What to Prioritize During a Crisis - Expert Edition Episode 26 (Classic Episode)

In this episode, our CFP Leisa Peterson and I discuss practical strategies to navigate financial uncertainties during the COVID pandemic, which can be relatable considering the potential financial turmoil in the coming months or years. We discuss the importance of tracking expenses, reducing unnecessary costs, setting financial goals, and adopting value-based budgeting. Invest in yourself and take advantage of free educational resources available online. With a positive mindset and proactive approach, it is possible to stabilize finances and make the most out of this situation, while highlighting opportunities such as investing in stocks and reaching out to companies for financial assistance. We hope we provide valuable insights and actionable steps to help individuals regain control over their financial situation amid uncertainty.

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TRANSCRIPT:

[00:00:00] Naseema: All right, so welcome to our new series of our conversations with the C F P. I'm super honored to have Lisa Peterson joining us. So where we talk about money issues that are important to you, but not just from my perspective, but. From the perspective of a fabulous certified financial planner. So welcome,

[00:00:22] Leisa: Lisa.

Thank you. I'm so happy to be here

[00:00:25] Naseema: again. Yes, yes, yes. So Lisa has been on the podcast as a guest and our connection was just so great. I just, couldn't stop. I just wanted to have more of her. So yeah, so now we get to have her as our in-house C F P, so that's awesome. All right, Lisa, so let's get into the topic of today.

So as we're sitting here recording, we're heavy into this Covid panic. Most people are sheltered in place right now and a lot of people are worried about their income. A lot of people have experienced job losses and if they haven't yet experienced job losses, they're kind of panicking in that direction because most people, as we all know, are check to check.

They don't have, adequate savings to even cover a $400 emergency. And People have a lot of debt, as is the norm in America. So I wanted to address the the people that are living check to check right now. What should they prioritize as far as saving debt repayment? What are some things that they can do to kind of stabilize themselves in this unstable situation that we're experiencing right now?

[00:01:41] Leisa: Yeah, it's a great question and what I'd love to do is go through just a few checks. With everybody, then we can kinda talk about what else comes, is that okay? That's perfect. Like just what are the things, like the top priorities that you wanna be thinking about? Because yes, even when I, even when you asked this question, I sort of regrouped and I was like, oh my gosh, this is really important information that we don't always think about.

And so before we kind of dive into specifics, I think if we could all just take a moment to make sure. That we are taking time to realize things could be changing out there. We wanna be more cognizant of what's going on. We don't wanna run a negative. So the best way to do that is, number one, to spend some time tracking expenses and income.

Like it's so basic, but we don't do it. And all of a sudden we wake up and think, okay, where's all the money going? But number one, Figuring out and, and once we figure out like what are the, we know how much money we've got coming in on a monthly basis, we are able to see what our expenses are. We're looking at our fixed expenses.

Those are like rent and utilities and car payments. The things that we know are gonna be exactly a certain amount every month. Then we have our variable ex. Fences. Those are the things that change, like how much mo money we spend on food if we go out and buy extra toilet paper, like all those things, and in all fairness, right now, we may find, and I know this is happening in my house where we spent more money this month, but we're not gonna spend as much next month, but we're looking at the average, right?

Of what do you spend over a 12 month period on average? And if that's changed recently, then go by the more recent numbers. And be able to also notice if you have any financial goals that you're putting money towards every month. So maybe you're putting some money towards your 401k or things that you don't even touch, right?

Because they go automatically into your savings account once you've figured out your income and expenses. The other thing that I think is really cool is give percentages to them. So 50% of my money goes to fixed expenses, 20% goes to variable expenses. What you could do when you do that is compare it to what I'm about to share, which is how about if you said all of those expenses that take care of the needs are 50% and, and maybe 20% is like fun and enjoyment, for example.

And then, what do you, what do you've got beyond that Give it some assigned values and pay attention to it. First, just see where you're at. The second step is to understand if there are any places that you can reduce. Expenses. So when you do, the reason we look at what we're spending is we often notice that there's some things that we're like, nobody's using it.

