How To Handle Your Money in Uncertain Times
I interviewed Brad Long for the growth secrets interview series. We talked specifically because we are dealing with a very difficult economic time and given Brad's focus on personal finance.
Brad Long is the Zero-Debt Coach who successfully paid off $43,000 worth of consumer debt a little over a decade ago.
He then got into financial coaching as a result of that.
On their platform, they help people manage financial crises, like the one that we're in now, by organizing their finances and getting on a written budget.
Once that is done, it's much easier for them to continue through that process to eliminate their debt and then move onto financial independence.
It starts with a financial crisis.
The Pillars of Financial Survival
There are 3 pillars of financial survival:
Preserve Capital
This is your economic defense. You're going to go through and list out all of your debts and expenses, get those. Then you can see whether you can pay all your bills or not.
Aggressively Obtain Capital.
That is going to be extra work (side hustles and selling some stuff).
Getting help, Encouragement, and Community
This crisis has taken us all somewhat by surprise. in that sense, it's a little bit easier right now because we're all in this together to get that community and that help that you need.
We are adapting in real-time.
I get together with a group of guys for a Bible study once a week via zoom. Having that community of people around you is a challenge. I'm thankful we have these tools.
Imagine if this happened in, say, 1988, and you were truly isolated and couldn't work. I don't know how we would manage. I think people would go crazy.
Preserving Capital (Financial Defense): What can People do?
We've already seen incredible carnage in terms of unemployment claims.
When you look at that through the lens of the reality, 78% of the population lives paycheck to paycheck, there's a lot of bad stuff going on out there right now.
Right now, press pause on your debt elimination process.
If you're still working, make the minimum payments. If you're not working, then that's where we go to the four walls.
The four walls are a defensive perimeter that you draw around your finances. It's your home, food, transportation, and clothing.
Your home includes mortgage, rent, and utilities. You're really in defensive mode here. You need to focus on those four things so that we can make sure that those are covered and then start saving for the emergency fund.
Get 3-6 months’ worth of expenses set aside in an emergency fund, even up to a year because we just don't know how long this is going to last.
Aggressively acquiring capital: What can people do right now to make extra money?
First ask, what can I sell?
Go through your basement, attic, and closets. If you've got an external storage unit, go through that as well.
This is a time to start offloading stuff that's not used. If you haven't used it in a year, maybe it's time to monetize. In an emergency, sell stuff.
If you've got a second car and the family can do without two cars, it might be time to sell that car.
You can find buyers for those types of things because people with cash are looking to make some deals. Go to a Facebook marketplace, Craigslist, eBay and Amazon.
Second, you need immediate work.
You can check the National Retail Federation's website.
There are tons of retailers that are hiring right now, like Walmarts and targets, because of the incredible influx. It may not be something that you want to do but these extraordinary times call for extraordinary measures.
If we're talking about keeping your four walls intact and buttressing that emergency fund, we want to do whatever we can to make sure that we've got cash flow coming in.
Third, develop side hustles.
There are a lot of different side hustles. Some of them are probably not relevant right now. Going online and starting something it's not going to make you $100,000 in the next couple of weeks. It's maybe not even in the next couple of years. But it's a great time to start getting online. If you've got something that you can teach, start developing an audience and serving an audience.
Where to put savings
Speaking of savings, we mentioned instead of focusing on hacking away at debt, for now, put some money aside during this period in case things worse.
With the emergency fund, keep it far enough away that you don't have immediate access to it so that you go buy an Xbox or a new purse (but close enough that you can grab it in an emergency).
Generally speaking, a traditional savings account is fine.
You want to have a little cash on hand.
There are scenarios where if this gets too crazy, they could do a bank holiday and you may not have access to your funds.
In addition to traditional savings accounts, we use an app called Digit.
It's connected to your bank account. It'll monitor your spending. What I like about it is that to get money from it, I have to go through the process of texting through this chat BOT and tell it an exact amount.
I think they built this in there for the psychological function.
It asks you: what do you plan to use this for?
You don't have to answer that, but you ask yourself, “do I need this? I'm about to admit openly that I'm going to use this for a non-emergency purpose”.
It makes you think twice.
Business Leaders and Entrepreneurs: Keep business going forward in a way that is cognizant of what's going on but still aggressively growing?
That's something that every entrepreneur is dealing with right now.
The fear of being like imposter syndrome.
You don't want to be a disaster capitalist. You don't want to be out in people's faces trying to sell them stuff. Selling is not necessarily a bad thing. if you're selling something, you're just exchanging value.
Any entrepreneur in any business, if they have the heart of serving their audience, what they need right now is your presence.
Some people have prepared for situations like this and they're going to be in the marketplace for buying things.
It's really easy to get tunnel vision and make the assumption that everybody's hurting right now and that it's bad to sell or you're dirty if you sell.
But that's not true.
If your audience has a need and they have the funds to do that, they're going to exchange that value with you.
This is especially a really important time to be online, to be present with your audience, and to build trust.
This is a time for you to build your brand and build your presence with the people that are following you or discovering you.
As long as the product or service that you're selling is genuinely valuable, to sell is to do a very honorable thing.
Hopefully, this isn't the first time that you're being confronted with the fact that your product or service should be a vital and a must-have for your customers.
Make sure you are speaking to your customers and making sure that you're there providing the value, giving them the information and helping them through the situation as best you can.
Warren Buffet said “be fearful when others are greedy and be greedy when others are fearful.”
Be fearful when others are greedy and be greedy when others are fearful.
I don't want to uplift the word greed, but the point is when you look around and you see that everybody is living, high on the hog, thinking about getting a bigger house, a nicer car, the stock market is going up and everyone's talking about the returns they're getting in their portfolio, that's the time to say we need to start being conservative.
When you start stocking away some cash and then when people are scared, then people can take you. You see, there's an opportunity there. It's not greed it's an opportunity.
Government programs and what people can do
By now, you should know about the $1,200 stimulus.
Some may have even received theirs by now.
But if you're at the upper end of the spectrum, you might not see a check for a few months.
It may not be helpful in an immediate sense.
Stop the Over Consumption Culture
It's really important to understand how those things affect everyday life. It'll frustrate you for sure, but you need to be aware.
We need to be accountable.
We need to be responsible for our situation and our family.
I saw a quote, it was on a bumper sticker, it said: no one's coming to help. You're on your own. It's up to you.
Even though we do want to be a community that helps each other and that works with each other, it's not a bad policy to have that, “I need to take responsibility for my situation and my family situation.”
We've got to stop living beyond our means.
We've got to use this crisis as a wakeup call to get our finances organized. Get on a budget, start eliminating debt, stop over-consuming.
Use this opportunity to get your arms around your current situation.
Once you've gotten organized, on a budget and start buttressing that emergency fund, let's say you saved six months’ worth of an emergency fund and the dust settles 3 months from now, you can take half of that emergency fund and throw it at debt.
You will have gotten major traction in the right direction. I'm hoping, for our culture, that this is a giant wake up call to stop this hyper-consumption.
Get on a plan. Let this be your defining moment.
Want to learn more about Brad and his business, watch the full interview below: