“Right now you’re in survival mode, firmly planted in the present. All annuities should stop. Any other retirement saving or investing should cease.
“[…] The vultures are coming. Apparently it’s feeding season for everybody from insurance agents to car salesmen when they know a few thousand people on our little rocks have just received substantial payments.
“Be careful, too, of requests from friends and family. You may have a fairly large sum of money now but you do not yet have a way to replace your income…”
Financial Coaching Centre founder Nicholas Dean speaks to Caribbean Money Moves editor Cedriann Martin Chin-Asiong about navigating tough financial times in 2019 and beyond:
When I sat with Financial Coaching Centre founder, Nicholas Dean, to discuss financial planning for folks coping with job loss, I knew this vital information could not wait until the podcast episode goes live later this month.
At time of writing thousands in the oil and gas and telecommunications sectors have been downsized in Trinidad and Tobago. Last year an economic advisor to the Barbados Government revealed that as many as 2,500 public sector jobs may be on the chopping block.
Right now people are hurting, in shock, anxious or in denial. Right now people are receiving severance packages and making decisions about how to manage their lump-sums. Right now thousands of workers are applying for the same, scarce vacancies. And so we decided to share this must-have guide right now.
Caribbean Money Moves is about hope and empowerment. Our mantra is that everyone can have financial security. That message is critical at a time that many among us are experiencing uncertainty.
In this interview Dean detailed how crunching your numbers and developing a personalised strategy does wonders not just for your bottomline, but also for your confidence. Whoever you are, whatever your situation, whichever financial missteps you’ve made in the past, you have what it takes to emerge from this experience wiser, stronger and, yes, financially healthier than before.
That’s why Dean calls this rash of downsizing a blessing in disguise.
“Now we’re thinking survival, getting off the sofa, turning off the TV and going to look for something to hunt, kill and bring back home,” the financial coach said. “That type of mindset is different from sitting in your comfort zone. Comfort today usually leads to discomfort tomorrow. A little discomfort today gets your mind in gear to give you comfort tomorrow when you can no longer work or you stop working.
“If you approach this challenge with financial wisdom and a strategy you are actually going to profit.”
These are the top ten takeaways from this interview:
1. Get a plan, get empowered
Everything is a blur right now. The first step toward clarity and confidence is crunching the numbers, preferably with a certified financial adviser. The goal here is to figure out how much money is available to you and how much you absolutely need to spend on a monthly basis. That’s the foundation for a budget and strategy that cover you for a year or maybe longer.
Knowing that you and yours won’t wind up hungry or homeless will do wonders for approaching the challenge of making your next career move from a position of preparation and quiet confidence rather than desperation and anxiety. The beauty of this according to Dean? You’ll emerge from the experience having made the thinking and lifestyle adjustments that will set you on course to continue minimising waste and building wealth.
2. It’s not business as usual… it’s business unusual
If you’ve never quite gotten the hang of distinguishing wants from needs… congratulations, you’re about to become a pro! You have to be absolutely clinical about spending your money. That means you need home-cooked food with inexpensive yet healthful ingredients; not takeaway.
You need to gaze at the sunset or take a walk on the beach to de-stress; not pop bottles with the boys. You need electricity, water and internet; not cable and deluxe data plans.
The fact is that people often underestimate how long it’ll be before they’re back in a job. Every dollar wasted is a dollar not available to tide you over. Newsflash: you are in crisis mode. The sooner you act and spend like it, the lower the likelihood of a crash.
3. Get thee hence debt
Debt repayments are always a drain on your resources, but never more-so than when you do not have a monthly income to service them. This is a critical dimension of financial planning in the context of job loss as people determine which debts to pay off, to pay down or to ignore.
Secured debt like mortgages and car loans require careful strategising. This really is a highly individual question, with the answer relying on factors including the size of your debts in relation to the quantum of your resources and essential expenses.
Dean has advised some clients to pay off their homes and others to prepay a year of their mortgage. (Note, pre-paying your mortgage for six or twelve months is not the same as making a lump-sum payment. You simply want to give yourself the peace of mind of being current on your housing bill.)
You need transportation but do you really need two cars? Do you need that car?
These are tough but critical questions. Credit card and hire purchase debt he typically advises people to get rid of entirely. You don’t need that high interest drain on your finite funds. But in some situations people may just have to tell credit card companies to suck salt for the time being.
