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Time for the Tough to Get Going

You have undoubtedly heard some variation of the following… “The time to make your mark is during times of adversity,” or “When times get tough, the tough get going.”

There are a whole lot of people and businesses that have had a “tough time” dealing with economic turmoil in recent years. Lately, however, the news has been more positive than negative as the stock market has largely been on the upswing, housing values are starting to return, and unemployment has dipped. Maybe the mostly positive news will continue for many years, but it is more than likely that the tough times will return at some point and, when they do, real opportunities will exist if you are paying attention.

Believe it or not, it is much easier to distinguish yourself and establish your own path to success when things aren’t going so well. Your goal is to be tough no matter what the economy is doing or how the times are defined.

When times are good, it seems like everyone is an expert stock picker or a real estate baron. Positive results can sometimes cause people to ask fewer questions and not pay as much attention to the fundamentals of sound financial management and when those results are a product of luck versus skill, fortunes will fall much faster and further than they rose.

When times are tough, only those with a measurable goal and legitimate plan will succeed.

You undoubtedly have a financial goal that you have yet to achieve; maybe you want to pay for your children’s education or purchase that dream house that has always been out of reach. You may even want to find a way to not be so dependent on the next paycheck or simply to do more with what you are already making.

If any of these goals apply to you, now is the time to act and there are three key steps that should be part of your action plan.

Pay Down Debt

This is the most important step and the one that is most often overlooked. Your debt is often the last thing you are thinking about when money is rolling in and your financial future looks bright. During those times, you can easily fool yourself into thinking that there will always be enough time and enough income to pay down whatever debt you are accumulating. What you may fail to account for, however, is that debt doesn’t go away or reduce when the tough times inevitably roll in. A simple exercise helps put this reality in perspective. Take out a sheet of paper and list your assets (house, savings, investments, etc.) on the left side of it. List all of your debts (mortgage, loans, other monthly bills) on the right side. Now, pretend that a recession has hit and fold your sheet of paper down the middle of the page vertically and hold the paper so that only the right side is facing you. What you see is what will remain for you to manage when the tough times hit. Are you prepared? Will you be one of those people that are able to “get going” and succeed despite the state of the economy?

One sure way to set yourself on that path is to make sure that your debt is manageable under any circumstances. What is manageable to you is going to be different than what is manageable for your neighbor or your co-worker, but roughly speaking, you should never commit more than 50% of your gross income to debt. There are absolutely going to be times when you will be justified in paying a little bit more for something than what you had planned, but it should never be a habit. Stretching a little bit here and there is okay and probably even good for you. Just as when you are about to exercise, a little stretching and loosening up can go a long way toward a great workout. Over reaching to the point where you injure yourself will finish the workout before you ever get started and if you over stretch over a long period of time, you may never get to exercise again.

Also note that there is a clear distinction between paying debt down and paying it off. While living debt free would be fantastic, it is also not that realistic for most of us. So, if you have credit card debt, pay that down first. Don’t worry about paying it off immediately. The important step is the one you take in establishing your plan and working toward your goal. Once your credit card debt is under control, make it a point to only incur costs that you can pay off each month. If you have or are about to acquire a mortgage, leave enough room to make an extra payment every once in awhile. If you need to get a car loan, first decide what your transportation requirement is and then stay as close to what you absolutely need as possible.

Shop for the Best Bargains and BUY

Think about how it would feel if you walked into your favorite department store and everything you ever wanted to buy was on sale at deep discounts. During difficult times, that is exactly the way it looks for virtually any investment out there. During more stable economic times, those bargains will be harder to find, but they are still out there. Do your homework, identify your goal, and be patient enough to wait for the investment choice that best suits you.

If you have thought about starting a college fund or there is a stock or a mutual fund that you want to put a few dollars toward, now may very well be a great time to take the plunge. Whether you purchase a stock, mutual fund shares, or a 529 for higher education, you may be able to purchase substantially more during tough economic times than you may be able to when times are considered more stable or positive. The point is that the best time to get started is when you are ready to do so and there is always a worthwhile goal to achieve regardless of what is happening around you. If you take the time to make the decision that is right for you, you’ll be in a better position to reap the benefits and gains of that decision in the future.

The same logic applies to your participation in a 401k or deferred compensation program through your employer. If you are not in one of these programs and one is available to you, get in right away. If you are already a participant in one of these programs, consider increasing your contributions to take advantage of any opportunities that may be right for you in the pursuit of your goals.

Every single one of these opportunities will also help you to build wealth so you have the chance to experience the dual thrill of possibly finding a bargain and taking a meaningful step toward greater financial success.

Diversify and Balance

These principles are important at all times and especially so during tough times. If you have or are going to incur debt, don’t borrow it all in one place. If you are getting a mortgage, remember that you will need something left over to furnish your new house and pay your real estate taxes and utilities. If you are going to buy a new car, remember that it will also cost money to put gas in it and insure it. If you are going to run up your credit card bill, remember that you also need to pay for your mortgage and your auto loan.

At the same time, don’t spend all of your investable money on one stock or one mutual fund. Do your research and determine what combination of options will best suit you and help you to meet your financial goals.

When you diversify your choices and you balance the manner in which you handle your financial needs, you build a healthy foundation for meeting your goals and you protect yourself from bearing the full negative impact of a recession or economic downturn.

Once you are taking these steps and following your plan, make it a point to continue to monitor your progress. If you are happy with your direction and the decisions that you have made, it will still be helpful for you to keep track of what is going on and perhaps to double check or verify the results that you are seeing.

If you don’t like what you are seeing, take a little time to understand what is causing your results to diverge from your expectations and then take action to correct what it. Whether you are looking at your finances, thinking about your career, or summing up your life’s experiences, it is vitally important for you to remember that you have the power to enact changes that will have a direct and positive impact on the trajectory of any and all of those things.

You will always wield power when you make a plan and act on that plan. You will, however, be powerless over your finances, your career, and your life, if choose inertia or you decide not to decide.

The decisions you make regarding your personal finances can and will have a huge impact on many other aspects of your life. It is vitally important that you spend the time that is proportionate to the value you hope to derive in order to make the best financial decisions possible for you and your family.

Given the consequences of the actions you decide to take regarding your personal finances, you may find it helpful to work with someone who is trustworthy and knowledgeable in these areas. A trusted advisor and confidant will alleviate some of the uncertainty you may feel as you attempt to take advantage of the opportunities available to you and allow you to concentrate on asking the right questions and maintaining your self-discipline. Just remember that being financially tough and “getting going” is as simple as paying down debt, investing, and balancing your choices.

If you decide to take those steps, you will be financially tough and ready for whatever circumstances come your way.

National Police Credit Union Contact:

For more information on National Police Credit Union, please visit our website or call 844.COP.SAVE. To join National Police Credit Union, or if you have immediate family members who are interested in becoming members, please use our application. This article was written by Scott Arney, CEO, Chicago Patrolmen’s Federal Credit Union. This article is part of Scott Arney’s educational series, entitled The Serial Decision Maker.


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