Today you pay your rent, or if you’re ahead of your peer group of other 20-somethings, your mortgage.

Probably you’re not going to have too much trouble doing so.

Probably you still have your job. Or, maybe you’ve been subject to layoffs already — if that’s happened, man, EssaySnark is truly sorry. It is stress beyond stress to lose income like that. It’s also incredibly stressful to still have a job at a company that has already begun layoffs, where you’re looking around and feeling anxious that maybe you’ll be next. Companies like Yelp — an internet company that we wouldn’t have predicted would be hurting already — laid off like 1,000 workers a month ago, and that might be only the first wave.

Hopefully, since you’ve been building your career for several years already and have been in a reasonably well-paying job for some time (at least, we assume that’s your trajectory, since you’re here reading this blahg) then you have a cushion of savings. You’ve got a couple months’ worth of money tucked away in an account. If you don’t have that right now, then we certainly encourage you to implement some steps to change spending and move money into a don’t-spend-it place to begin to build this buffer.

Perhaps the stay-at-home order you’ve been under has curtailed your spending. Maybe you were the one who was at Happy Hour every Thursday, Friday, and Saturday, and so yeah, your bank account is smiling that you haven’t been running up a bar tab each week. Tuck that money aside.

Some people have been responding to the stress of stay-at-home by doing lots of online shopping. If you’re in the category, we do encourage you to find a way to channel your anxiety into some other activity. It’s not good for the economy that all of us have stopped spending, but on an individual basis, we need to do what we can to prepare for the coming storm.

Because a storm is a’coming. 🙁 It’s inevitable that there will be major impacts happening in the not-to-distant future. For now, things may seem same-ol’ same-ol’ in your part of the woods. Maybe you don’t know anyone who’s suffering.

But suffering is starting, from the lower socioeconomic sectors of society, and it’s going to start to be felt by all of us.

Here’s a segment that came out in a newsletter authored by the Dean of Tuck School late last week (which was unfortunately actually written to honor the death of a colleague at Tuck, who didn’t die from coronavirus but did pass very suddenly):

Yesterday the Bureau of Economic Analysis reported that US gross domestic product contracted in the first quarter at an annual rate of 4.8 percent, the sharpest decline since the fourth quarter of 2008. This morning the Bureau of Labor Statistics reported that in the past six weeks, about 30 million Americans—nearly 20 percent of the labor force—have filed new claims for unemployment insurance.

Twenty percent of US workers are not working.

Let that sink in.

In other words:

 
 

So, what can you do?

Well, if you currently are working but not working, maybe you can use this reality check to motivate yourself to contribute more. If you’ve become a slacker on Slack, pick up the pace. Engage yourself. No, it’s totally not easy. If you’re feeling any symptoms of depression — commonly things like low energy, constant fatigue, feeling in the dumps all the time — we get it. Motivating yourself out of the funk is really really hard. But you’ll want to be someone that your company feels is needed even when times get tough.

Another way to channel stress into productivity: Do you have anything you can sell? Maybe you’ve got some sneakers from when you used to obsess about kicks, and now you’re not really that into collecting. Maybe you were the one constantly buying on eBay. Perhaps you can turn into a seller.

Or maybe you’ve been using your stay-at-home time to knit fun sweaters and beanies. Put them on etsy. See if you can become a home-based entrepreneur.

We don’t really suggest that you try to launch an influencer channel right now, or that you suddenly begin recording YouTubes of your folk guitar songs… at least, not in the context of getting ready for the economic downturn that’s coming. You’re unlikely to be able to easily monetize your content-creation efforts in this era. If we were talking two or three years ago? Yeah sure, the market was less saturated. If you feel that would be fun, then go for it anyway! But unless you have a social media presence already well established, or an offline following of fans of some sort that you can connect with and transition them to an online community, then we’re a little doubtful that slapping a Patreon up somewhere is going to be that profitable in the near to medium term.

The other thing you can do is to look at your spending. Are you signed up to three subscription boxes of goodies showing up on your doorstep each month? Do you really need the stuff that’s coming? Most of those are a good deal only through the initial sign-up period, and then their utility wanes. It’s not a very cost-conscious way to acquire even necessary items (plus all that packaging from individual shipments is super wasteful).

Do you even look at your credit card statement each month, to see what merchants are extracting money from you on the regular? Are you paying attention to where the money is going? Take stock of your situation. Do it honestly. See if you can pare back some of the expenses you’re carrying. It might seem like a non-issue to pay for some items right now if you’re still feeling flush. We predict that many of us will not be feeling so flush in the not-so-distant future. Making changes now will help you prepare for what’s coming.

Have you let your expense reports pile up because it’s a pain in the butt to file them, and your company owes you a chunk o’ change in travel costs through January and February when you were still a road warrior? Get those submitted to your accounting folks. Same thing with filing your 2019 tax returns. The government gave all of us an extension till July to file, but there’s no reason not to do it now. Clean up loose ends in your life.

