Michael (00:00): Hey guys, welcome to the wealthy neighbors show. This episode is going to be a little different because I know a lot of you guys are anxious about the coronavirus. A lot of you guys are anxious about losing hours at work or even losing your job entirely. So it just didn't feel right for me to continue with our normal format and schedule and all that. Knowing what I know about how a lot of you guys are feeling right now. And so I first want to start off by just updating you guys a little bit. Um, what we're doing, um, as you guys may know, I work in outside sales, so most days I get to work from home. So for me a lot of this is really business as usual minus the travel and customer visits and the fact that I'm trying to keep up with everything I'm still responsible for with my wife and daughter at home.

Michael (00:53): Um, then speaking of my wife, she has lupus. So we've been home for pretty much about eight days now. I'm just kinda stand away from everyone and everything to make sure she stays healthy. And so with that said, we've also pulled my daughter out of daycare as a precaution, even though kind of word on the street is that toddlers are generally safe. We just didn't want to take any chances with that. So we pulled her out. But with daycare we still got to pay for it so that it's not an expense that really went away or anything like that. Um, and then speaking of my wife, she's also a teacher, so again, she's home until at least the middle of April they announced yesterday, which is probably the best case scenario for her specifically. So as you can see, um, we both are expecting our incomes to stay the same.

Michael (01:42): So when it comes to our finances, we're really just kinda sticking to our longterm plan. Even though the stock market is down, we feel really confident that it's gonna rise again and that it will continue to do so over the longterm. So we have no problems continuing to invest just as we've always done. Um, we feel really comfortable with the emergency fund we have, which is about nine months worth of our expenses right now. So again, with just our situation, we feel very confident, very fortunate, very grateful, very blessed, um, for the position that we're in financially as it does allow us to be able to prioritize our health and our wellness over our finances at this time. But I know that's just not the case for everyone and it's really bothering me and it's bothering me because I consider you guys like family. I mean, I know some of you guys are out of work, again with no income.

Michael (02:43): Some of you guys are working reduced hours, but now you have the added expense of childcare with all the school closures. And some of you guys are small business owners who just don't have any customers right now or you're being forced to close your doors and um, and so I want to help you and I feel like this platform is one of the best ways that I can do that right now. But I do want to make it very clear that with this episode, I'm not trying to condemn you. I'm not trying to judge you for the position that you're in or anything like that. Because at the end of the day, that's just wasting breath, right? That's just stating the obvious, right? Like everybody right now knows, okay, dang, I should have an emergency fund. Like that's, that's not what this is about. My goal for this episode is to give you guys that are really having a hard time or even those of you that are just super anxious right now, some clear actionable tips that maybe you can implement and that'll help you navigate these times, hopefully just a little bit easier. So with that said, let's uh, jump right to it.

Speaker 2 (04:08): [inaudible] [inaudible] yeah,

Michael (04:08): I know a lot of you came into the year with these huge plans like paying off debt, maxing out retirement plans, knocking out a huge chunk of your mortgage or something along those lines. And maybe up until this point in the year, you've been absolutely crushing it. But I want you to hear me clearly on this. There is absolutely nothing wrong with taking a break on those goals right now. So that's going to be the first tip. Tip number one is to just hit the pause button on your big goals. Hear me, you are not failing because you had to pause your goals. It happens. Life happens. I've shared this on other episodes and other podcasts, but I lost my job while we were paying off debt and it definitely slowed us down quite a bit. I mean, as you probably can imagine now at that time I was able to side hustle and kind of make up a little bit of ground, but with the way things are closing and shutting down right now, it's not very likely that you're going to be able to do the same thing.

Michael (05:10): So give yourself a little bit of grace, hit the pause button if you need to, and be okay with that. Really and truly, your focus needs to be on controlling the things that you can control. And most of you don't control if your job closes, you don't control the stock market, but two things you can control are your thoughts and your responses to those thoughts. So hear me. Life doesn't begin or end with debt freedom maxing out your Roth IRA is not more important than making sure your family eats and has a place to sleep at night. It's totally okay to take a pause and focus on the most important things right now, especially if you're concerned about missing income for a period of time. So if you find yourself in that position, the position of potentially getting your hours cut or being laid off or anything like that, consider sending any extra cash that you have to savings while you navigate this situation instead of debt or investments.

Michael (06:09): I mean, at the end of the day when this all blows over, if you've got that same Pollock cash, you can literally send all that to debt or whenever you want to do with it at that time. But if you're feeling super, super anxious right now or you're concerned about job loss or any of those things, just hit the pause button. It's going to be okay. Number two on the list, I want you to try and resist the urge to panic and sell off your investments. So we all know that the stock market has basically been in a free fall for weeks now, and maybe you've been checking your 401k or your other retirement accounts while you're worried about being laid off or out of work for a bit, and it has you thinking about pulling some of that money out, or maybe you're just scared or stressed about losing your money in the market, right?

