Millions of families are experiencing deep financial stress during this pandemic. Job loss, increasing debt, and other financial hardships are putting many families behind.
Yet, the stock market somehow has remained at historic highs. This further increases the wealth gap between those who have invested in stocks over the years and those who haven’t.
This is a really tough time for a lot of people. So if you are reading this and going through a tough time, do whatever you need to do to get back on your feet. It may take time, you may have to take on more debt or dip into savings, and just know that is okay.
However, once you emerge out of this challenging time remember this experience. Use it as fuel to prepare you for the next downturn. Things may get worse before they get better, but they will get better.
This brings us to the purpose of this post. Despite having a rough start on our financial journey we took several steps over the past 10 years to unintentionally prepare for this pandemic.
Lessons Learned from the Great Recession
If you’re old enough to remember back to 2007, you probably know why that year was significant. Mortgage lending standards were extremely loose and stories of fraud in the industry were common. Shortly thereafter the housing market collapsed.
During that time, I was able to hang onto my job by a thread. At one point, my position was being eliminated but I was able to move to a different position in the same organization — and I’m still with that company today.
For years I watched as other families fell apart. I knew many people who lost their homes, were unable to find jobs for years, and I remember wondering if our economy would ever bounce back. This lasted for years. It probably wasn’t until 2012 or 2013 when things started to feel “normal” again.
My experience going through the Great Recession completely shaped my financial journey thereafter. In 2011 my wife and I were nearly $200,000 in debt, had a negative net worth, and were feeling the stress of not having emergency savings.
At one point we had two leaking bathrooms in our home and no money for the repairs. Thankfully we had built some home equity. So there we were, sitting in the lobby of a bank applying for a home equity loan to fix two leaking bathrooms. More debt.
It was at that moment that we decided to reshape our financial future — we didn’t want to be in this position again. The next big thing was coming and we wanted to be prepared. Of course, we had no idea the “next big thing” would be a pandemic.
We Built Our Financial Foundation
In 2007-09 our financial foundation was weak. We were one job loss, hospital bill, or car repair away from being in a really bad situation. At the time I wasn’t sure what to do about it, so I started reading about personal finance.
So what does building a financial foundation mean to me? Three things:
- Minimize debt
- Build an emergency fund
- Save for retirement
It took us many years but eventually, we paid off our student loans, car payments, and credit cards. We then started putting that same money away in savings until we had six months of living expenses stored up.
Eventually, we even paid off our mortgage. This has given us a strong foundation during this pandemic that no matter what happens we should be able to weather the storm.
We Moved to Single Income Household
Having a strong financial foundation allowed my wife to quit her middle school teaching job in 2018. She made the decision to take a few years off to spend more time with our young children who are now 6 and 2 years old.
What we didn’t know at the time is how beneficial this would be in the midst of the pandemic.
She focuses on taking care of the kids during the day while I work my day job down in the basement. It’s an arrangement that has allowed us to maximize family time while navigating all the challenges that have come with virtual school for our 1st grader.
The memories we’ve been able to make with our children have been priceless.
We Started Focusing on Our Health
In late December 2019, my wife and I started a workout program called P90x3. If you’re not familiar with P90x3 it is a 30 minute home workout program that consists of a mix of strength training, cardio, and stretching.
Our program was scheduled to wrap up right around the time lockdowns started in mid-March 2020. Normally, life would have gotten busier and workouts would have stopped shortly after. However, we’re still going with the same program more than 11 months later.
Now I know that working out doesn’t prevent someone from being impacted by the pandemic. We all know that COVID-19 impacts people differently. Some perfectly healthy people end up very sick or worse, and some high risk people end up with minor symptoms. My wife has a long history with a pre-existing condition that was completely out of her control so we fully understand how being healthy has a luck aspect to it.
Regardless, working out regularly no doubt reduces the risk against a virus that is impacting so many.
How You Can Prepare for an Unexpected Event in the Future
For many of us, our top goal is to literally survive the pandemic. But if we put health considerations aside, this is still a tough time for a lot of us.
Getting your finances in good order can help prepare you for the next unexpected event, whether that is a pandemic, a financial crisis, or whatever else may come in the future.
If you are someone who is not in a good place right now, remember what this is like and use it as fuel to prepare for the next unexpected event. We can’t predict what that unexpected event will be but we know it’s coming at some point.
Thanks for reading. You can read more about us over at Financial Pilgrimage where our goal is to help young families pay down debt and live financially free.