Updated: Mar 24, 2020
The stock market has been on a downward spiral all month. Historically, it turns around and we recoup losses that we see during times like this. Remember, the “loss” is not an actual “loss” until you liquidate (or sell) your position. Avoid letting fear drive your decision making process. Be strategic.
Let’s talk about what you can do today, right now, to help offset any disruptions you may see in your income.
How much discretionary income do you have? Your discretionary income is any money you have left over after you pay your necessities (ex: taxes, shelter, groceries, costs associated with transportation, medication, etc.). So, how much “extra money” do you have that can be set aside in case you need to tap into it?
Some items that you probably have on your spending plan that I would recommend eliminating over the next few months (maybe even until the end of the year to help put you and your family in a better financial position) are as follows:
Professional Manicures / Pedicures
Professional Hair Care
This list is not all inclusive, but I think you get the idea. Anything that is non-essential to you living. What are you willing to forgo for a period of time? The things that I plan to live without include: travel :), dining out :), my car wash subscription service, apparel shopping to name a few.
List all discretionary expenses that can be halted for the next 3 months. We may not need to tighten our belts this long, but it is better to be prepared than not.
Add all discretionary expenses you have identified so you know your monthly target.
Create a new spending plan for the next 3 months that does not include any of the discretionary expenses you included on your list.
NOTE: Head over to our Resource Library and download the Spending Plan template.
Open a new account to house your newly identified “extra money”. The account can either be a savings account or a checking account, but the primary thing you will need is a debit card or ATM card for ease of access. Deposit your discretionary money into that account.
NOTE: Typically savings accounts don’t come with debit cards, but account holders may be able to obtain ATM cards. ATM cards can only be used in ATM machines. Also, make sure there is no fee associated with having the account.
Start using your new spending plan immediately.
Let’s be clear, this is a season that we are in and we will come out of it. During this period of time, it is very important that you continue to make on-time payments of any debt that you may have. On-time payments of debt accounts for 30% of our credit scores. On Sunday, March 15th, the Federal Reserve cut interest rates to nearly zero percent. Yes; you read that correctly… Zero percent. Take measures to position yourself in a manner that will be beneficial to your future self.
For help with achieving your financial goals, connect with me.
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