Riding out the storm...
For whoever needs to read this right now.
You were sailing through life, one monthly pay check at a time. Bit of savings here, bit of debt there. All going smoothly. And then one day, the storm to beat all storm comes and hits your life like a ton of bricks. It may be due to the economic impact of Coronavirus; it may be due to a family breakdown, it may be due to the death of a loved one.
You are in a storm right now, and you need to ride it out.
1. Pile Up Cash
Your emergency fund is your friend right now - and if you don't have one you need to build one.
Sell everything in sight. Literally. Electronics, furniture, clothes. Extra cars, caravans, luxury items that aren't needed. Anything and everything you can sell on ebay or a local Facebook marketplace can turn into cash.
Cash-in totals on cash-back websites and pocket them into your emergency fund.
Switch bank accounts to get the switching deals - you can get over £100 sometimes for switching current accounts.
Switch energy providers for both reduced deals and cash awards for switching.
2. Work To A Budget
A Budget is literally your magic tool. Email firstname.lastname@example.org for an example budget to work from. If you look at what is coming in vs what is going out, you can check whether you are following the no.1 rule of growing wealth: living below your means.
Go through your Budget line by line and make sure you are keeping it as lean as possible:
MORTGAGE/RENT: Can you move to reduce your rent or take on a room mate? For mortgage, is your mortgage less than 1/4 of your take home pay?
COUNCIL TAX: Are you in the correct band? Look online to make sure your council is charging you the right amount.
Gas & Electric: Have you checked deals and switched? Have you looked to measures which can reduce your bill? Such as tactical heat settings, draft excluders, removing towels from radiators, drying clothes on the line?
BROADBAND & PHONES: Have you reduced your monthly bill by shopping around? Could you go on a SIM ONLY tariff and no upgrade to keep the monthly cost down?
AFTER SCHOOL FEES: Are these the lowest they can be? Have you considered getting alternative help with children or sharing child care with a friend?
RECREATIONAL FEES: Could you reduce your social activities for a period of time whilst you go through the storm? Don't be worried about saving face and Keeping up with the Joneses - this is about survival! Who cares what people think? This is about you!
3. Cut Unnecessary Spending
This is not just cutting back, this is cutting everything you don't need! You are in a storm, you don't need to be going out to a restaurant, buying the kids expensive birthday gifts, going shopping for extra clothes. All discretionary spending cut back and having low outgoings means being in a position of strength that you don't need too much income to live month to month.
Top tip is using cash envlopes as a way of limiting your spending, e.g.
Grocery shopping (£50)
Kids stuff (£25)
Allocating cash for a particular budget item means you work to that limit, and tracking your expenses means you know where money has gone.
4. LOOK AFTER YOU - "I Get To"
Your mental health is so important during a storm - make sure you are looking after you! Part of this is making sure you are practising gratitude - #igetto referenced by the amazing instagrammer @savemycents - if you find joy and gratitude in the most simple of tasks, you will be much more at peace during times of need. For example:
"I've no income coming in" = "I get to take this time to only focus on what I really need"
"I can't afford to go out to dinner" = "I get to cook a fresh meal at home with leftovers to spare"
"I'm worried about the future" = "I am grateful for my present, my health my happiness my family."
One final thought. Billionaires spend a lot of money to practice Seneca's concept of "Stoicism: the endurance of pain or hardship without the display of feelings and without complaint". So wealthy people pay money to practice feeling pain and hardship. Do you want to know why? It keeps them grounded and it keeps them grateful.
Whatever kind of storm you are coping with right now, and whatever practical tips you intend to implement - be grateful. Practice gratitude. We promise the storm will pass.