OK OK I know... Yesterdays post PART ONE was quite the departure from my more recognizable, optimistic, glass is half-full, blue sky way of thinking.
But we all realize, I'm sure, that acknowledging anything other than what is reality would be foolish and ostrich-like and I do not want to get sand in my hair!!!
You may by now be aware that the aforementioned post dwarfed any post I have ever written in terms of rewards by quite some distance... Clearly a dose of truth struck a chord with many people.
That's not surprising in the current climate right?
This has caused the unintended effect of stirring within me... The pressure of the sequel, anybody who watched Ghost-busters 2 or Indiana Jones and the Temple Of Doom will be all too familiar with this phenomenon.
My great hope is that I can stop this post from running on way too long, but there's a lot to cover. The other great pressure I feel is that I do not, after painting such a bleak, dystopian vision in PART ONE, go on to over simplify what I believe we can do to counteract at least some of the the effects on our financial life from the current crisis.
Feel free to skip section headers that are not relevant to you as this post will still be a biggie, I am certain lol.
Firstly. Now this DOES sound overly simplistic but is where I MUST start.
- Your personal financial situation and net worth (or lack thereof).
If you do not know this in numerical form, you do not stand a chance. Large purchases, extra debt and also extra income or earnings have a net effect on this number (obviously). It is essential to know at a glance if a net cost or unexpected expense will tip the scale to a degree that causes you to spiral completely out of control.
Conversely it is important from a psychological standpoint to know how much a potential windfall or liquidation of assets will ease your burden to assess if it worth doing. So a quick example would be you are 20K in debt and a 2K debt will have a 10% negative effect on your situation or vice versa for many, this will be the straw that broke the camels back.
If this is the situation you are in (I have been there) act now, do not wait for the inevitable expense to come along and create the economic carnage that you already know it will. This sounds so obvious it is almost patronizing, but I did not think of it in terms of that simple sentence when I was there and the cold hard reality may well be a wake-up call for somebody reading this.
Many people dragged in to the vacuum of the current/upcoming crisis will have never encountered this before.
What can you do?
A - Stick your head in the sand and hope the storm passes... I do NOT recommend this!
B - Take steps NOW to create a little breathing space in the short term while you make a plan for the long-term.
First up. If you can not explain your financial situation by rote, become familiar with it... NOW! If you have a collection of unopened bills and invoices, go get them after reading this, or at latest tomorrow morning, if you don't, they may begin to loom larger and larger in your mind and you may not do this. I know many people in exactly this situation and this is always the first step I suggest. It worked for me!
Choose a time in the next 24/48 hours when you will arrange all these bills in to some kind of order. If this causes you huge stress, (I know this to be true for many, it's not something to be ashamed of) then only be around this bill/debt pile for 2 minutes the first time. I promise you moving them to a prominent position or arranged letters from even one creditor WILL have a psychological impact, you will feel you have taken the first step.
When you are ready, separate correspondence from each creditor in to individual piles, circle the most recent balance on the letter and the account number for ease of reference later. Take a notebook and list each creditor, account number, contact details, balance, due date.
Next step - Contact them. This is the one where people stumble but hear me out on this. Never pre-judge which lender/ creditor will help or not help. I was utterly amazed at some of those that helped me reduce my outgoings when I had to do this.
- Explain that your debts are placing you in financial hardship.
- Ask what they can do to help. Do NOT ask IF they can help, only ask WHAT the CAN do to help. 'Important.'
- Call each one in turn. Do not be put off if some say they cannot help, this is irrelevant for now and may not be the case.
- Some will offer to freeze interest, some may offer a free payment break, some may ask for an income and expenditure sheet, essentially what comes in to he house and what goes out. This is a good sign. There are many forums online that can help you fill out one of these, many of them have inside info on what is acceptable expenditure and what is not.
- In the UK we have an organisation known as citizens advice who offer, free, impartial advice and template letters and an adviser to help you fill out all the relevant paperwork if you simply cannot face the phone calls. In the U.S I believe these are known as legal clinics or legal aid clinics, I'm sure most countries have their own version of this.
- In recent years a huge number of debt counselling services have sprung up to help in such situations too.
