Financial Advice When Furloughed | 415

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Chris shares how he dealt with the stresses when HIS cash was tight.

Hello, my fellow Ripplers! This is Chris Miles. Your Cash Flow Expert and Anti-Financial Advisor. Welcome you out for a wonderful show. A show that’s is for you and it’s about you. Those of you that worked so hard for your money. And you’re ready for your money to start working harder for you. Now! So you can have that freedom. That prosperity. That cash flow. Today! Not 30 or 40 years from now, it would, possibly if the market smiles in you the right way, but right now. So you work because you want to not because you have to. So you can live that life of freedom of comfort and a life of doing what you want and doing whatever they want with whomever you want. Right? But again, it’s so much more than just your own financial freedom. It’s about creating a ripple effect through people’s lives. And that’s what it means to be a Rippler. It’s how can I go about doing good and blessing lives because I’ve been blessed too. And that is exactly what the show is about today.

Again, thank you guys for allowing me to express that through you. To be able to share with you and give you so many good advice and tips and things like that, to help you grow and prosper and really get this applying to your life and making it real results for you guys. So thank you so much for following me for bingeing and for sharing this with other people and doing all that you guys do.

Here’s a quick reminder. Check out our website, MoneyRipples.com There’s great blogs on there. Plus theres the ebook, Beyond Rice & Beans. If you’re trying to find ways to free up cash today. So check it out!

Hey guys, so today I’m getting so many people that lately over the last month or two, especially. Once we hit about may June, a lot of people start getting to the point where they’re saying, Hey, I’m getting furloughed, right? I’ve been, not always laid off. That’s the funny thing. Most people will say they got furloughed or their contract is terminated or whatever it might be. Or sometimes they are laid off. But even sometimes your hours are reduced. You know, your income isn’t impacted in some sort of way. Maybe even bonuses are reduced, right? And so I want to address you guys. So not just those of you who’ve been furloughed, but even those, even that say, Hey, I’ve seen a reduction of income because of what’s going on in the world today. And what do I do? What’s the best advice? Because man, does that throw a wrench in things or what? It’s so easy to create a plan for someone when things are going easy, right? When things are just, you know, status quo, right? Like you just know that the money’s coming in just like normal. Expenses going out like normal.

And you’re like, Hey, things are good. Now for some of you guys, you’re like, Hey, even if I had a reduction in pay or hours, the cool thing is I have reduction of expenses. Cause I’m not driving around as much. I’m able to work from home or have less expenses in certain areas. And that’s great. Like, I definitely commend you for that. And I’m making that work for you guys. But I wanted to give some ideas about what kind of advice I’ve been giving people. And again, this is not blanket advice, right? You can never give blanket advice because every situation is different. But I wanted to go into more about, you know, what you can actually do right now. You know, what would I recommend if I were in that situation? Which by the way I have been. I’ve been in a place where cash flow has been tight.

If you remember from my story, the last recession. I was upside down $16,000 a month. And some of these people I’ve been talking to, some of these people were used to making $150,000 $200,000 or more a year. And then they lose that income. And they’re like, Whoa! Okay. Yeah, I’m getting unemployment. Or I’m getting something of that nature, but I can’t rely on that forever. You know, what do I do? So here’s a few quick pieces of advice.

One, you’ll make sure cash is absolutely essential. Make sure you have cash in your pocket now. Guys, if you ever have a possibility of being furloughed. And I mentioned this on a podcast a few months back, but there’s a possibility of being furloughed. You may want to get money out. You may, if you’ve got equity chapter your house, you may want to get it out.

So you don’t have to go and sell it because that’s really your option. If you can’t cash equity out of your house and you’re short on cash, then that requires you to sell it. Now for some of you, you’ve got different resources and that’s great. But even if you don’t, it might not be a bad idea while you’re still employed to see if you can look for cash reserves. You know, I hope you have some savings in place. If not look for it. Now, maybe guys will say, well, I’ve got a 401k or IRAs or something like that. This could be your time to access that money. You know, even if you don’t need it still, that might be a great time to get it. Because if you have been affected by COVID because of the cares act, you can withdraw up to $100,000 this year without the 10% early withdrawal penalty.

