FIRE in the Age of COVID-19 (Part I: Surviving the Storm)

The year 2020 was supposed to be epic. We were riding high on an 11-year bull market. It was the beginning of a new decade (always exciting), and we were looking forward to such events as the 2020 Summer Olympics in Tokyo and the U.S. Presidential election in November. 

Allison and I wrapped up 2019 in style, and we came into the New Year riding high. We went to FinCon DC in September, signed a book deal (all about FIRE and our financial journey) in October, and enjoyed a 10-week trip to Europe and South America from November to January!

Little did we know when we returned from our trip in mid-January, that the world was about to turn upside down. The COVID-19 pandemic hit us all like a tsunami. 

At the time of this writing, there are over one million confirmed Coronavirus cases and over 50K deaths worldwide. This pandemic has completely devastated the global financial markets, and we are heading into a deep recession with an uncertain recovery plan.

 

How to Comprehend This Event

Navigating through this crisis is a complex task, so we’re going to split our thoughts into two blog posts. 

This post, Part I: Surviving the Storm, will help you figure out what to do right now while you’re in the middle of the storm. You’ve been capsized, and you need to find a lifeboat before you drown.

Part II: Preparing for the Next Storm will help you get your financial house in order once things settle down. The time to prepare for a storm is before it hits, and there are a number of things you can do to help you weather future disasters.

But for now, let’s keep you from getting swallowed up by this storm…

 

Immediate Concerns

Health & Safety: First and foremost, your health and safety (as well as that of your family, friends, and community) is the most important thing right now. 

According to the WHO (World Health Organization), the latest advice for protecting yourself and others from the virus is the following:

• Wash your hands frequently.
• Maintain physical distancing.
• Avoid touching eyes, nose, mouth.
• Practice respiratory hygiene (covering your cough or sneeze).
• Stay home if you feel unwell (if you have a fever, cough and difficulty breathing, contact your medical provider for advice).
• Stay informed and follow advice given by your healthcare provider.

There is a lot of misinformation out there about COVID-19, and even the messages coming from trusted health and science sources change as they get new data and information.

Some good sources of updated information: WHO website, CDC website, and your local state and community resources (e.g., California Department of Health). Google has also put together an excellent page of COVID-19 Information and Resources. 

Physical Health: In addition to protecting yourself from getting the virus, it’s also important to continue maintaining a healthy lifestyle. That means exercising, getting enough sleep, eating nutritious meals, and getting fresh air and sunshine when possible.

Mental Health: This pandemic has taken an enormous toll on everyone’s psyche and stress levels. Here are some ways you can protect and improve your mental state:

• Establish a routine: Create and maintain a daily and weekly routine to help you stay focused and engaged. (It’s also a good dry run for the FIRE lifestyle.) 
• Work on projects: Blog, write, create a business, learn a language, design a 5- or 10-year FIRE plan, etc. We’re working on the editing process of our book and refocusing on Retire By 45. 
• Connect with others: Now is a great time to reach out to family, friends, and others who have slipped off your radar. 
• Take a media break: Try not to get overwhelmed by consuming too much information; take in small bits throughout the day and only from trusted sources.
• Exercise your mind: Reduce stress with meditation, mindfulness, breath work, and physical exercise.
• Distract yourself: Do fun stuff like play with your pets or kids, read a book, work on a hobby, watch a funny movie, or cuddle with your partner.

 

Shore Up Your Finances

Before you start worrying about how this pandemic will affect your plans to FIRE (we’ll go over that in Part II), you need to first get your financial house in order. 

Income & Employment

Let’s start with your employment. Are you still employed?

• No, I got laid off
• Yes, but furloughed or reduced hours 
• Yes, job is still intact
• I own my own business

If No or Furloughed / Reduced Hours: If you lost your job either partially or completely, then your most important task is to find new sources of income. Even if you have a solid emergency stash, you don’t want to burn through it too quickly. Here are some strategies:

• Stimulus: See if you qualify for the CARES Act stimulus check. 
• Unemployment: File for unemployment ASAP with your state unemployment office.
• In-demand Jobs: Some companies and industries are doing mass hiring in the areas of healthcare (CVS), grocery (Albertsons, Kroger), retail (Lowe’s, Target), delivery (Amazon, Instacart), and telecom (Microsoft, Slack).
• Our Resource Page: Check out our Increasing Your Income resource page, which has suggestions for Freelance work, Gig economy jobs, Sharing economy opportunities, and Selling stuff.

If Yes: If you are fortunate to still be employed, your goal should be to keep that income stream alive. Here are some tactics to keep your job secure:

• Be invaluable: Become an expert in your field. Fill in gaps in your expertise with training and courses. Position yourself to be the go-to person in your department.
• Problem solve: Avoid complaining. Be the one who identifies potential solutions. Find ways to make your boss’ job easier.
• Video correctly: Look professional in your online meetings (shower, wear a nice shirt, comb your hair). Be on time, limit distractions, and be prepared.
• Manage your time: If you’re working remotely, create a schedule and stick to it. If possible, try to get your work done early.

