Last week I talked about why you always need to be investing in the stock market. I talked about why you should start investing as soon as you start working and keep it going all throughout your career.
But I also know that things are pretty tough for some people out there. Katie and I are lucky. We’re both teachers and there doesn’t seem to be any rough waters ahead from a job security point right now.
But I know that there are a ton of people who depend on our ability to get out and interact with the world for their jobs.
That’s why your priority might need to be building up cash reserves for an emergency that’s happening now or in the future.
Cash really is the most secure financial standing.
Cash gives you options.
What’s The Priority With Your Cash Right Now?
If you have a lot of cash, you know that you’ll be secure for a long time, even if things get rocky.
When you have a good strong emergency fund, you know that you can take a job loss and instead of panicking because everything is going to come crashing down on you, take your time to figure out your next move.
And that’s just under normal times.
If you’re experiencing an emergency, you want to reach for cash, not debt.
Dave Ramsey talks about taking care of your four walls. You take care of your four walls because it’s what’s most important. Since it’s the priority, it’s where you’ve got to put your money. What are your four walls?
- Food
- Utilities
- Shelter
- Transportation
In that order. Everything else is extra.
Start at the top, make sure you can eat.
Moving to utilities, make sure you can keep the lights on.
Then, make sure you’re taking place of where you live.
Lastly, make sure you’re paying to keep transportation moving.
If you’ve experienced a job loss, you want to try to do something that’s going to generate some cash. If you’re married, and your spouse has a job, you just want to send everything into lockdown mode until you can get back up to two incomes.
Cash Gives Options, Debt Takes Away Options
Use your cash to take care of yourself. Don’t reach for debt as a way to weather through.
What I hate about debt is that it takes away future options. Cash gives freedom, debt takes it away.
While having a lot of cash will help you navigate these rough waters, debt ties your future down and limits your ability to pivot.
When you have everything paid off and you don’t owe anyone anything(especially if you have a paid for house), then you can lockdown into emergency mode and bring your expenses down super low.
If you owe a lot of money, and have a big house payment(I’m right there with you), then you have a whole lot of people that you need to pay each month.
You don’t have options, you need to work. You need to bring in income so that you can fund the things you’ve already purchased.
So if you’re in this crisis suddenly finding yourself without work, find ways to lock down spending focus on keeping your 4 walls up, and reach for cash to make it through this.
And if you’ve used debt as a tool, you want to find ways to shed that in the future.
Take care of yourself,
Jared
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