How To Talk About Money With Your Partner In A Volatile Market

With so much craziness going on in today’s world, I wanted to take the opportunity this week to talk about how me and my husband prepare financially for storms like this. We have a very volatile financial market, and with the Coronavirus spreading across the globe, those markets are likely to stay volatile for a time to come. 

 

Plans for zombie apocalypse!

Kidding, I’m kidding. Seriously, do not panic. There are fluctuations in our market all the time. We’ve been in recessions before, and we’ve thrived before. And both will happen again because that’s just life. And through all of that, the ONE thing that is a safe bet is remaining consistent with your investment strategy. 

So now, as we’re facing what will inevitably be a serious economic impact from this pandemic, it’s important to not only hunker down for your health and well being, but it’s important to remain focused and keep your long term financial goals in mind.

What’s the best way to do that? Dollar Cost Averaging is something that very smart people have been preaching all along (thank you, Warren Buffet), and is a way to mitigate risk through rising and falling financial markets. I explain this, along with a few other strategies in this video

“Dollar Cost Averaging” means that you divide up whatever the total cost of the investment would be today over a period time, and then always put that divided amount towards the investment. Doing this means that no matter what fluxuations happen in the market, your cost is averaged out over time. 

What does this look like if you’re simply saving, and not investing? Exactly the same- it means that you always set aside a certain amount of money for your savings, regardless of what is happening (good or bad) in the market.

So bottom line- consistent investing/saving over long periods of time is the safest bet for your money!! 

 

Real estate is a LONG TERM investment

I learned this lesson the hard way. Back in 2006 I bought a condo near the height of the market… the value inevitably dropped with the crash in 2008, and then, the moment I had a valuation on that property that was back in the six figures, I sold it. At a loss. And I sold it due to ear and pressure. 

Big Mistake!!Had I held on to that property (which was cash flowing at the time) it would be worth so much more money today, and close to (if not completely) paid off. 

What I learned here is that buying a property simply for capital gains is not a wise move. If you buy with the intention of either occupancy, and/or cash flow, you won’t lose. 

 

Remember that pesky budget…

Are you tired of hearing me preach about this yet? Too bad, cause I’m going to talk about it forever and ever because I TRULY believe that this helps people. I’m living proof of it! People like to get up in arms, and say things like “easy for you to say” when they hear me talk about budgeting. I get it, I’m a successful business person who has reached a level of financial security that a lot of people strive for. 

But I GOT here because of that budget. Seriously. And I didn’t have any sort of head start- I grew up in a small town with zero opportunity, a mother who worked two jobs to keep food on the table, and I started finding ways to make my own money as a small child. So what you see now is a result of me sticking to these saving and investing principles. Of course there’s been hiccups along the way- we’re all human. But the best thing I have done in my adult life is learn how to live on a budget. 

You can do this too- I know it because I’ve lived it. It takes sacrifice and effort, and the payoff is literally worth it. My rule of thumb is to learn to live off 70% of your income, and use the remaining 30% for debt reduction and savings. You can download my free budget guide for help in seeing how the numbers work for you. 

 

Does it make sense to buy now?

This question is coming up a LOT right now, and my answer is the same as it was before we were staring down a pandemic: if it’s in your budget to buy and you can afford the monthly payments, yes. Absolutely. ESPECIALLY right now as interest rates are so low. 

Interesting note is that rates are SO low right now, that they are almost at the same percentage as inflation. So if money depreciates by 2-3% every year, and you are borrowing somewhere in 3%, you’re borrowing slightly above inflation. What that means for anyone getting a mortgage right now is that your loan will consistently be depreciating, but you’re only paying about a half a percent in interest because of the difference. 

It truly is a crazy time in history, and I’m not just saying this because I work in the world of finance. I personally refinanced my own home in these past couple of weeks, and depending on your circumstances and long term goals, it might be a great time for you to either purchase or refinance. (If you’re curious to find out what you qualify for, you can always check out our mortgage calculator)

So what’s the bottom line here? If you live a lifestyle that is centered around budgeting and investing, you can weather any market. So stay safe out there, don’t panic, and when it comes to saving and investing, keep your eye on the ball. This too shall pass 🙂