If you Own a Business: The CARES Act has allocated almost $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses.

 

Reducing Expenses

As most people know, the three biggest household expenses are housing, transportation, and food. Let’s look at some ways you can reduce those to give yourself some financial breathing room.

Housing: First things first - can you pay your mortgage or your rent? The CARES Act offers options for mortgage and rent relief, including foreclosure protection, mortgage forbearance (pausing or reducing payments for limited time), and eviction protection for renters. 

If you have a mortgage and cannot make your payment (or can only make partial payment), contact your mortgage company as soon as possible to discuss options. 

If you’re a renter, talk to your landlord and see if you can work out a plan during these hard times. Perhaps they would be willing to take partial payment temporarily (e.g. pay for their property tax and insurance) until things stabilize.

The Consumer Financial Protection Bureau’s Guide to coronavirus mortgage relief options explains how to qualify for and request these protections, as well as where to get additional help. 

Transportation: The one bright spot is that if you’re sheltered in place, you should be able to reduce much of your transportation costs. Staying at home means much less spent on gas, tolls, and maintenance. 

You can also contact your insurance company and see if they can reduce your mileage or re-categorize your automobile as a "pleasure" vehicle. Also, remember to start your car up and drive it every so often. Your battery and tires will thank you.

Food: We have always recommended buying in bulk, and that makes sense even more now. Not only is it cheaper, but it’ll allow you to reduce the number of times you have to go outside to shop.

For produce, we shop at our local Oakland Chinatown neighborhood. We’re able to get an enormous amount and variety of fruits and vegetables at minimal cost. If you have local ethnic markets or Farmers’ markets that are open right now, give them a try. They may even have the toilet paper that is so scarce these days!

(Note: Of course make sure to wash your produce and your hands, and practice proper physical distancing when shopping. We also wear a mask when we shop now.)  

Frugality: If you haven’t been practicing frugality yet, this is a great time to start. It’s one of the main reasons we were able to FIRE in our early 40s. For more tips on reducing your expenses and practicing frugality, here are two of our more popular posts:

4 Money Lessons I Learned from My Super Frugal Wife: These seemingly simple money lessons were extremely profound for me. I used to be someone who spent willy nilly and wasn’t very thoughtful about finances. Allison instilled these habits in our household that have been invaluable.

How We Live Comfortably for Under $3K Per Month in the Bay Area: Even living in the most expensive region of the country, we’ve been able to whittle down our household expenses to a fraction of what most people spend. This post goes into some of those strategies.

  

What Else You Can Do

Once you have your essential needs met (your health and safety, your mental state, and your basic finances), you may be wondering what else you can do right now. 

Check In: Reach out to friends, family, and loved ones to make sure they’re OK, especially those in vulnerable groups (e.g., seniors, those with health problems). See if they need anything or if they just want to talk. Make sure they know what’s going and are prepared for worst case scenarios. (Pro tip: tell them you’re thinking about them and you love them) We check in with our parents every few days. 

Help Others: Even if you can’t donate money, perhaps there are other things that you can offer. Local blood banks are in dire need of donors right now, so check their website for donation procedures. You can also donate your time and expertise. Perhaps you can offer advice to people who need it, or you can just be available for people who need someone to talk to.

We’ve been doing regular shopping runs for many of the seniors in our building. We figure we’re going shopping anyway, so we may as well get stuff for those who are more vulnerable while we’re out.

Work on Yourself: Now may be the best time to learn something new (e.g., an instrument or language), develop a new skill set (e.g., programming or editing), or start a project (e.g., book or website). 

Isaac Newton did some of his best work while quarantined during the Great Plague.

Develop your FIRE Plan: It may seem counterintuitive, but a financial crisis may be the best time to focus on your future financial plans. 

The lessons we learned from the dot-com bust of 2001 and the Great Recession of 2008 helped us to not only survive those disasters but to thrive afterwards.

Slow down: Take this opportunity to enjoy a little downtime. Take some deep breaths. Feel the sunshine on your face. Embrace the fact that you don’t have to rush into work everyday. Think of this time as a “dry run” for the FIRE lifestyle, when you’ll have more freedom to do what you want throughout the day.

Also, try to put things into perspective. You’re probably lucky to have most of your immediate needs met. Remember some things are more important than money.

 

What’s Next?

Hopefully, this post will help you get through this initial storm. In Part II, we’ll dive into a deeper analysis of the financial impacts of this crisis. We’ll look at how you can learn from it and improve your situation for long-term financial security.

And we’ll discuss what this all means for the FIRE movement going forward. Is it over? We certainly don’t believe so, but it may change (for the better). We’ll provide our suggestions on that and more, so be on the lookout for our next blog.

In the meantime, stay home, stay safe, and stay healthy!