Once these short term measures are in place, sit down and assess your fiscal picture. How and where can you cutback and make savings, what expenses can go? Cable TV ? Cigarettes? Expensive lunches at work? Pre-made pasta sauces or dishes that can be recreated at a fraction of the price?
Could you ditch the cakes from the local bakery and make your own? Doing things like this can actually be empowering and fun. When M'lady and I were in a bind, we had a game of hunt the yellow sticker... In the stores we use, yellow stickers denote an item close to it's sell-by date, or no longer being stocked by the store. We bought loaves of bread for a few pennies, dented cans and 12 packs of items that were actually 9 packs or 11 packs.
Nope! It's not glamorous but we actually ended up finding it a fun way to take charge of our situation and save money which could be diverted elsewhere.
Right now, you may not see the fun in this, but I assure you when you see the effect this has on the bigger picture there is a satisfaction that you cannot put a price on, except of course, you can!
If you search this kind of penny-pinching method of getting back in to control online, you will likely encounter the response that it is no way to live, it comes from a mindset of scarcity... Then you will likely be pitched a course or training program for 99.99 in whatever currency is relevant to you, that claims to send torrents of money flowing in to your life.
I often wonder if these 'so-called' gurus have ever known real difficulty and adversity.
All I can tell you is this strategy has proven results but requires patience and discipline to make a large dent in your financial deficit.
I don't need to tell you to stop using your credit card or avoid borrowing your way out of debt do I? No I didn't think so, you're smarter than that, I knew it the first time I looked at you Dear Reader. :D
Put your cards on ice...Literally. Drop them in ice and place them in your freezer/icebox, this will make you question whether it is worth the effort and second guess yourself before making a credit purchase.
If you go via the legal route of reducing your debts, you will likely have a pro-rata amount you pay to all creditors, 1% of outstanding debt for instance. You must not pay more to one of them to clear the balance quicker as you will have shown prejudice, this if found out by other creditors can cause them to terminate any arrangement you have in place.
If you have created a DIY repayment method however, you have one of two routes you can take.
Pay as much as you can to the smallest balance debt, thus having the motivational benefit of having them disappear from the list forever, re allocating the saving to your next smallest debt OR the more sensible fiscal route of paying more to high interest debts as the saving will be greater in the long run, freeing you from debt sooner.
Calculate your net worth.
This is incredibly simple. It is also the clearest way I know of gaining a true reflection of your fiscal picture. Calculate the value of everything of value that you own, allow for depreciation of course if you do this periodically. Jot down the total figure.
Calculate the amount of everything that you owe, allow for interest of course if you do this periodically. Jot down the total figure.
This will look something like...
Debts totaling $20,000
Assets totaling $2000
$20,000 minus $2000
Giving you a net worth of -$18,000
This may not look great when you see it in black and white BUT now you can start to work on it, right?
Could you sell some of those assets to instantly reduce that debt side of the equation?
Pick an increment, a dollar, ten dollars, one hundred dollars but no bigger than that and chip away as hard as you can to make that net-worth increase. $17,675 is better than $18,000 right?
This bit if done right and celebrated every time you increase by your chosen increment gives you a sense of achievement. You've taken action and moved forward, the size of the step matters not!
Try and make enough savings so that you can divert a little money to takeout, cinema tickets, crazy golf, a meal at a reasonable restaurant or whatever will feel like a mini-celebration after sticking to your plan for a couple of weeks.
Do you enjoy walks in the forest, making a picnic may be less expensive and just as much fun. Start thinking this way. Economic turmoil can be handled creatively, I promise you!
If when you see the true picture in all it's ugly glory laid bare and realize there is absolutely no way out or the figure is simply too high to ever manage, consult free legal advice ASAP, your only option may be bankruptcy or one of a number of alternatives that are available and less restrictive than they used to be.
If it comes to this, then likely you have been having sleepless nights anyway, this way you will likely begin to rest easy again.
There is so much more to say but right now, I dare say you would not thank me for sharing anymore in this post.
More on building your net worth.
