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I stepped outside under a deep blue sky. The sun shone bright. It was a perfect day. Yet nothing felt right.

unsettling perfect dayIn less than 24 hours between Wednesday, March 11th and Thursday, March 12th: The stock market continued to crash, marking the fastest ever drop from market top to bear market. The president addressed the nation to try to calm fears about the spreading pandemic and the rapidly accelerating economic impact. 

The NBA and NHL suspended their seasons. The NCAA cancelled basketball tournaments. Disney announced it was closing theme parks.

In my personal life, my parents postponed their trip to visit us later this month. My wife’s work retreat scheduled for this week on the opposite side of the country was cancelled as well.

I started the car to take my daughter to school. A voice on the radio announced that trading on the New York stock exchange was halted for 15 minutes. There was speculation that the market could drop another 20% today. I turned the radio off.

The feeling in that moment felt eerily similar to 9/11. I vividly remember walking out of work that Tuesday afternoon, nearly 20 years ago, on the other side of the country. It was a similarly sunny warm day, under the same gorgeous bluebird sky. 

Now, just like then, the world as I knew it the day before didn’t make sense. It’s hard to describe the feeling other than to say my entire equilibrium was off.

I’ve been working on blog posts about credit card travel rewards and creating retirement income with interest rates at all time lows. I’ll publish them later, when the time feels right. 

Today, I need to make sense of the current situation and reorient myself. Hopefully, I can help you do the same.

Financial Independence is a Myth

Since I started writing, I’ve become acutely aware that words matter. People associate strong emotions with certain words and phrases. 

People argue about what retirement means and whether early retirement is a good or bad goal. Conversely, I’ve found people nearly universally associate the term financial independence with personal freedom to do whatever you want. They embrace the concept.

I focus a lot on the term financial independence. My book is titled Choose FI: Your Blueprint to Financial Independence. Obviously, I embrace the concept as well.

But in times of crisis, we come to realize that none of us are truly independent. We need each  other.

Our financial independence relies on governments that can maintain order, a functioning financial system, the ability to get safe and affordable food, utilities that allow us to live comfortably, infrastructure enabling us to move freely, and a medical system that functions when injury or illness strike.

It’s important to control the things you can control. It’s also important to recognize there are  things you can’t. We don’t even know some of the threats that exist. Our biggest threats may not even exist yet.

“Black Swans”

We can’t be prepared for every “Black Swan” event. A few months ago, no one had ever heard of COVID19. A few weeks ago, it was still a disease in far away places. Today, we still don’t know whether the disease is seasonal, what therapies will be developed, and how effective they’ll be.

Shutting down sporting events, major concerts, festivals, conferences, theaters, amusement parks, and schools nationwide is unprecedented. We’ve seen cases in the past temporarily affect travel. But completely shutting down the entire cruise industry and the massive impacts on air travel including banning travel from an entire continent is unprecedented as well. 

It is impossible to predict and plan for specific “Black Swan” scenarios. We can generally prepare and become more resilient. I think this is a big point that is missed by those who ascribe to mainstream personal finance principles when thinking about FIRE. 

I had the opportunity to discuss this on Morningstar’s Longview Podcast recently. Christine Benz asked me: “I worry a little bit that maybe some folks who are looking at their enlarged portfolio balances might be inclined to undertake a really early retirement, might be in trouble if they encounter that weak equity market early in their retirements. Can you talk about that and whether that concerns you?”

This scenario doesn’t worry me. If anything, I’m concerned that people on this path are overly obsessed with their finances.

Without question, there is risk involved when you make the decision to walk away from your income and choose to retire. But even in worst case scenarios, the FI community is far better positioned than the average American when situations like this arise.

We’re Blessed

It breaks my heart to think about how many people are stretched so thin financially that they can’t sustain a month of hardship. Many people will face significant consequences if they miss even a single paycheck.

We’re all affected by the crisis surrounding this pandemic. I’m certain our net worth has dropped several hundred thousand dollars in a matter of weeks. Honestly, I haven’t had the stomach to check exactly how much. 

Missing out on a couple of weeks visiting with my parents hurts. My mom is battling a chronic medical condition, and we never know how many of these opportunities we have left. We cherish each one.

But the challenges and hardships we face are minimal in comparison to those faced by many Americans following the standard path through life. 

I was able to go out and drop a couple hundred dollars stocking up on food without giving it a second thought. While many people have no idea what they’ll do with their kids when their schools close, we’re positioned perfectly with two parents at home with lots of flexibility.

Technically, I’m a FIRE blogger, living a FIRE lifestyle. I’ve learned from and support those whose mission is to help others optimize the fastest path to financial independence or to never pay taxes again.

But my primary mission is to expose the simple but life changing FIRE principles to those who may otherwise miss them. To those who assume these principles are too extreme and thus inaccessible. Or to those hung up on the standard view of retirement.

I want to provide a realistic message of hope and a path to increased resilience and freedom.

It’s No Time for a Victory Lap

Hopefully, you are following similar principles and taking a similar path through life. If so, you’re likely doing relatively well despite the current turmoil. Congratulations for taking the actions that put you in that enviable position in life.

Realize though that when we have events like we’ve experienced the past couple of weeks, many people will be hurt. Some irreparably. So this isn’t a time to spike the football and do your best touchdown dance.

Medical workers on the front lines treating the sick are going to be vulnerable to this illness and stretched thin. Many people in the travel, tourism, and entertainment industries will be out of work indefinitely. Millions of parents are going to be challenged to take care of work and child care obligations simultaneously in the weeks and months to come.

What Can We Do?

We can’t tell you how, when, or where to invest your resources. But I always like to share what we’re doing with full transparency.

Like most of you we have fears. Like all of you, we don’t know what will happen next. Our natural instincts are to get more frugal. We could strengthen our financial position by cutting back discretionary spending and hoarding cash or using it to buy more stocks while they’re “on sale.” 

But we’re challenging those instincts. Instead, we’re looking for ways to spend our time and money in ways that will help others who need our resources more than we do.

Consider infusing small businesses with cash by buying gift cards to use in the future, even though it may not be appropriate to use their services now. Increasing charitable giving is an excellent option. Indulging to make a large purchase that you may have been on the fence about can provide a vital boost to a small business.

We can also give of our time. One opportunity I see for myself is to help fellow parents who face substantial challenges with schools shutting down for long periods of time.

Many people reading this blog are in a similarly fortunate position of having enough, maybe even excess, money and/or time at this time when others are struggling. What will you do?

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Valuable Resources

  • Free Travel with credit card travel rewards. Find the best current travel rewards offers. Learn how Chris uses credit card sign up bonuses to get thousands of dollars of free travel every year.
  • The Best Retirement Calculators can help you perform detailed retirement simulations including modeling withdrawal strategies, federal and state income taxes, healthcare expenses, and more. Can I Retire Yet? partners with two of the best.
  • Our Books

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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