Guest article by Ryan Luke, first responder and author of Arrest Your Debt

There are many things COVID-19 has taught us, including personal finance lessons. According to Scientific American, in the first three weeks, 16.8 million people lost their jobs due to coronavirus. Chances are, you are either married to someone or have a close family member or friend who has lost their job.

Not surprisingly, the government struggled to get people set up with unemployment checks quickly. There have been website crashes and other issues with helping people financially during this time.

Also, if you were lucky enough to get a $1,200 stimulus check after losing a job, that might be enough to cover one mortgage or rent payment, but not a long-term solution to financial strain.

Our World Is Financially Fragile

What the virus has taught us is we are much more fragile than we thought. The virus has brought the economy to its knees in an extremely short amount of time. Luckily, most of us are in “essential jobs,” but that’s not to say our spouse was.

As we go through this time, it’s still unknown the total economic devastation that will be left for us to clean up. In other words, we don’t honestly know the impact this will have on our city, state, and county revenues. One thing is sure, the entities that pay our salaries are going to experience budget shortfalls. We just don’t know how bad those shortfalls are going to be.

Will we be required to furlough employees as my agency did in 2008? Will junior officers and firefighters be laid off? Only time will tell. Whatever happens, for many of us, our financial stability is in the hands of our employer.

Living Differently – With A Financial Plan

From this day forward, I want to challenge you to live differently. Don’t give the government that much financial power over you. Would you believe me if I told you there was a way for you to take control of your money and have your money work for you rather than you working for money?

In these stressful times, there is no better time to take control of your life and your money. The goal is to get to a point where you forget what day payday is and aren’t concerned if you will have enough money at the end of the month. Living paycheck to paycheck isn’t cool anymore.

The process to gain financial peace is quite simple – yet easier said than done. By focusing on one step at a time, you can begin to take financial control away from your employer and hold your financial future in your own hands.

Step 1 – Build a monthly budget

Each month you should know how much money is coming in and how much is going out. A budget should focus on the minimum amount you will make each month, not counting off duty jobs and side hustles. If you budget your money on your base pay (scary, I know), all that extra money that comes in can be used to catapult you towards your other financial goals.

Step 2 – Fully fund a $2,000 cash emergency fund

The time of relying on credit cards to pay for vehicle repairs and other unexpected bills is over. Each time you pay with a credit card and can’t pay the balance off each month, you’re making someone else wealthy.

You put your life on the line each day for the money you make – it deserves to stay in your pocket – not someone else’s.

Fund the emergency fund by paying minimum payments on every bill you have until you have $2,000 in a separate savings account. Keep your emergency savings away from your regular checking account, so you’re not tempted to spend it.

If you have to dip into the emergency fund to pay for an unexpected financial need, stop all debt repayment and get that fund fully stocked asap.

Step 3 – Get out of debt

Seriously. You deserve to see your retirement account grow like a snowball rolling downhill due to compound interest. Each interest payment you make on your home, vehicle, credit card, and student loan is making someone else rich. It’s time to turn the tables.

It’s certainly possible for you to be the lender instead of the borrower. What if people paid you to use your money rather than you paying someone else for theirs? It’s certainly possible if you decide to live differently.

Get out of debt by paying the minimum payments on every one of your debts except the one you want to pay off first. Whether you choose the debt snowball or the debt avalanche method, it doesn’t matter. Pay off your debt as soon as possible – your future self will thank you for it.

Step 4 – Contribute 18% to your 457b account

Ideally, you should be putting money away into your deferred compensation upon employment. Compound interest is a fantastic thing and needs time to work. If you have defeated most of your debt, make sure you increase your retirement to 18% of your gross pay.

Step 5 – Save up six months of expenses in cash

Having six months of expenses makes you financially unstoppable. If you can save up six months in cash (not counting your emergency fund) to cover your bare necessities, you will be financially protected from just about anything (including any future pandemics).

By giving yourself a 6-month safety blanket, your money fears will pretty much be a thing of the past. If you lose your job, that fund will provide you six months to find another job. Think of all the possibilities and the peace of mind that would give you.

Wrapping it up

Don’t rely on the government to take care of you – take control of your money. It may be time to get rid of some of those unnecessary subscriptions or expensive toys in the garage. Spend your money on what adds value to your life, and budget accordingly.