How to survive a financial crisis

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It’s 2019 and the disparity gaps between Black and White household income and wealth is even greater than ever. Add to that the effects of the 2008 recession, which most Black households have yet to fully recover from, and the fact that 40 percent of adults are unable to cover a $400 emergency expense, and all those tips about getting our credit together seem moot.

Most of us are either in — or one paycheck away from — a financial crisis. Considering the current government shutdown, it’s now or never when it comes to taking control of our financial future.

Here, we chat with financial coach Jonathan Marcello about concrete ways to survive and thrive through financial uncertainty.

Create a budget

Take account of every dollar coming in and every dollar that you spend. “You can’t even begin to save or make real goals if you don’t know what you’re working with,” said Marcello.

Live within your means

But, he added, it’s not enough to just create a budget anymore. “You have to adjust your budget within the current economic standings,” said Marcello. “Even if you aren’t one of the 800,000 who are furloughed, the government shutdown affects everything. If people don’t have money, people can’t spend money.

“If people can’t spend money on things like retail or services than those businesses can’t pay people. Are you one of those people?” asked Marcello. “This is the time to evaluate every spending choice. Scale down on expenses that aren’t a necessity.”

Be wise with your tax return

“Tax season is coming. Be smart with your return — 80 percent of people living check to check have dependents,” said Marcello. “So, for a lot of people, this will be the biggest check they’ll see this year. Don’t blow it on unnecessary expenses or feel-good buys like tech toys, a mommy-makeover or extravagant vacation.” Instead, he recommends, to use half of your return to start your savings or emergency fund.

For the rest, he said, take one half and catch up on or get ahead of bills. “The feeling you have when you wake up not being behind or in arrears [debt that is overdue after missing one or more payments] is refreshing,” said Marcello. “Let that encourage you to keep working toward your goals.”

Get real about a savings plan

It’s hard to think about saving money when you’re trying to make ends meet, but just putting away a few dollars from each check can add up quickly. “Out of sight, out of mind,” said Marcello. “Automate your savings so you don’t even miss the few less dollars.

Either have your job set up an automatic deposit of five to 10 percent into another account or find an app that can do the same thing.” (The MSR has previously shared some apps that can help you get started.)

Get a side hustle

If you’ve got down time, pick up a side job or start a small business. “Now is a good time to look at what you’re good at and see if you can monetize it,” said Marcello. “I know a TSA agent who drives Uber and joined Amazon Prime to make deliveries.

“She also makes candles, bath soaps, foot scrubs, and other effects,” continued Marcello. “And, she sells food plates for $10 on Sundays. Tough financial times require you to think outside the box.”

Always have a plan B

Even when you think you’ve figured out your financial future, have a back-up plan or strategy. Marcello gave his own real estate experience as an example. “I have rental properties that are affected by the government shutdown because I have Section 8 tenants,” he said.

“While vouchers seemed like a stable choice, I made sure to rent to half cash tenants and half Section 8. With no funds being released yet for January, imagine if I had done then I would be at the total mercy of government funding vouchers.”

Research and invest

“If you’ve got it, take $100 out of your recreational money and invest.” For example, he said, “You can bid on a garage sale or storage unit that’s about to be auctioned off. Or you can shop thrift shops for deals that you can resell. There are ways to so many ways to make money, you just have to research them and find what fits your situation.”

Marcello also said this is the best time to get involved in the market. “I don’t know which ones, but there is a stock or bond somewhere that is suffering from the government shutdown,” he said. He said for those who are familiar with stocks to look at those that have declined since the shutdown began. But he recommends moving quickly. “It will rebound quickly once the shutdown ends.”

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