The best way to deal with reality is to deal with it. What’s likely going to happen is that large numbers of low- and middle-income earners who have been first hit by the job losses that have already happened are not going to be paying their rent and their mortgages. Some states have enacted protections for tenants to limit evictions, but that’s not universal, and it’s only a temporary reprieve. The money will still be owed and will need to be paid eventually.

That’s actually an important point to remember: When your credit card company or mortgage or other lender offers you a forebearance, that is NOT the same as a forgiveness. If they let you defer payments, they’re not saying they’re zeroing out what you owe. They’re telling you that they’ll give you extra time, and in many cases, they may not charge interest, and the past due amount won’t be incurring late fees. But it will still need to be paid. If it’s an essential item like your car or your house, and you’ve got the money now, you might want to go ahead and pay it.

In bschool you’ll learn about the time value of money; a dollar today is worth less than a dollar in the future based upon inflation.

EssaySnark is no economist, and has no idea if we’re going to end up in a hyperinflationary period, or go into low inflation as a result of these impacts. Truly, nobody can know that. If you have $1 today, will it be worth $0.99 next year? Or $0.50?

What we do know is that if you need your car, and intend to continue living in your house, then paying those bills now is, like, kinda important.

If you’ve been buying frivolous things as a way to blow off steam, and have now amassed an impressive collection of single malts, or classic skateboards, or limited edition whatevers that you enjoy hoarding… We invite you to stop. Don’t feel guilty if you’ve been engaged in this behavior up till like an hour ago. Just stop. Be mindful. Pay attention to what’s happening. Unless you’re independently wealthy, it may make sense to be more aware of your outflows.

Just like in 2008, when foreclosures and evictions begin, it’ll start a ripple effect that impacts everything. (We’re speaking of how things work in the U.S. and other economies that have similar pressures; it might be different in your part of the world, but it will be an impact nonetheless.) Housing prices will start to go down as vacancies increase. Areas like Detroit that have only recently really recovered from the 2008 crisis will be hit hard all over again. The people who lose their homes will shuffle around, initially within their local community, and in some cases, may be forced to relocate to another region completely. Whole families will become homeless through no fault of their own.*

Retail is likely to be forever changed by this. There have been early reports of some huge corporations that are already filing for bankruptcy protection, and many well-known names may cease to exist completely . There will be a contraction, and it will be felt.

When will all this start to happen?

Well, one statistic we heard yesterday (sorry no sauce for this) said that 25% of renters were late on their April rent payment. That doesn’t mean they didn’t catch up, but it doesn’t look good for what will happen in May. Most landlords can absorb a missed payment without it putting their own finances into crisis, and we’ve heard tales of some landlords say they wouldn’t accept rent from their tenants in April. Not sure if that generosity will extend into May, and those are one-off cases anyway. If hoards of people start getting evicted, that’ll put one kind of strain on the system, but it also means there will be empty units sitting around, since there won’t be other renters to move in if nobody can put together the money for a deposit. Soon enough, those landlords could be getting into trouble with their lenders.

If homeowners go into arrears on their mortgages, it typically takes about six months for the process to play out with the bank.

All told, we’re looking at the pain to start becoming acute in July, and possibly getting much worse across society before it gets better.

If you’re reading this thinking, “Yeah but, those problems are what other people will deal with. Not me. I’m still working from home. My paycheck is coming in. I’ll be fine until I have to start my MBA.”

Well, you could be right. But an economy in depression — and yes, that’s almost 100% guaranteed what’s on the horizon, an actual depression, not just a recession as we had in 2008-2010 — an economy in depression means that the job market will be VERY different very soon. A depression means that student loan approvals may suddenly not be near-automatic approvals as they currently are, especially for internationals.

A real depression means that even if you’re doing okay, people in your community will be affected.

Things are going to be different.

We’re not saying you should sell all your things and move to the woods. It’s not time to turn into a prepper.

But be smart about the decisions you’re making.

If you have a job, strive to keep it. Make a contribution there. Make yourself valuable. Make your boss want to keep you. Do good work.

Bring that attitude to your job is going to help you lead a good life, because you will gain satisfaction from your own efforts. Do it not as a means of ingratiating yourself, but because it’s who you are.

When everything falls apart, character is what we have left. Character is where we can gain strength.

We may be in for a rocky road for awhile. Be smart about the moment at hand.

Coronavirus and the World

• Coronavirus and the world: What’s going to happen? (With science.)
• Why EssaySnark is still concerned with coronavirus by

 
 

*Homelessness is a complex problem. We say “through no fault of their own” as if some homeless individuals should be blamed for their homelessness. That is not how the ‘Snark sees it. That sense of blame and judgment against the homeless is a closed-minded and hurtful attitude that many domiciled individuals hold against those who are homeless. Don’t know what a “domiciled individual” is? It’s you; it’s anyone who has somewhere to live. Society judges so many strata of folks for so many unfair reasons. The entire fallout from this pandemic is only going to make such attitudes worse and hurt more of us. /rantover