The Virus, Your Spending, and Your Savings
Family,
When
I first got married (billions of years ago), my wife’s uncle said, “You know
Israel, I don’t have anything to give you. But I can tell you this – good
tires are cheap insurance.” That statement has rung in my ears ever since.
From that time, I’ve always kept newer tires on my vehicles. The one time I
didn’t have good tires on my vehicle, it hydroplaned in the rain and was
wrecked. Where am I going with this?...
I
have been working like crazy this year and this virus situation hasn’t slowed
it down; if anything, it has accelerated it! This situation has really
brought some things to pass; meaning, the things I have told my clients, my
students, and my family are starting to make sense. Those of you who know me
know I speak of “stacking cash.” As you know, my priority for my family
(you) is that they hold a handsome amount of cash. It can be under the
pillow, mattress, or in the bank; just as long as you have it! (Remember my video
on The Savings Program that Truly
Works?). The reason why I focus on savings rather than home ownership
or retirement or investments is because of the saying “cash is king.” And
we have all been alive long enough to know that “stuff happens.” And in
this world that has placed a monetary value on everything, having money allows
you to resolve any issues that may arise.
The
situation we are in today has compromised the average American’s financial
position – income, assets, debt, expenses. Jobs are gone, assets are
losing value, debt is increasing, and expenses are continuing. This is
happening to everyone! They are talking about lending companies deferring
various types of payments due to this situation – credit cards, loans, car
loans, mortgages. While I have seen emails from credit card companies
stating they are providing relief, I haven’t detailed out the programs. (If
you need me to, contact me.) But from my research, I have found that
most mortgage deferments are structured to where the person has to pay all the
deferred payments at the end of the period. In other words, let’s say your
monthly payment is ordinarily $1,000 and it is approved for deferral for four
months. At the beginning of the fifth month, you have to pay $5,000 ($4,000
+ $1,000). And if that isn’t the case, then the person has to
refinance the loan and include the $4,000 that was deferred. Only in
qualifying cases will the $4,000 be moved to the end of the loan (thus
extending the loan for the same number of months that it was deferred.)
For my business owners, I have researched those SBA loans they are
talking about in the media and have found that the funding has been changed
from helping small businesses to funding mid to big businesses. I can go on all
day about this, but believe me, I have stressed and nearly cried when I found
out about the “updated criteria.”
Regarding
the average American, the $1,200 (or $2,400) stimulus check has been received
by many. But in reality, what impact does $1,200 have on your full
financial situation? It is bad enough that most wages weren’t sufficient
to manage a comfortable lifestyle devoid of anxiety and stresses, but now they
want to add insult to injury by giving out a meager $1,200? Mind you, I
am not saying it isn’t helpful, but I am saying its helpfulness is rather
insignificant in relation to the totality of the average person’s situation.
I’m
no doom and gloom guy, but I believe planning for “real life” is essential -
especially in a monetized system like the one we are in. As I mentioned,
I was told that “good tires are cheap insurance;” which essentially
means planning and preparing can prevent and/or reduce sucky situations. For
us, cash is the resource that we can use to resolve our daily expected and
unexpected expenses. I believe that when this situation is all over,
fewer people will buy into the “consumer” narrative that we are held to and
people will prioritize saving money and refine their spending to those things
that are essential and preparatory. I am attaching an easy spending plan
(budget) spreadsheet that you can use to help refine your spending towards your
financial objectives.
I
didn’t mean for this to sound preachy or negative but I wanted to share with
you the importance of saving money. Just remember “good tires are cheap
insurance” and that will motivate and empower you towards the financial
success and peace of mind you truly desire. To learn more about financial
positioning, watch my videos on YouTube. Please like, comment, and share
them. And be on the look-out for new ones!
Best
of all,
Israel
C. Wright, MSA, CFE, AAMS
Director,
Airborne
Financial Group
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