So those of you that are not 59 and a half, you can actually withdraw this money without having a penalty, but you will pay taxes, right? You’ll pay income taxes like you would normally, you know, if you pull that money out, when you’re in your sixties, you still have to pay taxes on that money. So the good news is, at least you can tap into that money. And that could be an extra buffer. You know, I had a client recently and I know some of you guys even brought this up to me when you’ve called in, you know, this client said, Hey, Chris, you know, you want me to get out 120,000 of equity from our home? You know, like that seems, it seems crazy. Cause that creates more debt. And I’m like, it is, it’s a liability. It’s not really debt because there’s an asset there too.

But it is a liability. There’s a loan there and there is a monthly payment. And when we calculate a payment being only about 400 bucks a month, they realized, Oh, well how long could we pay $400 a month with this $120,000? Forever! This can keep us going. This could be the thing that helps us weather the storm. And again, guys, this is like advice I’ve given similar. But if you’re already at that point where now you can’t be as proactive. Now you gotta be proactive, right? Now, if you’ve got cash. You need cash. That’s the key. That is the number one essential thing. Even before trying to pay off debt. You know, that’s the thing. When people say, let’s just pay off this debt so we don’t have these monthly bills. That may or may not be a good idea, depending on your situation. I have had seen situations where that works, but first and foremost, you’ve got to have a good amount of cash and you might want to have cash to last you, however months you may need.

You know, I had one client, they said, you know, Chris, I have six months of reserves, but I don’t know if that’s going to be enough for what we’re dealing with right now, because I may not be hired back til 2021. Okay. Well then you might want to keep more reserves. And that means, yes, that’s money you’re not putting into use. That’s money you’re not necessarily going out in investing. It’s really to help keep you afloat to keep you going. Right? It’s just like when you watch these survival shows, you know, when they’re able to, you know, shoot a deer or something like that, they’re like, Oh good. Now I got stores of meat that can last me through the fall and into winter or however long I need it. Good! That’s what you need. You need those reserves. You need that storage.

So I cannot emphasize enough. Cash is absolutely essential. And that does not mean going to credit cards. I don’t think you should be doing that. Avoid going to credit cards! Avoid doing things that will keep racking up your monthly expenses a lot. And those things will rack them up faster than if you use like a home equity line of credit, for example. So again, cash reserves are essential.

Two. Yes, we talked about debt a little bit. You try to manage that debt, but again, not at the sacrifice of your cash reserves. So make it least, make sure you have at least those six months reserves set aside to pay for all your expenses, by the way, bonus tip, while you’re going through this great time to make sure you’re tracking your money. Just like I talk about in my ebook online, right?

Track your money every single week, you know, be really meticulous with it. Figure out what expenses you can cut. You know, again, I don’t want you to be dirt cheap, but start to find out what’s really essential. Well, if you’re in a place where this is kind of crunch time, this is not the time to go live Lavita loca, right? Like this is not the time. Just go blow your money. I’m not saying you don’t have fun. I’m not saying you don’t enjoy life. But what I am saying is make sure first and foremost, you have those things in place and you’re being responsible steward of your money. So when it comes to the loans and debts, if you have extra cash now leftover, maybe you’re saying, Hey, this 401k money was supposed to be making me returns. Now I got it in cash, but in having to have extra, great! Maybe that’s the money you use to go and pay off those loans.

And here’s the thing. I would go back to my episode, where I talked about the best way to pay off debt, which I talked about using the cash flow index. I would refer back to that before you just go and pay off stuff. My top of the index, you want the index to be a below of 40. The lower, the better, right? The lower the index, the more you want to pay it off. The more impact it has on your finances. But you know, again, this may not be the time. Now let’s just say you have been furloughed you’ve maybe you have debt management. I have, many of you that you’re like, I don’t really have any debt other than a mortgage on my home. And that’s it. And maybe it’s a few car loans that really aren’t worth paying off. They’re all low interest.

Awesome! Then the next thing you can look at, again, if there’s extra above that those reserves, is then we can look at investments. Now you may not be buying certain types of turnkey real estate properties, because if it requires you getting a mortgage, you may not qualify for a mortgage now. If you don’t have the income coming in, the banks will tell you no. There are certain types of real estate that sometimes can work well. Even if you buy it all outright in cash, you could still pay you good cash flow, but that’s very specific. There could be different types of funds and things like that that can help generate some income for you. Again, use this with discretion, right? And this is why it’s always case by case. And we’ll be looking at a situation just depends. But you know, it’s not as important to get that money invested, but it can help.