Michael (06:57): Those things are very, very normal and as long as you're able to meet your most essential needs, I want you to think twice before withdrawing any of them money. This is definitely the time to tap into that emergency fund. But pulling from retirement accounts too soon can have some really bad consequences. For most accounts, you're going to be hit with a 10% early withdrawal penalty and you'll be taxed. And that's after the value of your portfolio has dropped like 20% or more in recent weeks. So in other words, because you're going to lose so much money, this is a really bad time to sell off your investments. You will be much better off in the long run if you can hold tight and resist the urge to pull any of that money out. Again, this applies to you if you're fully capable of meeting your basic fundamental needs.

Michael (07:49): So now the question is how can you make sure that you're able to meet those basic needs, right? Well, that's going to be done by following the third tip, which is to lay out your projected income. Then list all of your expenses in order of importance. So a lot of us get anxious when we feel like everything is out of control or maybe even beyond repair. And a way to combat that feeling is to just get some clarity on the situation. So take 30 minutes to an hour and just write down any income you expect over the next few weeks. And if you don't anticipate having any income, start with the amount of your emergency fund. From there. I want you to list out your expenses in order of most important to least important, and then subtract that amount from the total you have listed at the top as you go.

Michael (08:39): So let's say you lost your job, you don't have any income, but you have a $5,000 emergency fund. You're going to list that $5,000 then start listing things like food $200 over the next few weeks. Now you have 4,800 then you've got medications that say they're 60 bucks. Now you're at 4,740 and you're just going to keep going on that list of absolute necessities until you run out of money or that list of necessities is done. And what this is going to do is give you a clear picture of where you stand so that you can make the best decisions going forward. Number four, on the list you need to communicate with any bill collectors and service providers. So going back to the last tip, when you're doing that, when you're listing out all of your expenses, it could be possible that you run out of money while you have some of the necessities still on the list.

Michael (09:32): Don't be afraid of that. There are a lot of companies right now that are really helping the customers out while we navigate this whole thing for the next few months. So give your bill collectors a call and explain your findings and your situation. I know certain cell phone companies are waiving late fees right now. I'm your landlord, or even your mortgage lender may be willing to work with you as well. But here's the thing, people cannot help you if you don't communicate. So this isn't the time for you to start ignoring those phone calls or being embarrassed. This is really when you need to step up and take control of the situation. Call your lenders, call you the utility companies, call the bill collectors and whoever else you make payments to and just let them know that you're having a tough time due to this crisis and just see what kind of assistance they're able to offer you, especially if you're the customer that always pays on time.

Michael (10:24): They keep track of that kind of stuff. Again, nobody can help you if you don't communicate, so just take a little bit of time to make those phone calls if you need to. I did record an entire episode on how to talk to lenders and bill collectors and I even shared some tips on how to negotiate some of those bills that you may have, so be sure to check that out. You can find that [email protected] slash empty M five number five and this one's a little self explanatory, but stop spending money unnecessarily. And this goes for hoarding food in the grocery store to just other expenses that you normally have. See, not only is buying too much in the grocery store, bad for your finances, but it's bad for our supply chain. It's bad for the store workers, it's bad for other customers who are actually in need of the stuff that you're hoarding.

Michael (11:13): So try your best to stick to enough for let's say like two weeks or so. And if everybody does this, we should all have what we need to get through this. But again, this doesn't just apply to grocery store runs. Maybe you have three or four streaming services that you're paying for and those are running you about 10 bucks each. That's 30 $40 a month. And now I know a lot of you are at home with your kids like I am right now. So I'm not saying to just completely get rid of everything while we're sitting at home for most of the day. But you need to ask yourself if you really need all of those services or if you can just get by with maybe one right now, like maybe you keep Netflix and get rid of Hulu and Apple music until you're back in a good financial spot or maybe you're paying for cable and you can get rid of all the streaming services for now.

Michael (12:03): I mean, especially with streaming services like music, cause you can usually watch videos and do all that kind of stuff on YouTube or even a free versions of music. Apps like Spotify and truth be told you're probably just binge watching one show at a time on one video streaming service. So again, do you really need three or four or five different streaming services right now? Or maybe you have some more expensive subscriptions that you can pause for now, like some clothing ones or facial products or whatever. If you are feeling financial pressure, this is a great time to reevaluate all of your expenses and cut out some of the fluff until things start returning back to normal. Little things like that can really add up, especially when you concerned about how you're going to pay for those absolute necessities. Number six is kind of a two part thing and it's, it's to either use or beef up your emergency fund.

