Ep 207: How To Make Good Decisions During Uncertain Times
It may only be a few weeks since you first heard of Coronavirus, but chances are that it’s already changed your life — or the lives of people you love — perhaps drastically, perhaps forever. March was officially Wall Street’s worst month since 2008, when the S&P 500 fell nearly 13%, and the the COVID-19 crisis that tipped it all off has left millions of us unsure what’s happening. We may be unsure what’s next with our jobs and income, our children's’ education, our loved one’s health, our 401(k)s and portfolios, the list goes on. And all of it makes us feel uncertain and in need of answers.
In this week’s episode, we’re diving into the concept of dealing with uncertainty as it relates to our lives and our money, and some tactical things we can do when we have so many questions on our minds. We’re joined by Carl Richards, Certified Financial Planner and the author of two books, “The One-Page Financial Plan: A Simple Way to Be Smart About Your Money,” and “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”
Jean and Carl dive into the topic of making good decisions, and how those decisions can’t come from a place of panic. They discuss the steps we should all take towards making good decisions when we’re worried, and what people should be doing now. Carl talks about the importance of sticking with the plans you made, and then what to do when your plans get “blown up.” He lays out a step-by-step plan for what to do to bring back feelings of control.
He also talks about the importance of perspective — that even though we know “this time” is different from the 2008 Great Recession, the only reasonable thing to do right now is to assume that even though this time is different in terms of the cause of the downturn, it won’t be any different in terms of the fact that it will end, and at some point we will all return to normalcy.
Carl talks about what “panic behavior” looks like during times of crisis (we’re looking at you, hand sanitizer hoarders) and the importance of both talking to someone when we need to, and focusing on the things that are within our power to control. Even if the only thing you can control at the moment is your breath, then focus on that. Then once you’ve got that under control, you can focus on the next thing, until your feelings of control gradually begin to expand. Eventually you’ll start to feel a greater sense of ownership and control over everything you do.
If you’re worried about making the “right” decisions at the moment, Carl advises a mindset shift — instead of wanting to be right every day, just try to be “a little less wrong.” He says it’s the notion of the “least bad option,” which is, unfortunately, what we’re faced with sometimes. But we’re better at figuring out our problems than we think we are.
For people looking to make an immediate cutback on expenses, Carl advises taking stock of our blindspots — What expenses could we cut back on now? As more information becomes available, what small steps can we take that are going to help us make it through this time?
Then, in Mailbag, Jean and Kathryn take a question from a listener who’s curious if she should buy a new car, or wait in light of the economic shift brought on by coronavirus. We also hear from a woman who is curious about refinancing her student loans, and a listener who has questions about refinancing her mortgage and catching up on her retirement contributions while the markets are down. In thrive, Jean talks about resilience, perseverance, and what it really means to achieve success.
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