CORONAVIRUS IS WHY I STOPPED BORROWING MONEY!
It’s playing out right now. I’ve been saying the same thing for years. I don’t want to have the burden of debt when things go bad. I want to be debt free and cash flush so the next panic is just an inconvenience.
In 2008 the economy collapsed, the stocks tanked, and real estate dropped like crazy. Lots of people lost their jobs, businesses were disappearing, and gas was four dollars per gallon. No one could get loans and cash became king. A lot of good and smart people got in big trouble because they were leveraged, and “leverage” is the highly intelligent way of saying “in debt”. Debt is great when you need cash to grow and the economy is booming. It sucks when things go wrong… and lots of times it’s not the borrower’s fault when things go wrong. Often it’s outside influences and just plain bad timing.
We get a bit of amnesia on these things, but if you really think about it or watch the news, we are mere moments from the apocalypse every single year. Really go back and think about it. The news and politicians are always feeding us fear because that’s what masses pay attention to. Fear manipulates the economy. Watch the stock market. Those guys are the biggest scaredy cats in the world. If a politician hiccups during a speech they all sell and the market drops, but if that politician sounds confident they all buy and the market goes up.
With an economy so volatile with things we can’t control why risk having the burden of debts?
This year it was the coronavirus. Regardless of your opinion on the virus and the response around the world, it is crushing the economy and really hurting a lot of businesses and people financially. The tide is going out and bills still have to be paid. This is what I have been preparing for. (Side Note: While I think this gets bad, I also think it recovers quickly simply because the only driving factor is the virus. I think the government will inject cash, provide loans to businesses, and we will get back on course pretty quick. I don’t see a years-long collapse like in ‘08.)
My house has been paid off for almost three years now. Zero debts. Everything is owned. Plenty of cash. Now this economic catastrophe is simply irritating, but not crushing us in our home. So to everyone who said it was not possible and even the few who said it was irresponsible this is what I was trying to prevent. I have zero fear and anxiety. I’m not concerned. I feel great considering the alternatives!
This is why I tell dads to get debt free. This is why I tell dads to pay cash for their trucks. This is why I tell dads to have a nice, fat emergency fund of cash and to never use it (because buying concert tickets is not an emergency, the coronavirus shutting down the country is). The feeling of having your income halted while still having to pay bills does not feel good. Again, it’s not your fault. But it almost never is. These are outside forces affecting our lives for which we have no control. This is why guys, this is why! Next time it won’t be a virus, it will be something else, but this always happens.
Life is simply more enjoyable living this way. The lack of pressure and worry is really nice. The lack of anxiety about your future is great. Knowing nothing is going to be taken away from you is just peaceful.
However, there are downsides to living this way.
1.) It takes time depending on your income level. It took me almost 10 years to get to a point where I had no debts, no mortgage, and a nice, fat emergency fund.
2.) If you’re a business owner it sucks. You have to intentionally keep yourself from growing too fast and as a driven, motivated person it was my biggest struggle.
3.) People are always telling you you’re wrong. They tell you that you can afford the payments. They are always telling you how much you are missing out on. Leverage is how you build wealth. Those people are loud when things are good. Now that things are scary—they wouldn’t dare say a word. They’re scared about losing everything. Also, they are calling me asking for loans.
4.) It requires sacrifice. Especially for the smaller income dads. You don’t get to do certain things. You sacrifice eating out and drinking. You don’t get to buy the things you want. Because your long-term future is more important than those things you want now, but don’t need.
Let this coronavirus be for you what 2008 was for me: an eye opener. It doesn’t matter if you’re smart, talented, and/or lucky. Debt lets you buy stuff before you can afford it. Debt seems fine until it’s not. Smart, talented, good people go broke in times like this because of their debts. Debt will crush you when things go south. Don’t carry that weight above your head. Get out! Make the sacrifices now to give yourself security in the future.
If you’re reading this in debt today with all of this hanging over you, then this is my recommendation. If you are not working right now because of coronavirus, find work. Do yard work for neighbors, work as a handyman, or go find some temp work. If you’re near an Amazon warehouse I hear they are in desperate need of workers. It’s temp and manual work, it’s possibly even degrading to you, but it’s cash. You need cash. Stay legal, stay within your morals, but find any work that pays. It’s temporary. Delivery services are booming. Online services are booming. There are options out there.
Aside from finding a way to make some cash. Prioritize what you spend on. You need food and necessities, a roof over your head, and utilities. That keeps you alive and able to fight another day. There is probably some relief coming. A lot of companies are allowing you to delay payments on things. So work with that the best that you can, but make sure you are providing the necessities. I would rather you get a few harassing calls and a lower credit score than see your family go hungry or homeless.
If you’re a dad that’s debt free and has cash, we are in a fantastic buying opportunity. A lot of deals are to be had. Stock market is on clearance. People are going to be selling nice things very cheap because they need cash fast. Businesses are going to have great deals because they just need any cash coming in their doors. Businesses may go up for sale because this was a scary wakeup call. They might get liquidated because they were over indebted. There will be opportunity in any downturn. This could be a great time to make some moves.
I hope this is a wakeup call for a lot of families. Debt free is nice and comforting. If you really think about what you have bought on payments, did you really end up NEEDING it?
When this is all over, work hard, pay off those debts, build an emergency fund, and don’t borrow anymore money!