We don't need to spend this money. We might find out that we are out of contract on our cell phones and we could actually lower our costs and take our phones and get 'em un unlocked and go to a cheaper provider. These are the times that we look at those sorts of. Things Cuz phones are expensive for most of our families, especially when we have kids and they all have phones.

It's like ridiculous. So number one, track expenses and income. Number two, reduce expenses wherever possible. Number three, set goals. The biggest reason people I think end up living paycheck to paycheck is they haven't a set a financial goal for themselves. So because of that, they don't get anywhere. If you get in your car one day and you just drove around in circles and then came home, you didn't actually get anywhere because you didn't know where you were going.

Like it seems completely silly when you. You think about it in the, but then that's actually how a lot of people live their lives. There aren't any financial goals and then therefore you don't ever achieve the things that you actually could have could have achieved and bring you great comfort and security.

So maybe it's saving a thousand dollars for an emergency account, and maybe after that you get to a thousand, you're like, let's go ahead and go for 3000. Your goals could be just as super simple. The other piece, once you've done. All three of those steps. The next is to focus on what are you going to do going forward as far as budgeting and managing your money?

Keeping it really simple. One way I love is value-based budgeting, right? So value-based budgeting says, okay. I've got that 50% of my money that's going to all the things that I know have to be paid. But if I'm gonna devote any money for fun and enjoyment, I'm gonna run it up against a values check to make sure that I.

That thing that I spend money on is absolutely, positively bringing me joy. And if, if the answer is no, then put it aside and focus on finding the things that do bring you joy. And all of a sudden you may find that there are some things that you've been spending money on that are not bringing you all that much joy.

And this is when I think of like friends, sometimes we spend money to hang out with friends when it's. It's like not bringing us joy and we could just tell them, Hey, I love spending time with you, but I don't need to spend a hundred dollars every time I hang out with you. How about we go for a walk with our, space and all of that good stuff that we've got right now.

Okay, find your joy. And then finally, it's about monitoring and checking and seeing if this is actually helping you. Are you actually able to save some money and not be living paycheck to paycheck because now you've created some space and some way to save and to create an emergency account. What do you think about that and, and what

[00:07:27] Naseema: would you add?

I, I, I love it and I often say that most people just don't know what's coming in and going out, and that's what the huge issue is. I also like where you talked about cutting expenses because, and I think Particularly during these times, it's super important to really be super diligent about cutting out the unnecessary, because anybody can lose their job, right now.

And if you cut down, say your expenses were $5,000 and you are, you cut them down to three, two thou or $2,000, it's a whole heck of a lot easier to Find something, a temporary job that covers $2,000 in expenses versus $5,000 in expenses. So kind of like be thinking like that even though we don't the most important thing you can do during an economic downturn or like a crisis period like we have is kind of like stay in.

But always plan, if you were losing your job. So I really like that. I also like how you talked about having a goal, because if we aim at nothing, we hit it every time. And yes, your analogy was like, so on point because we run our lives our money, our finances We let our money control us, right?

Like it just, we don't tell it what to do and therefore it just does whatever. And then we have anxiety about it when all we have to do is flip the roles. And so I think that's super important. And by flipping those roles, it and by setting goals, you are flipping the role. I love the value-based budgeting.

It reminds me of the Marie Kondos. Spark joy. And that's awesome because I think that's where people fall off in their budgeting cuz budgeting is super important no matter which way you budget. It's super important that everybody has some form of a budget and it's super hard for people to stick to because they look at it as deprivation as opposed to what it really is is an opportunity for you to spend things on the things that are important to you and to acknowledge that and then not waste money on things that really don't bring value, and so I really, really love that. And then lastly, I really like the point that you're talking about and spending money on ways that really aren't serving you and hanging out with friends aren't to impress other people. I like, I look at this time as an opportunity and with this like shelter in place and social distancing, I really hope people.

Really see like the value of like true friendship and understand that during these times it's not about hanging out and spending money. It's really about the true connections that you have as a friend and taking advantage of different ways to connect that don't necessarily cost money. And yeah.

Excellent, excellent points, and I agree with all of them. Yay.

[00:10:12] Leisa: Other thing I just was thinking is if you could save a little bit of money and actually buy some stock while it's on sale, right? Mm-hmm. Go for it because this is the time. Like we just got a 25%, if not more sale dis un uns stocked.