Michael (12:57): Now I know some of you guys aren't living paycheck to paycheck. Maybe you're a debt free and you have a little bit of money saved up, but you're worried about the market or you're worried about your hours being cut or being laid off. If you're in that place where you have a little bit of money saved but you're still worried about some of the external factors, consider using this time to add a little more to your emergency fund. Again, that goes back to point number one. Pause on some of those big goals. Reassess the situation if you need to add to your emergency fund. Do so like sometimes we don't realize how exposed we are until a little uncertainty comes our way and so a few months ago, maybe three months of expenses saved would've felt fine, but now you see that with your situation you need closer to six months or nine months based on, again, your lifestyle and circumstances and things that are generally outside of your control.

Michael (13:49): That's okay. Take this time again to pause everything for a little bit. Stack up some cash. There's absolutely nothing wrong with that. Had we not gone through that job loss and illness when we were paying off our debt, I would have probably been okay with a smaller emergency fund myself, but that experience showed me exactly what we needed to do, which was to have nine months of expenses saved and I'm so glad we actually did that. It's helped us get through a lot of situations since then. For example, I work in sales for building materials and this is an extremely volatile field and position, especially if the real estate market starts shifting. And the thing is we rely on my job for health insurance to keep my wife going strong, so I don't want to stress about anything like that for as long as it takes for me to find the right fit should I be laid off or anything like that.

Michael (14:40): I also never want to be in a situation where my daughter's school is closed and I don't have the ability to take off work even if it's unpaid. So listen, I know you may be having a lot of different and a lot of different emotions right now. Don't ignore those, but don't let them consume you either. Sit down, create a plan to build up a little cash so that the next time you're in a similar situation, you can think clearly and sleep well at night. And again, that's going to look different for everybody. Some of you are totally content with three months of expenses saved. Some of you guys are going to need six. Some of you are going to be like me, you prefer nine or maybe even a year. But right now is a great time for you to sit down and determine what amount would make you comfortable at a time like this because Tom's like these are what the emergency funds are for.

Michael (15:25): So this is again a great time to sit down and take stock, do inventory on what it is that you actually need. Number seven on the list is to just stay hopeful. Now listen, we don't know how long this is going to last. We don't know just how bad it's going to get and that can be a little scary. But take solace in knowing that we got this right, we're gonna overcome it. And your 401k will overcome it too. You've navigated challenging situations before you will navigate this one and any others that come in the future. So stay calm, take a deep breath, follow the steps we just laid out. See, panic only leads to irrational thinking and irrational thinking can lead to some pretty big mistakes. And I'll admit, I'm not wanting to really watch the news, especially in times like this, but I know everyone isn't like me.

Michael (16:19): So you must consume the news. Do so in really small doses. And when you do remember to ignore the headlines and the sensationalism and just find the facts, headlines are written for emotional responses. Facts are what helps you make the best decisions. So don't let journalists who are just doing their jobs spooky, take some time away from all that stuff. Pull out the board games with your family. Go for a walk in your neighborhood if it's safe to do so, or just sit outside with some music and clear your head, like whatever you do, take care of your health and your family's health as best you can. And that's not just your financial health. But that's your mental, your physical, and even your spiritual health. Again, it's really important that during this time you do your best to remain hopeful. So thanks for listening and I hope you guys really find these tips to be helpful.

Michael (17:09): If you want a place to just kinda talk and ask questions as you try to make the best decisions for your family, I would love to have you be a part of the neighborhood and this is not like me trying to boost it or anything like that, but this is just me giving you a safe private space where you can kind of talk through some of these things with people who are experiencing the same thing and have some similar goals as you. And so again, no cost to you as always and you can join by heading over to winning to wealth.com/neighbors that is winning to wealth.com/neighbors also, if you know someone that's a particularly tough time with their finances right now, feel free to just send them this episode, but don't just stop there. Be a good friend as well. Listen to them, encourage them, and help them to remain hopeful as they navigate these challenging times in the same way you are. So thank you guys for being understanding of this new format as again, where we all just try to navigate what it's really unfamiliar territory to all of us. And just so you know, my plan is to get back to our Wednesday interviews next week, but I definitely felt like this was important to do with how I know some of you guys are feeling and what I know about what some of you guys are even experiencing. So thanks again for tuning in to this unconventional episode of the wealthy neighbor show.

Speaker 2 (18:58): [inaudible].