By Odest Riley Jr.
Brunches, late lunches, game nights and passport stamps have been the reality for many of us the last three to five years. “Living My Best Life” was the anthem bumping in our ear pods as we headed to the airport for a quick weekend getaway.
But now as some of us sit in our homes quarantined and waking up every day to hop on Zoom conference calls, we have begun to ponder whether this is our new reality. And as our jobs cut staff, reduce bonuses and landlords/mortgage companies send out “We are all in this together emails” with invoices attached; it’s now time to take inventory of our lives as “adulting” becomes the new norm.
Understanding that sitting around waiting for someone to save us is not likely to happen anytime soon, so what’s next? As a real estate and finance specialist, I get asked that question all the time. And my advice is simple and straight forward.
First, compile a detailed breakdown of all essential and non-essential bills in your life. Next, cut out all the things you set on auto pay that you forgot you have been paying for.
For instance, check your checking account statement for anything that you haven’t used in the last 60 days and cancel it. Login into your Apple account or Google Play and delete/cancel anything you haven’t used in the last 30 days.
In fact, those two steps alone have saved me $389 a month.
Once you hit the small expenses it’s time to get on the phone and start negotiating the larger ones like your car payment/lease agreements, credit card interest, student loans and mortgage/rental leases. In these uncertain times, we should be reaching out to all of the above and asking questions such as:
Can I lower my interest on my car payment or do you offer any special programs to help during this economic downturn?
Dear credit card company, can I lower my interest rate? Or can you please pause all interest on my card for a set amount of time?
Navient/Sallie Mae, can you stop interest on my student loans for a set amount of time? And how do I apply for forbearance of my loans?
Dear Landlord/Mortgage company, what options are available to me for my current situation? Can I spread my rent payments out and add an extra three months to my lease? Are there any government programs to help me pay my rent or mortgage?
The next step is the most polarizing word in English language: Budget. It’s time to set a budget so we can start gaining control of our financial lifestyles. A budget is like a road map or GPS system that allows us to know where we are headed with precise directions; while also preventing us from getting lost down roads that are not in our best interest.
And during this time your budget has to be more focused on 2021, and set up in a way that allow your families and children to survive if the economy doesn’t bounce back as fast as the government wants it to. For all of us living in urban communities, we know history shows that recessions and depressions hit us harder than anyone else. So we have to be better prepared.
Finally, it’s time to cut down on expensive tastes and switch our mindsets to survival mode. That is: eating out should become a treat not a daily occurrence; buying a new car should be put on hold until you know if your company will be going back to work; and reminding ourselves that vacations don’t always involve passport stamps.
So for those of you who didn’t stop reading when I suggested setting a budget and stop eating out every day; just remember that this budget is to allow you to know where your money is going so that you can better control your economic future during this global pandemic.
Whether you are rich or poor, you should have your budget set up to give you realistic parameters as to how much money you want to spend each month. That means setting a monthly spending number and not going above that number unless an emergency occurs. And for the record, an emergency is not purchasing a cheap flight deal or taking advantage of all the upcoming holiday sales.
Instead financial emergencies consist of medical expenses, major expenses on your primary car, funeral expenses and/or day care expenses due to pandemic issues at your child’s school.
Winter is coming and we all need to prepare ourselves not to be stuck out in the cold. So as we have the time at home to set our goals for 2021, let’s make sure those goals are more focused on living within our means until things are a little better. And you never know, a road trip may not be as bad as you think.
A budget is like a road map or GPS system that allows us to know where we are headed with precise directions.
Odest Riley Jr. is CEO of WLM Financial, a privately held, full-service real estate firm, and the author of “The ABCs of Real Estate Success.”