It can help. Especially if you’ve got a lot of money, you’re like, I’ve got a lot of cash sitting around here. Maybe I can do something with it now. Cool! Maybe it’s the time to do that. Maybe it is time to become a real estate professional and rough sorts, right? Where you can actually now write off losses under taxes. If you’re making income, now you’re not paying tax on that income. Meaning you don’t have to make as much money as you did before when you’re earning a paycheck. Right? So things like that. If you have a business, by the way, you’ll, this is the, this applies to you. Even those who have the jobs. The other thing is look for additional ways to create income. Can you do contract work? Can you do other lines of work? Are there ways to boost up business? Other ways to, if you’re a business owner to boost up marketing? Especially now, when people are starting to scale back a lot, this might be the time to boost it up.

For those of you that are looking for jobs, maybe you can look for contract work on the side, something you can be doing. Maybe you’re looking for another job and there may be a hiring freeze. There might not be in your industry. Just depends. But look for ways to create value for people. This might be the best time of any to show people how you can go out and create value. Showing real value. That service. Ability to solve problems. It’s what makes you valuable. And that’s what gets you earning money again. So look for ways to start creating money. Don’t just sit around and twiddle your thumbs. Hoping that things will get better. You know, be proactive. Now, if you have a job, it says, Hey, it might come back. You know, I had a client where he said that his work said, Hey, well, we’re going to have you work for, you know, 80, some odd days straight or just about straight.

We’ll pay you a, just a boatload of money. Right? And he was kind of going back and forth like, should I do it or not? Hey, if he can give you some temporary income right now, and that’s allows you to boost the savings to go and invest, do it! Don’t sell your soul completely. You know, I’m not saying, you know, do a job you absolutely hate and just make your life miserable. But I would say, be grateful. Be grateful you have that ability to earn income. And look for ways to do it. And it might be creative ways. It may not be the way you’ve done before. This might be the very excuse you need to go on launch something. To launch something new or something you’ve always wanted to do. This could be the time and that, if you have savings in place. That could be great.

Now let’s back all the way up. What if you don’t have any savings? Guys, the best thing you do is look for ways to sell off stuff. I would recommend download my ebook, go through that, see if there’s ways to find extra cash. Cause I was there too, and it’s not an easy place to be. When I was, when my income was sacrificed and I lost pretty much all my assets, I’ll tell you, there was only two things you could do. One is either sell stuff, right? You just sell off assets and try to liquidate everything you can or two reduce expenses. And then three of course is increase income. You know, find ways to increase your income of what you can do. And you might have to get creative, you know, and that’s okay. And that in fact, I think for many people, and this was true for me, that’s some of the best, this could be the best opportunity for you to learn how to develop skills, to create real wealth. Lasting wealth.

Cause you’re not just trying to throw money at people or at things. This is a way that how to create money from within. From using the value that your ability, your God given gifts and abilities and talents, to be able to put that, to use, to go and bless other people, to solve problems, to serve people. And that creates a very predictable outcome of money. And that’s purely how money is created. It’s all about how do we go about creating value for other people. That is the essential key, no matter what. Even if you’re fine right now, if you want to increase your income, that is key. And I’m going to do a separate podcast episode just on that, but just know that that is the key thing to do.

So as a recap guys, you know, here’s the thing I recommend is…

One, cash is King. Make sure you liquidate everything you can or everything that makes sense. Sometimes you don’t have to liquidate everything, but liquidate what you can, whether it be home equity, whether it be retirement plans, savings accounts, whatever it might be, make sure your liquid in savings to help you weather the storm.

Two, with debt. You know, maybe it makes sense to pay off debt. Maybe it doesn’t. Make sure you’re looking for the most productive ones. And again, I recommend you go back to that episode last fall that I did about, you know, the best way to pay off debt with that cash flow index.

Three, make sure you’re tracking your money and be a wise steward of your money. Make sure you’re going through and monitoring everything you’re doing.

And then four is find ways to create additional income. What can you do to create more value for people serve and solve problems. Contract, work, other business streams, whatever it might be, look for ways to do that. And yes, that could be investment streams of income too. But again, it’s about finding that income, reducing expenses, managing debt and having liquid savings.

So guys, I hope you make it a wonderful and prosperous week. And again, if you’re struggling with this, best of luck to you. I’m rooting for you. Hey, if you feel like you need extra help, reach out to me, just shoot me an email, Chris@MoneyRipples.com So anyways, guys, hope you all be making a wonderful and a beautiful prosperous week. And we’ll see you later!