We all know that owning assets or bringing in income is almost the only way to increase your net worth without inheritance or luck. What if you have very little disposable income, how can you possibly increase your economic prospects...
Let's assume you have cut your debt to the bone, have your position under control but simply could not handle a financial setback. You have basically enough to get through the month, or that old chestnut...
"too much month at the end of the money."
You somehow struggle through but only just. This pretty much sums up my position so I have a little experience of this. Let me share my experiences to increase my net worth without any savings to speak of.
I decided to become an investor!
Whoa whoa whoa Steven, you said without any real monetary reserves, what gives???
Bear with me. I hope you've found me sincere so far and I promise I have no intention of steering you wrong now. I assume you have a job? If so, first port of call is your employer, Is there overtime to be had? What is your chance of a pay increase? Does the boss need the office painting? Could you do the job instead of a highly paid corporate decorator?
You will never know if you don't ask, what have you got to lose? The worst you are gonna get is a no!
Incidentally, I have painted for 2 previous employers after work, other random jobs too. I know you may not want to work extra hours, but remember this is not to raise money to fix up your car or buy a new boiler. This is to strengthen your economic future, who knows it could help you retire earlier.
If this fails or you don't actually have a job, oh well, nothing ventured nothing gained, right? Make it clear that if any opportunity comes up for odd jobs or advancement, you would like to be consulted first. This doesn't only have to be to your boss by the way. Your local store, friends, neighbors, church whatever, wherever, open those doors and see if anything comes along.
Plan B. Everybody, I mean everybody can make a tiny saving of a dollar here or a dollar there. OR they can make a dollar here or a dollar there. Think about bulk buys of products you use at a discount rate, coupons and special offers. Like I said earlier, gamify the experience, if it is a game, you will start to become addicted to making savings.
OK so how is a few dollars going to make me in to an investor? I'm hardly going to become the next Warren Buffet at that right. That may well be true BUT when people talk about being an investor, they think of Wall Street, megabucks and big deals , purchases, mergers and acquisitions.
Not me!
I value the value of a pound, euro or dollar even though I am fiercely anti fiat lol. I realise that as each one you put to work for you increases so do your chances, MASSIVELY!
I registered with an app for trading stocks and shares when I learned it was fee free and you could invest very small amounts of money. Each month I squirreled away a little more, I am talking the equivalent in pounds of 10 to 15 dollars. Some of them were winners and I cashed out and rolled my gains into more of another stock OR waited for the original stock to drop and buy it again.
I buy almost exclusively units that pay a dividend whether the stock/share goes up or down, I'm not a financial whiz or a secret stockbroker but I went to YouTube and learned how to choose which ones to invest in and went on my merry way.
Imagine the feeling of going from having nothing to being an investor. I now have a portfolio worth around £500 UK from investing a little over £200 last Christmas time. This is not really impressive BUT it's impressive to me, knowing where I started. Something bizarrely synchronicitous happened when I was a little way in to this post ((about 2 months ago haha)) I got a ping on my phone. A Vodafone dividend came through ((I don't get dividends often so smiled at the timing.)) it was worth £4.68. I bought the stock when it was super low, that's why I bought it, I knew a company that well known would likely rise and even if it didn't I would get dividends and still hold the stock.
If you are unfamiliar with the concept of dividends. A 'divi' is a share of the profit made by the company that is paid to share/stockholders in relation to how many units they hold. You still get to hold the original stock/share , it's like having a bankable mini passive income.
Obviously in light of the current crisis, there will be less dividends paid due to losses made by companies during and up to lock-down. That won't stop me putting regular small amounts in to the market for the long term in to companies I believe will survive the next huge recession. There is also a huge amount of volatility right now that creates opportunities, anybody in crypto is familiar with buy the dip sell the rip or top, it's not that much different tbh.
Speaking of which, you are in crypto!!!
Being in the cryptosphere exposes us to free learning and analysis we can not get for free elsewhere unless we are willing to search for the resources, make the most of this info after you assess the most credible sources. Let me assure you of one more thing...
Anybody here can hustle and work their way to becoming a big account by deliberately aiming at improving their writing, formatting and graphics, as I call it, leveling up your blogging. When this is coupled with being an awesomely engaged and creating content often and commenting plenty, your success is locked in at the moment of decision.
