Mike Cashion, MFF Director of Operations

By: Mike Cashion, MFF Director of Operations

WHY ARE WE WRITING ABOUT THIS?

The world continues to feel like an awfully weird place in the continued time of COVID. Do not lose sight of how our world is continuing to shift in big ways. Saving should remain top of mind in all of this uncertainty.

From a business standpoint, everything is artificially inflated by the government, the road forward is uncertain and who knows how human behavior will change in the next week or twelve months. Many have lost or stand to lose their jobs in the near future due to the ongoing disruption from COVID. I know that sounds really pessimistic, but it could very well become a reality and is the reality for many people. Businesses small and large are trying to attract new customers, retain current customers and keep their businesses afloat. The stock market continues to show much growth due to a few large companies that have benefited greatly from the pandemic, while many struggle to survive.

WHAT’S GOING ON TODAY?

There are a few things that have been happening recently. I’m not sure what you have been seeing, but I continue to see ongoing stories of the stock market continuing to rise, people buying new homes at high premiums, people buying new cars at top dollar with no incentives or concessions, companies aggressively marketing products and services and many people continue to lose their jobs. That is a lot to take in during these unusual times.

What I am seeing a lot of is this perpetuation of FOMO, which means Fear Of Missing Out. Just because your neighbor or the news is talking about how hot the housing market is, does not mean now is the time to buy. If prices are crazy high, the demand is high and tons of people are losing their jobs, I would tread softly, save and wait for things to settle. No one wants to spend a premium on a home, have the housing market slide, lose their job and then be stuck in a tough spot. Is that going to happen to you? Who knows… What I am trying to say here is don’t make a HUGE financial decision, such as buying an expensive product like a house or car, just because many others are or because you feel like you are missing out. If everyone is chasing something right now, it is probably the time to take a pause, save, and pay attention.

THE FUTURE ALWAYS SEEMS BRIGHT

As humans, we are designed to be positive and think that the future is going to get better and better. For the most part, I think things do improve a lot over time. You can think of it like the stock markets over a long period of time – it tends to continue on an upward trend. With that said, it is cyclical and adjusts up and down in the short term. Sometimes, those market swings are drastic and could be over months or even years.

All I am saying here is to play the long game. Don’t think short term here. Recently, a friend was telling me about his visit to have his truck serviced at the local dealership. While speaking with some of the staff and people purchasing new trucks, he came to find that many people are buying brand new pickup trucks with financing terms as long as 84 months with payments north of $600 and $700 dollars. That is a LOT of money for a truck! When you factor in all of the other expenses associated with one of these trucks, such as registering it, insuring it, fuel, tolls, parking, washing, maintaining and etc, this becomes a monthly expense well over what my housing cost is on a monthly basis. Do these people really need a brand new truck right now? Would a used truck be a better choice right now with so much economic uncertainty?

WHAT IF THINGS DON’T GO AS PLANNED?

None of us want to think about these situations. But if you were to buy / finance a big ticket item, such as a home or vehicle, and your income went down or away completely, could you handle this expense? If that is a no, then you should probably hold off unless you NEED to make this purchase. If it is a “nice to have,” “fun to have” or you validate it by “so-and-so has one” then you should hold off, save and wait for the timing to be better.

ACT TODAY AND BE READY FOR TOMORROW

It is always fun to get new things or go big on a fun experience. Save today for the new thing or adventure, and it will be so much more meaningful when you have the money set aside to make the purchase without overextending and when you can really enjoy it. Also, if you save today and for some reason an interruption in your income occurs, you have some options.

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Copyright © 2018, Morgan Franklin Followship
The information provided herein is for educational purposes only. Any content, including without limitation, statistics, examples, illustrations, models, video presentations, quotes, material, data, suggestions or information of any kind, have been designed solely to increase your knowledge and understanding of financial literacy and should not, in any way, be considered investment advice or a solicitation to invest or otherwise spend your money.