Stay Calm and Prepare for Another Wave of Pandemic Panic
| Paul Fain
Election Day is over. The sun rose the following morning. The stock market did not crash.
So our attention has turned back to the pandemic. A second wave of the virus is surging across the nation. To wit, I was hospitalized (non-COVID) in June at the University of Tennessee Medical Center. At that time there was one COVID case in the hospital. On the November day I’m writing this, UTMC has 60 COVID in-patients. Once again, from the White House to the local courthouse, there is a rising potential for a repeat of widespread lockdowns. And again, there is much hand-wringing and gnashing of teeth over restrictions.
While that plays out, what do we need to do at the household level? For one thing, it is important to consider what you learned about your finances during the initial COVID wave. Go back and review the past six months in your checkbook to examine your spending. Many households struggled with unpredictable income and expenses. Can you reprioritize your spending for the next three to six months? What is your bare bones spending budget? Did you miss the last opportunity to refinance your mortgage? With rates near Great Recessions lows again, now is a good time to examine your options to possibly lower your mortgage payment.
Remember that holiday spending is a common budget buster. Reign in the family’s gift expectations this year. Keep it simple. Draw names for a Secret Santa gift exchange. Since my immediate family is spread among four cities, my son set up a group account on www.drawnames.com.
Ordinarily it would sound ridiculous, but also think about your spending needs for household supplies. No one has forgotten the crazy run on toilet paper and disinfectant products. Keep your pantry stocked with enough to get you through at least a few weeks of crazy part two. (“Supply chain disruption” is a new household phrase).
On the income side of the household ledger, there are still a lot of people who are unemployed or under-employed. As a last resort, review your access to retirement accounts. Penalty taxes for “early” withdrawals can be avoided under certain circumstances, such as qualifying age or health-related factors. If 2020 was your target retirement year, consider postponing the brass ring for a few more quarters.
Not only did the stock market not crash after the presidential election, it actually hit a new high. The rise is probably a combination of relief from uncertainty and the introduction of a COVID vaccine in the near future. If you need to raise cash from your portfolio, for spending needs or to seed an emergency reserve account, take some market profits off the table now. Market downturns are often swift and unpredictable.
“Currently during the pandemic, 84 percent of Americans say that they are facing financial struggles and hardships,” said Nancy Brooks, executive director of Louisville’s National Alliance on Mental Illness. With depression and anxiety rising across the country, know your health insurance plan’s benefits for mental health – use them.
Even in the midst of uncertainty and struggle, we still have much to be thankful for. Take a moment this week to take a deep breath and give thanks.
This article was originally published in the Knoxville News Sentinel on November 19, 2020
Do you have questions about financial planning, investing, or retirement planning? Send your questions to our Knoxville certified financial planners or directly to Paul@assetplanningcorp.com!