Unless you’ve been living under a rock, you know that Coronavirus has had a dramatic impact on both US & foreign markets. In fact, stocks plunged this week by the most since the 1987 stock market crash. Understandably, this volatile stock market, combined with Coronavirus fears, is causing people to panic, but rather than panic, there are practical steps to be taking now. When we have a volatile market, it’s crucial to think both short-term & long-term with a cautious & level head.
5 Things To Do When The Market Is Volatile
Complete A Spending Analysis
This should be your first step. In fact, this should already be part of regular routine- regardless of the economy. But as some businesses are closing due to Coronavirus, many people may be experiencing less pay in the upcoming weeks or months. In order to allocate for less pay, it’s important to know where your dollars are currently going.
If you don’t know how to complete a spending analysis, check out this post where I show you how! While doing the spending analysis, identify areas of unnecessary spending, frivolous subscriptions, etc.
Refinance Your Home Loan
Despite the stock market drama, interest rates are still comparably low. As the economy may fluctuate due to global Coronavirus fears, those interest rates may tick up. It’s important to take advantage of these current low interest rates which will greatly benefit you in the future. To take advantage, you need to contact your mortgage Broker and lock in the current interest rate & begin the refinance process. If you don’t do a refinance, at the very least check out this post where I share how I shaved YEARS off my mortgage– and I strongly encourage all homeowners to do this!
Study The Stock Market
Buy low- sell high. If the stock market continues to decline, this volatile stock market can work for you. I’m new to the stock market. I’ve been a real estate investor for years, but I’m always open to learning about new ways to invest & make money. As stocks decline, consider taking advantage of buying low and selling high when the market adjusts.
You can easily sign up for a self-directed account which I did through Charles Schwab. However, make sure you do your homework or consult a professional before investing!
Hedge Your Bets When Buying Real Estate
This week alone, I lost multiple deals due to Coronavirus fears & stock market volatility. Real estate investors are cautious of what the market may do and are taking the “let’s wait & see” approach. If this volatility continues, it’s only time before it impacts the real estate market more. As we learned with the last crash, buying high can result in upside down mortgages and foreclosures. While I don’t anticipate a full blown real estate crash, I wouldn’t be surprised to see an adjustment.
A Few Tips For Hedging Your Bets:
- Don’t pay over appraisal
- Don’t drain IRAs or savings accounts to purchase real estate
- Avoid ARM or high-interest loans
- Avoid purchasing at the top of your budget
Live Far Below Your Means
I wish this was a part of everyone’s daily lives, but sadly many Americans are so infatuated with keeping up with the Joneses. If you’ve listened to Dave Ramsey any length of time, you know he advocates for sometimes drastic but necessary steps to help you shake the habit of living above your means. Again, this should not be a step you take just because the market is volatile- you should be living this way all the time to achieve financial independence!
A Few Dave Ramsey Inspired Tips:
- Stop using your high-interest credit cards. Call ALL of your credit card companies today & ask them to lower your interest rate.
- Pick up a side hustle that can provide a financial cushion
- Explore consolidating your student loans
- Sell the car you can’t afford and pay cash for one you can!
- Forego all of the extra expenses like cable (here are my tips for cutting the cable cord)
Remember that making decisions based on panic & fear rarely leads to success. Many of my suggestions are things I would suggest even in the best economy. In fact, they’re pretty much all things I’ve incorporated into my daily life for years. This volatile stock market does not mean the world is ending or we are heading for another recession. It is, however, a wake-up call for protecting & preserving our finances!