Many have asked the question of whether the stay-at-home measures have been worth it, given their cost to the economy and to morale. I would unequivocally say “Yes, they are—human lives are always worth it.” However, I can’t deny the economic impact of this thing.
I’m no financial planner or accounting genius. I’m not even a certified financial educator of any kind. However, over the years I have picked up a few basics—some from David Ramsey’s Financial Peace University and some from trial and error—about how to get and keep one’s finances in line. These basic, commonsense things may not be enough to bail a person out of a truly dire situation like a job loss or a foreclosure, but applied over time, they can at least offer some skills with which to approach these things. The most basic, important part of the picture is deceptively simple: assess your current financial picture. How much is coming in? How much is going out? How much debt are you carrying? What do you have saved? This can be a very scary thing to do if it’s been a while. While I’ve never personally been farther than a month behind on a given bill (and never more than one at a time), I’ve seen others suffer the terror of staring down their pile of financial commitments with little idea of where to begin. I know that feeling: I get it every time I am asked to sort a bin of items from the garage. Remain calm. Take a deep breath; you can do this if you don’t panic. Start by looking at how much money you actually have readily available before doing anything as dire as cashing out your retirement, if you have it. If the number is frighteningly low, take another deep breath and drink a glass of water. Write the number down, since it is a major factor in what you do next. If the number is lower than $1,000, you definitely have a lot of work to do. Next, take a good look at your sources of income. This is easy if, like me, you’re salaried and your paychecks are relatively similar from one pay period to the next. If you are a gig worker, make note of the seasonal fluctuations you experience in income and try to find any patterns. If these numbers scare you a bit, take another deep breath and remind yourself not to panic. Write it all down. After this, add up the bare minimum expenses you need to pay to stay alive. By this I mean such things as food, shelter, clothing, health insurance, and transportation to whatever you do for work. In calculating this number, do not shoot for what it would take to live well in these categories, but for the bare minimum you need to stay alive. For example, food can be crazy cheap or crazy expensive depending on how you go about it, and the only clothing that belongs in this category is what keeps you from going naked, ragged, cold, overheated, or job-threateningly unprofessional. “Professional” is a subjective term relative to whatever your profession happens to be, but generally it means that your stuff doesn’t stick out like a sore thumb compared to whatever your colleagues happen to be wearing. Transportation at this level is the bare minimum it takes for you to obtain supplies and to arrive safely at your job. Shelter is more complicated. Because moving is expensive and the financial agreements surrounding housing are intricate pieces of work, jot down your expense for shelter as whatever your current mortgage payment or rent is. They include things like property taxes, homeowner’s insurance, or HOA fees for the property in which you live. If you own more than one property, you are at a level that likely doesn’t need such basic advice. Unfortunately, shelter is often irreducibly expensive and hard to change without such drastic measures as obtaining a roommate, waiting for a lease to end, selling your house, or forcibly being removed from your domicile. If, before even working on your debt or past bills, your most stripped-down survival number is higher than your income number, then you need more income. You need a higher paying job or you need an extra one. This is easier said than done, of course, but the attempt must be made. Dust off your resume, earnestly seek out listings, and apply everywhere. At this level, you likely qualify for some form of assistance from either the government or a local food pantry. Swallow your pride and take it; you will pay the system back when you get back on your feet. If you are one of my church members and you are at this level, please let us know about it privately so we can help you survive. Next comes the truly terrifying part: pull together all your loan documents and unopened bills to figure out what you owe. This number has the power to depress you a bit, but you need to know what it is to start attacking it. You cannot fight a monster you cannot see. Write down every debt, no matter how small and no matter how large. Write down their minimum payments and add that to the previous number. If what you get from that is higher than your income, you need more income on a consistent basis and you need to avoid contracting new loans at all costs. For the rest of it, there are shorter-term things you can do to get that number down. Sell everything you can think of to sell and use the proceeds to get rid of the smallest debts first. Why the smallest? Because it’s one less item collecting interest, thus freeing up more income to tackle the larger ones. Even if a payment on something is low, killing it frees up resources to take on the big things. This is the situation in which extra temp jobs and more gig work can be genuinely useful. If you can really put your nose to the grindstone for a season and intensely work at this, eventually you can reduce the number of payments coming out of your more regular income and even get out of basic survival mode. Once you’ve built it up, keep a buffer of at least $1,000 in your account, just in case you have an unforeseen emergency. After that, though, every spare dollar needs to go towards getting rid of as many debts as you can. When your only remaining debt is your mortgage, you can ease up a bit; while it’s good to try to pay it off early (even $20 extra a month can make a difference), you need to counterbalance that with quality of life issues and building a stronger emergency fund. In this economy, finding work, even on a temp basis, is easier said than done, of course, and the work that’s available right now comes with risks. Those risks are likely not worth it to chip away at debt, but if you’re not even meeting your basic survival expenses, it could be more than worth it. If you figure out where you stand now, you will be in a better position to take advantage of any opportunities you find from here on out, and you can be more intentional with your money in general.
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AuthorJillian Lutes is the youth pastor at West Covina Hills Seventh-day Adventist Church. Archives
May 2020
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