How I'm managing finances during the COVID-19 era

It's week two of social distancing and more than 3 million Americans lost their jobs last week. The uncertainty of how long the COVID-19 pandemic will last and the job losses to come has everyone stressed and reeling.

On financial message boards the three weeks ago, when we saw the first massive stock market drops, many were  jubilantly buying at what they thought would be the low. The next week, when the reality of the situation hit many of us and it became clear that we all needed to work from home, businesses shuttered and schools closed the tone was much more worried. What should I do about my planned debt payments? How much emergency fund should I save? Should I invest now or is too risky? Should I pull my funds out?

It's been quite the ride on the Dow this month.

It would be very hard for anyone to answer these questions with any certainty, we don't know what the future will hold but here is what I am doing to try and prepare.

Our Background

My husband and I are both W2 employees, neither of us has been laid off and based on what our jobs are, we don't expect we will be, of course anything can happen but we feel our jobs are secure for now. We have two rental properties which are a bit of a double edged sword in this case, we have additional revenue streams in case of job loss but both properties are mortgaged, so we also have additional liabilities. Should our tenants be laid off and unable to pay their rent, we may have to float additional mortgages for a while. 

We don't have any short-term debt (ie credit cards or car payment), just mortgages and I have a really high student loan payment. 

Our Previous Plan

We had been working on paying off our smallest mortgage, which is on one of our rental houses. We wanted to improve our debt to income ratio so we would be prepared in the future to buy a third rental house. All extra money above our ~4 month emergency fund was going to that debt. 

I was hoping to be looking for a third rental this time next year (my husband felt this was wildly optimistic as a timeline; he checks my craziness).

This is me doing the math on how soon I can house shop.
Photo by ThisIsEngineering from Pexels

Side note: we were not aggressively paying off my student loans because I'm eligible for a loan forgiveness program and which will hopefully be approved at the end of 2020 if everything goes to plan.

Going forward

Given the current uncertainty, we are halting all extra debt payments and instead saving the money in cash in case:

• One of us does lose our jobs (pretty unlikely)
• Our tenants aren't able to pay rent and we need to cover the mortgage
• Real Estate prices fall enough in the next year or so that we decide to buy something (also unlikely they'd fall enough for us to be ready to buy)

I will be honest and say that I had a few moments "OMG we should buy stock in airlines! hotels!" but again my level headed husband helped to check this impulse. While yes, they will probably come back, we don't buy individual stocks because it's too risky. Even though they are lower now than they were 3 weeks ago (or even a year ago) doesn't mean it's not risky. We might choose the 2 or 3 companies companies that go bankrupt.

Remember on Downton Abbey when Lord Grantham had made a huge investment in a railroad company that was basically the only one that didn't have a big post-war expansion and instead almost went bankrupt and was nationalized by the Canadian government?

via GIPHY

So yeah no stocks for us but I did put a few hundred bucks in my IRA, in mutual funds rather than individual stocks. It kind of quenched my urge and it's tax advantaged.

This sums up our plans for the immediate future. It's not super exciting but then again, solid financial plans rarely are. I'm sorry I can't offer you a get rich quick scheme, maybe next time.