A common fortune cookie observation attributed to John Maynard Keynes is “Markets can remain irrational longer than you can stay solvent”. This usually applies to capital markets like stocks & fixed income but can equally apply to commodities, retail toy fads or the job market.
You may think it’s totally irrational that no one wants to hire you, but until the day comes, you need to find ways to stay solvent and get by until the cash starts flowing again.
A couple of honest tactics we used to help stretch a dollar during lean times. It’s nothing to be ashamed of or be afraid to admit.
1. Delay and Defer
Business school teaches that cashflow is the lifeblood of any business. When cash inflow dries up, so does the cash outflow.
Anything that was not necessary to pay for went on hold. Sorry, backyard - no landscaping for you this year. A quiet birthday at home beats an expensive dinner and drinks out on the town. Minimum payment set for all credit cards and student loans deferred.
Like rationing water in the desert, each dollar outflow becomes precious and highly scrutinized for its usefulness and value gained.
2. Debt is Necessary Sometimes
I took on some (more) debt to keep things flowing for awhile.
Using credit cards or a loan responsibly to help get by is OK as long as you aren’t wasting it on frivolous expenses.
3. Insulate the Kids
It’s important to keep financial anxiety and concerns to a minimum around the kids. They do not need to suffer or chafe at the situation if you can avoid it. Snapping at them over only eating 2 bites of a $8.00 ice cream they begged for helps no one.
Suddenly cancelling their activities or deviating on lifestyle is a red flag even small children can pick up on. The kids have enough to worry about in their little worldview so penalizing or disadvantaging them will only make everyone feel worse.
My socks may have holes in them, but the $25 for the kid’s field trip to a farm was paid.
4. We got Help (The Importance of Family)
We were lucky here. To get over a hump and make a plan, we were able to get a small bridge loan (loan being the keyword) from family until we we saw some relief at year end (see below). Thank you to the angels who swooped in and diverted a potential crash landing.
5. Diversification
The idea of a traditional 1 income family in 2024, frankly, feels more dangerous and risky than most entrepreneurial endeavors or volatile investments.
My wife works and has does quite well for herself earning a good income and a year end bonus to keep cash flowing. I also had side gigs and investments ready to go in the event of a problem. Substitute teaching for minimum wage may not match a full time job but it was there when we needed it and certainly better than zero.
6. Tax refunds
A silver lining of not working is not paying taxes. Come year end, we had a big refund come our way as our actual earnings were far less than the tax withholdings would assume starting early in the year. For once, Uncle Sam’s slice of the pie served as a decent emergency savings fund dispersed in the nick of time.
7. Don’t forget to rebuild when you can
Now that the drought is over, it’s imperative to rebuild your savings and pay down the debt. The last thing you want to do is run into another problem down the road but not have replenished your dry powder and supplies for another battle.
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Thoughts? Questions? Comments?
Reach out! Maybe I’ll do a full post on the topic or as a Q&A
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