Perhaps this could enable you to be a freelance writer on many of the paid gig sites, stock photography sites, designing sites. Maybe you could design graphics here for others? I can think of many ways to create value to other users here who may require the skills you have.
I don't think blogging here to make your rent payment is a great plan, remember if you do, you will never achieve the stake that will set you up for the future and will likely look back in time and think "why did I sell my stake". I realize some people from certain countries do not have that option and we must all handle our own rewards however we see fit, right?
Once you open up your mind to possibility and opportunity you will begin to think up ways to make a little money (or a lot) more often than you maybe do currently.
When m'lady and I were in a dire situation and Christmas would be approaching fast I used to take to eBay to help with gifts for my Daughters. It is not what I wanted to do after a long day/night at work, but needs must, right? I have lost count of the number of Christmas's that were saved due to that auction site and one or two others I used through the years.
Facebook, although I don't use it, m'lady does and the number of lamps, furniture, games, old toys and collectibles that we have sold through local buy/sell groups have brought in funds that were very useful indeed. Reselling can be very effective too, especially around Christmas time and especially when selling overseas to markets to whom the product may be available. Believe it or not, the last things I sold on eBay were old 80's/90's VHS video cassettes of movies that I knew would be niche/cult/desirable. If you are unsure, do a quick search when de-cluttering your home, there may be hidden loot in your old items that are bin bound...
I could go on with lots and lots of side hustle ideas but I won't. You get the picture and I will likely cover each one in more detail in upcoming posts.
Remember if the money is not chipping away at your debt or adding to your assets, it is not doing what it is supposed to, building your net worth!
For some of you the biggest goal right now is getting that net worth down to a neutral zero! If you can achieve that, wealth creation is the next step, that is a very satisfying place to be.
These steps can be large personal steps BUT let's get to the really BIG stuff.
Time for change.
If you read my previous post, PART ONE You will have heard my theory on the wholesale redistribution of wealth...
Essentially we were heading to the largest redistribution of wealth seen to date. This has happened on a cyclical treadmill since markets were established.
The picture goes like this. After a recession, the average citizen is a little cagey about big purchases, home buying and taking on credit, HP and loans. The greedy, grasping overbloated financial institutions need and want your money so they start offering great interest on credit, savings and loans. Remember subprime mortgages? More and more people enter in to such deals as the rates are so good right and become fooled that the good times will run and run and run.
Essentially, the working class start to acquire wealth, property and investments and begin to move toward or in to the middle class due to their new net worth. There has long been a belief that this is allowed to happen by those who control the financial system and through their lobbyists who also effectively control governments.
Then comes the redistribution of wealth opportunity for the mega-wealthy. Homes, vehicles and large purchases are repossessed/foreclosed auctioned off and bought by those with huge reserves for pennies on the pound. Financial markets tank and those uninitiated in viewing market cycles panic sell at a loss and those same people who bought the homes, but top quality stocks, shares and bonds at knockdown prices knowing that all they have to do is wait out the recession and cash in when optimism begins rife as the whole sorry cycle repeats itself...
Obviously, I'm sure you can tell, I have some sensitivity toward those who hold the view that this is a somewhat deliberate and manipulated event. IF this is true, what can we do to negate some of these effects?
- Buy local and buy independent.
By supporting the mom and pop stores and independent retailers in your locality you can choose where you money goes and mitigate the effects of multi-national mega-corps deliberately affecting markets, supply chains and economies. Nowhere is this more effective than using farm shops. I buy much of my fruit and veg from a local farm that have an ethical farming ethos.
There is much less waste as the wonky produce is not discarded in the way it is when it is chosen to supermarket reps who tend to screw independent farmers in to the ground on price, size and shape produce. Many of these reps also oversee the destruction of the discarded produce so it cannot be sold by the farmer, thus protecting his supply route to market.
Money earned in your community is likely to be spent in your community, making for a healthy local economy. This is also obviously reflected at a regional, and national level with other kinds of goods and services. This would make expensive import/export supply chains obsolete for products that could be created locally/nationally if everyone did it.
