Hopefully you are looking at the pandemic from your rear view mirror, at least with regard to most of the financial implications. In terms of our personal and business finances, what have we learned?
For starters, expect the unexpected. Feces does and will happen. How can you prepare?
Do you have an emergency fund? If you do, build on it. And if you do not, start now. The amount you need is personal. Just make sure it can carry you for a few months at a minimum.
Do you have lines of credit at your disposal? Credit cards are considered available lines of credit if your maximum amount exceeds your balance. Yes, this is an expensive source of cash, but not having cash is more expensive and painful than no cash at all. If you have credit card loans now, accelerate the repayment. Get prepared for the next one. A home equity line of credit for homeowners is another immediate source of emergency cash.
The housing market is still hot. Did you consider downsizing? There may be a large pot of gold sitting in your real estate. When times are bad, it is difficult to convert illiquid assets into cash. When times are good, it is much easier but we don’t plan for the next cycle.
Have you preserved or improved your credit scores? With your credit cards, please remember that utilization impacts your score. The lower the utilization, the better your score. Start to build up your credit lines again.
Are you familiar with the public sector opportunities? Business owners are all too familiar with PPP. But there are other programs or grants available. Check with your state and county economic development teams. Individually, are you using any grace periods afforded to you? There are also hardship programs available for individuals.
Many years ago someone coined the phrase “cash is king.” It may be overused, but its lesson is eternal. You can’t pay your bills on Friday with promises or illiquid assets.
“Those who cannot remember the past are condemned to repeat it!”
A 1975 graduate of the Wharton School at the University of Pennsylvania, Harvey enjoyed a 20+ year career in commercial banking, exercising his “golden parachute” in 1996. In his volunteer life, he is a past chair of the Small Business Banking Unit of the American Bankers Association, Easter Seal Society of New Jersey, the SAAGNY Foundation, PPAF EXPO, and Supplier Committee of PPAI. He is also a past President of PPAF. PPAI awarded him the H. Ted Olson Humanitarian Award in 2013.