There's no question that the coronavirus pandemic is upending the lives of millions of Americans. To navigate the financial challenges many are facing, events such as the Great Recession, which started in 2008, can provide helpful insights.
For Ramit Sethi, personal finance coach and author, the biggest takeaway from that time period is to get into the right mindset and be proactive so that you're never left without options.
"The No. 1 rule I learned from the last recession was: live to fight another day," Sethi says. "Do not allow yourself to get put in such a bad situation that your back is against the wall and you have only bad choices to make."
It's all about planning ahead, Sethi says. If you're worried that your job may be at risk, make a plan as soon as you can that includes how you'll need to adjust your spending and who you might approach to get leads on available jobs. If you do end up losing your job, you will at least have a basic playbook that you can follow, Sethi says.
It's important to get ahead of any potential job loss as opposed to waiting until you're unemployed, Sethi says. Even before you're laid off, tell everyone you know that you're going to be in the market. "It's easier to get a job when you are still employed. If you have the option to tell people about your job search while you are still employed, it's advantageous to you," Sethi says.
It may also be a good time to reevaluate what you want in a career. "Get rid of any preconceived notions about what really, really mattered to you before and start fresh," Sethi says.
Do you need to live in this city? Do you need to have this type of job or work in this industry? Maybe you're open to a change. "Reconsider everything," Sethi says. Think about creative ways to earn more, but perhaps in new ways, he adds.
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When it comes to adjusting your spending, start by picking your two or three biggest discretionary spending areas and focus on reducing those first, Sethi suggests. It can be difficult to cut costs everywhere all at once, but having a more targeted approach can make it easier to identify what can be trimmed from your budget and follow through with doing it. "I want you to get really disciplined about your spending," he says.
And make sure you're not overpaying for essential services, Sethi says. There are five types of bills that you probably pay on a regular basis that you should attempt to lower: cell phone, cable, credit card, student loans and housing.
Many of these companies, as well as your utility and car insurance provider, may have formal financial assistance programs available at the moment. But even if they don't, it's worth giving these providers a call to try and negotiate down your current payment or delay payment until a later date. "Think about calling up the companies that you do business with and telling them: Look, I'm facing some financial difficulty. I need your help because I've been a great customer," Sethi says.
"Make sure that you live to fight another day because there will be great opportunities and a great future in the long term," Sethi says.
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