- Make your demands and expectations known.
Local politicians are elected for a reason, to be servants of the people. Most or at least many have forgotten this. LOBBY THEM! Make them aware in the local press, via letters, calls and e-mails that things must change. I can hear some people already muttering that it wont, work, they won't listen. It is our job to make them listen and bring them back to account for their actions and decisions.
National elections - I see the action by we the people as almost exactly the same as at local level, BUT 100 times more vocal. If we all attended local meetings when politicians toured each area on the campaign trail and handed them a huge list of names and stated aims and this happened in town after town after city after city... Can you imagine? Social media gives us the connections to arrange such initiatives, make the media aware...
"Well that seems a lot of work Steven..."
I cannot disagree with you BUT it all comes down to personal responsibility and what kind of world we want to live in, right?
Become accustomed to growing a little food of your own. Even if you only have a window box and no garden, grow some herbs, spices, cress and carrots... This is to remind yourself of the ability that is innate in us all to take care of ourselves, even if it feels like we have forgotten. In the event of a global crisis or food supply chain this is a skill we may have to rely on more and more.
If you do have a garden, grow extra. Arrange to sell them to your neighbours, or help out your family and friends. Who wouldn't want to live in a world where we all share a little more, right? Or we sell for a pittance, explaining to those who trade with us, you are literally covering the cost of next season's seeds.
Does your town or city have a lot of unmet charity needs? Homeless problem? Poverty problem? Donate one measly hour of your month to help out. If you can do more, awesome, do so and become a part of the problem not the solution.
This has so many benefits to you and your community, your nation, they are almost too immeasurable to mention.
- Learn a 'useful' new skill.
Develop yourself in a new way. Find something that appeals to you, be it a foreign language an IT skill, accounting, learn to play the piano. This also makes you far more resilient if it something you can use in another arena you give yourself more options for life and perhaps financial benefit.
If this is a skill that you can teach others, this s a massive benefit to you and others too. Imagine the talent pool available to us all in our circle of influence if we all did this? If you knew a mechanic a builder, a decorator, a designer, a hairdresser, a chef, a florist, get the picture. You could have an old style value trading system available to you all.
- Understand that the industrial age has gone!
The industrial revolution was indeed, revolutionary to the world and hearkened a change from cottage industries, to a bigger, more efficient way of doing things albeit less personalized and bespoke. We are now in a similarly revolutionary age. A digital age, an age of information an age of upcoming AI everywhere. Jobs will be taken by machines in a way we can barely comprehend, right now. Industry will disappear at an alarming rate.
How will these lost positions in the labour market be filled?
On the whole, they won't!
I believe we will see a universal basic income, that will be touted as an altruistic move on behalf of our global governments, or perhaps government (singular), not in name of course, but to all intents and purposes. We have all seen encroaching globalization happening before our eyes in many ways and for many years.
I believe this UBI will be a pittance designed to keep us just above the breadline, driving down wages, imagine a world where if you don't work efficiently enough, there really is 100 people waiting to jump in to your position?
We all need to become proficient in self proficiency and taking care of ourselves, earning money from home based enterprises which are actually plentiful, right now in so many varying fields. I have done a lot of research in to this and have some amazing things to share with you going forward.
Try and consider extremely carefully if you are looking to take on any credit debt in the near future as we head in to times that will see reactionary, punitive and irrational periods of interest, that make little sense in relation to the market conditions as the 'banksters' try and capitalize on our suffering. Even if you doubt this I strongly urge you to act as though it is true. I will be sharing some opinions from names you may well know that suggest exactly this disconcerting scenario!
As ever I have so much more to say and so many thoughts and ideas to share but alas they must wait to be included in another post as it seems I have wrote a novel again... Sorry!
There is much we must learn and work out id we are ever to get ourselves accustomed to living under the conditions of...
The new abnormal normal.
Thank YOU for taking the time to read my post and if you're one of those amazing people who like to hit the comments section... Then I doubly thank YOU!
Either way I want you to know that you are appreciated!
Keep taking the time to connect with each-other both here and in the so-called real world and try and look after each-other, because as you already know...