Yes, yes. So go use that money you're saving because if you buy it that way and it goes, back up. Even if it takes a few years, it's like you're gonna be so happy that you bought now or you buy during this time. Create some money that you can invest. I always like to think of spending, the best kind of spending we can ever do is the spending that is on investments.

Yes.

[00:10:55] Naseema: Yes. Change the

[00:10:56] Leisa: way you think about it instead of the purse and the shoes that lose value. Buy things that gain value. Yes.

[00:11:04] Naseema: You'll never regret those decisions. Yes, I love that. And so I'm not an advocate of buying Siegel stocks, but like I was listening to this podcast today and it was like so on point, like if you are a Disney person, You can't go to Disneyland right now, but guess what?

Disney stock is like ethically low and you know it's gonna go back up. Like this is an opportunity so I don't, I'm not advocating any kind of way. I can't give financial advice, but just look at. The things that are coming up right now as different kind of opportunities, and I feel like you'll flourish through these situations.

So yeah, I I love it. I love it. Yeah. Oh yeah. And then the other thing I gonna say, yay. Is that also Yes. The, the best kind of savings you have are investments, but the biggest investment that I think people should make is investing in themselves. And while people have a little bit more idle time, maybe cuz they're not commuting they're homeschooling kids.

Okay, whatever. Maybe that takes up all that time. But I really feel like people should invest, not if it's not even monetary, but time in learning a new skill, learning some new things about self-improvement. I feel like a lot of people are putting really, really good free content out there. For people to learn and grow.

So take advantage of those opportunities cuz you can always look at a situation where others are looking at, oh, this is a hard time as a, as an opportunity for growth. And so I, I see a lot of it. And so just to kind of shift your people's perspective out there, these are things that we could be doing.

[00:12:31] Leisa: Yeah. Yeah. And they're free in many cases. Right now. I think I saw Yale. Yale was offering like their favorite class for free.

[00:12:40] Naseema: Yes. Go

[00:12:42] Leisa: find those opportunities.

[00:12:45] Naseema: Yes, yes, yes. So much opportunity. And so just to summarize, I think we covered so much, but instead of looking at this situation as a place of like scarcity and fear, There's a lot of things that we can be doing to prepare ourselves and to kind of shift our focus so that we can get the most out of the situation.

Also another thing that I wanted to mention is if you're worried about bills and debt, Every company, any company that I owe money or have any kind of money monetary relationship with, from utilities to credit cards, have a covid hotline that you can call. And if there's a challenge that you're facing, All you have to do sometimes is just pick up the phone and come up with a solution.

And maybe it's just pausing any kind of extra payments until you save some have some liquid savings. But don't, don't be in fear. Look at the things that are available to you. Reach out to people if you need help. Act fast. Don't wait until the last minute until you really, really need, need, need that help.

And I think, I think we'll be fine. Yeah.

[00:13:56] Leisa: Yes, yes, we will totally be fine. Yes. And we could come

[00:14:00] Naseema: out even and this year, a Disney person, please don't go Disneyland. It's.

[00:14:12] Leisa: Ooh. She's like budgeting already. That's awesome.

[00:14:17] Naseema: That's hilarious. Yes. We used to be Disney seeds and pass holders, but now we're not anymore. And her birthday is on Thursday and we were supposed to go to Disneyland. But I, but I refused to pay $400 for one day for the both of us. And That's where it's a lot of dollars, but Naima Disneyland is closed, so we wouldn't be able to go anyway.

Yes. Okay. So yes, we have third person joining us on this podcast.

Today's real life and That's enough. But anyway can you tell people, Lisa, how people can get in contact with you, where you can be reached?

[00:15:00] Leisa: Sure it can be reached@wealthclinic.com. That's my website and you can learn more about things that I'm working on and my upcoming book there.

[00:15:08] Naseema: Awesome. And Lisa will be joining us for conversations with the C F P going forward.

Thanks again, Lisa, and we'll see you guys next time. Thank you. Bye.

Hey there I’m Naseema

My dream is for everyone to know that financial independence is attainable with a little intentionality. Learn how I can help you finally break the cycle of living paycheck to paycheck.

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