In January 2022, Bank of Canada (BOC) projected year-end 2022 inflation at 2%. Oops, it’s 7% today! As the year progressed, BOC threw interest rate increases at the economy to take control of inflation, but alas, that approach is contributing to the rise. Still,Tiff Macklem, governor of BOC, says he won’t settle for anything less than a return to 2% inflation — a euphemism for don’t confuse me with facts. The old failed ways to fight inflation continue to be central banks’ choice tools, so it seems likely Canada and many developed countries will fall into recession in 2023.
Meanwhile, consumers must manage their affairs and try to keep themselves and families afloat. So, here are seven keys with a fitting acronym, WEEP NOT, to take on today’s economic challenge. They will help you ride out today’s difficulties, and maybe you emerge stronger and better able to deal with future challenges.
Where are you
Often, we try to fix our situations with advice and tools that might not synchronize with where we are. Today, if you are in debt, understand the implications of a quick short-term fix such as loan-consolidation can be expensive long-term. Then again, adding credit cards and borrowing from “money shops” at astronomical interest rates will be catastrophic. Many folks emerged from the lengthy low interest rate period with enormous debt. Take a step back, reflect, and get advice from a fee only financial advisor to guide you; understand that your bank does not provide independent financial advice despite what they and other financial advisors say. Both want you to buy their products.
Emotional and Mental Health are Crucial
While dealing with today’s financial issues, we forget the most important factor affecting us is the real and potential damage to our emotional and mental health. It’s vital we take time to look after us. Are we getting enough sleep, eating properly, and appreciating today as a special gift? We must learn how to lower our stress from financial issues because it is difficult to avoid today’s problems. It is not a cliché to say today will pass… yes, it will. Meanwhile, let’s do our best, difficult as it is, to minimize damage to our emotional and mental health.
Encouragement is Essential
Being in debt, struggling to meet bills, can be lonely and embarrassing. Though not obvious, others are in the same situation and their pride, like ours, keep them from reaching out, not necessarily for financial help, but for a comforting voice to listen, hear, and not judge. Be alert to others who might be in your tough situation and see if linking with someone to encourage each other might help you through this difficult period.
Pressure to buy a house
Society pushes several false narratives. Graduate from high school, take on student loans, attend university (trade schools are a no no), buy a home, get married. Many young adults feel guilty if they haven’t achieved these spurious milestones. They worry, and take on more debt. Proponents of this approach have no answer when I ask: So, you want folks to take on debt to buy a home they can’t afford; but when they pay it off, you want them to take a reverse mortgage? This is utter rubbish! Renting is a great option unless you can afford a realistic down payment and other home related costs in your budget, and you can cope with the emotional and metal aspects of carrying debt. Flee from this pressure (and these people) and focus on your situation, in your time. Be the best you in each case. Renting can be expensive, but your role is limited. Here is a question often overlooked: Do you want owning responsibilities with negative equity — mortgage higher than the market price of the house?
Noise surrounds us from experts
On November 12, 2005, The New York Times suggested the only people getting wealthy from get-rich-quick schemes are folks writing those books. Nothing has changed. Today we have many talking heads telling us how to survive this market with insane ideas. We have had several recessions, market crashes, and none of these so-called experts planned and survived them unscathed. Avoid their noise. If you feel you must listen, check the résumé of the expert you wish to follow, look at his and her track record over the years coping with adverse economic situations, then you will see reality. Besides, remember the backstory to today’s situation is unique: cheap money, pandemic, supply chain disruption, lots of government money flooding the market, and more. We haven’t seen these challenges together before.
Overspending will plunge you deeper into debt
Unless you have a spending plan based on the cost of goals you plan to achieve in a specific period, overspending will result. Understand, a budget (spending plan) is nothing but your estimate of expenses needed to achieve goals in a future period. You guide it, not vice versa… money must not lead budget decisions. Spending decisions result from choices to achieve goals. Governments throw money at problems without identifying the problem and designing proper programs with accountability to solve them. That’s why they are superb at wasting taxpayers’ money.
Difficult as it might be, try to focus on a setting up a Capital Fund (emergency fund) to pay for predictable but sporadic expenses such as major car repairs, fridge replacement, and more.
Tomorrow is another day
It’s tempting to rush ahead to solve today’s problems without regard for tomorrow. While we must focus on today and be present as we navigate each day, we must do our utmost not to compromise essential plans for tomorrow. Still, understand, God alone knows tomorrow. Experience today, but be mindful that decisions today could have profound effects on tomorrow’s plans. Develop a decision process to follow; mull decisions over, but realize your gut feeling might have the answer to the challenge you face.
WEEP NOT – Take On Today’s Challenge
- Where are you… understand this is the base on which to build
- Emotional and mental well-being are crucial… pay attention to what your body is telling you
- Encouragement is essential on this journey… mutual encouragement can come from a like-minded person in a similar situation
- Pressure exists in society to buy a car, a home, get married… don’t succumb, get and use your own decision-making process
- Noise from so-called experts will distract you and cause you to try dumb things… flee from these people
- Over spending will happen without a spending plan; set your goals and cost them… that’s your budget that you control
- Tomorrow is another day and not one of us knows its outcome… be present and be the best version of you with the best information available
© 2022 Michel A. Bell
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