And what about personal loans? Let’s just say that if someone owes you money right now, you might not like what Dean had to say.
4. Lots of people want a piece of your severance package. Be wise!
The vultures are coming. Apparently it’s feeding season for everybody from insurance agents to car salesmen when they know a few thousand people on our little rocks have just received substantial payments. Be careful, too, of requests from friends and family.
You may have a fairly large sum of money now but you do not yet have a way to replace your income. Stop. Think. Do not make any quick decisions about purchases, investments, coverage or loans. (Who are these folks asking jobless people to borrow money, anyway?)
Remember your first priorities are your family’s needs. You must be absolutely discriminating about the role you assign to every dollar until such time as more of them are rolling in. Again, this is an area where a solid, independent personal finance adviser can help you make wise decisions about things like health insurance, term life insurance or transportation. And to be clear, such a person does not have a financial instrument or product to sell you. They’re offering independent, unbiased advice; not trying to profit off your severance payment.
5. Retirement saving stops… for now
Right now you’re in survival mode, firmly planted in the present. All annuities should stop. Any other retirement saving or investing should cease.
If you’re 15 or more years away from retirement you may be in a position of using your past pension contributions to tide you over. It’s a sobering thought but you’ll have to do the calculations to figure out whether you have to take the extreme step of living off money previously earmarked for your golden years.
This bit of counsel gave me the shivers. All I’ll say is that if you’re taking the step of dipping into your retirement nest egg, you’d better be super efficient with your spending.
6. Communicate, communicate, communicate
It’s not enough for you to have a plan in your head. There are some things you’re going to have to let others know. Most important for families is that everyone be onboard, including your spouse and children. You’ll all have to make sacrifices and adjustments. But your family will strengthen in intimacy and resilience as you work your plan together.
Sometimes you’ll have to tell friends that you’re not able to do the things you used to. Not right now, anyway. Replace that girls’ night out with a movie night at home.
Then there are creditors. In a previous incarnation, Dean worked as a loan recovery officer. He assures that people working these jobs are human and often do have empathy. It’s important to reach out, indicate your predicament and be straightforward if you’re missing a payment. The impulse to dodge or hide only makes things worse.
7. What they say, they say
That’s the title of a groovy Machel Montano track from the late nineties. Loose translation: what people think about you is not your business.
Do you need to sell that SUV and get a used but reliable sedan? Do you have to take the kiddies out of private halls of learning and enroll them in good ol’ Government school? Do you have to put your weave and acrylic habit on hold indefinitely?
Feel powerful and purposeful about making responsible decisions for the survival and sustainability of your family. What matters is putting yourself in the best position to tread water until you’ve once again got a living wage.
8. Uproot false pride
Waiting for a manager position? Holding out for a similar salary? Turning down your nose at that menial job?
Here’s a tip: don’t. Every mickle mek a muckle, as the Jamaicans say. That ‘lesser’ job will help cover a bill and keep the wolves at bay until better can be done.
As a matter of fact, get this dotishness about ‘lesser’ jobs out of your head. There is dignity in any legal work. There is honour in service. While you devise your master plan to come back bigger and better, don’t pass up earning opportunities you think are below your station.
9. Put the U in Job Hunting
With the backing of your financial plan you have the room to be deliberate and creative in your job hunt. This is not just about sending out your CV to a dozen employers.
Maybe you need to tailor your résumé to different businesses. Maybe you need to retool for a new area of work or industry. Maybe you need to come up with out-of-the-box ways to make yourself standout.
The important thing is that you do this with a spirit of determination and calm rather than fear. You’ve got the time and space to think about what you bring to the table and how you can challenge yourself to evolve.
10. Become your own boss
Maybe, just maybe, you don’t want to work for anybody ever again. A layoff might be the push you needed to turn that side hustle into a full-fledged grind or to operationalise the business plan you’ve got on paper. Perhaps this is your first opportunity to develop a business idea that makes the most of your strengths and passions.
This is not to say you should be foolhardy or flippant about venturing out on your own. Do your homework, get an education in business development and management and get ready to take the calculated risk that might make you eternally grateful that back in 2018 you lost your job.
This was an inspirational and often surprising discussion. If what you need right now is a dose of reality, a dash of strategic guidance and a generous helping of hope, get ready for the podcast later this season!
In the meantime let’s get this Caribbean movement going!