Tips to Protecting Yourself (Financially) during This Crisis

cloudy on 24/03/2020 - 12:40
Last edited 24/03/2020 - 13:22

I was having a think about some of the lesser known risks we all take and thought I'd write this to share to all in hope it can better protect your finances.

Frequent flyer points
My tip: Use them up if you can find something you want.

Given the situation most airlines find themselves in, it is not certain airlines will survive and therefore your FFP may be lost. Even if airlines do survive, most airline CFOs will be tin rattling banks and governments at this time and reduction in balance sheet liabilities in all fashion will be undertaken, and for sure reductions in FFP values are being considered. So I see little reward in keeping your points and high risk in holding on to your points. So use them if you can.

Online buying
My tip: Only user Credit cards/Paypal (or other buyer protection methods of payment)

We're all probably buying more online more, but retail is quickly tanking. Nearly all retailers, even the ones benefiting from this crisis (Harvey normal and JB are selling out of freezers and air purifiers and posting 9+% like for like sales growth) are withdrawing their earnings guidance as people lose jobs and the economy tanks. Lots more retailers will go into admin and likely fail, think Kikki K.
So when purchasing online use a method that protects you like a CC where you can charge back if you don't receive goods because they suddenly go into receivership after you place an ordered.
Payment methods like BNPL (Afterpay etc) don't allow for chargebacks in their policies. Although there was a story here of someone managing to get their money back from such a circumstance, it is a unnecessary risk and I wouldn't be relying on good gestures when waves of retailers could fail and bad debts rake up.

Gift cards
My tip: Use them up ASAP if practical

Similar rational as above, with retail hitting the walls risk of failure is high and gift cards on have value if the retailer is still kicking, many will not be kicking.

Cash tired up in non-financial accounts
My tip: Withdraw the cash if you can or only keep small amounts.

Many sports betting agencies will be struggling big time, given there is no sports to bet on. If you have large amounts in your account, it's prudent to withdraw.

Mods: Not sure if this should be merged in other threads, but given the strange world we live I thought I'd share some prudent tips I'm giving my family and friends.

Financial COVID-19

Comments

  • HighAndDry on 24/03/2020 - 12:48
    +18

    I know you said these are lesser known risks and this is a good list, but I just wanted to reiterate for the nth time:

    Have an emergency fund.

    • cloudy on 24/03/2020 - 12:52
      +3

      Well yes, I did want to focus on topics not general spoken about as much. But feel free to list all the more obvious ones too. :)

    • skillet on 25/03/2020 - 22:44

      How much?

      • HighAndDry on 25/03/2020 - 23:07
        +1

        General consensus is at least 6 months (of essential spending, not income), but anything up to 24 months isn't totally crazy.

        I have 12 months of essential expenses, for example.

  • SlavOz on 24/03/2020 - 12:48
    +7

    How to protect yourself financially?

    Don't buy things like

    freezers and air purifiers

    • cloudy on 24/03/2020 - 12:54

      That may help you individually, but every economy is reliant on spending, and if you want a job too you may need others to spend. So lets not all bunker down and eat plain rice for a year.

      • bobbified on 24/03/2020 - 13:47
        +1

        That may help you individually, but every economy is reliant on spending, and if you want a job too you may need others to spend.

        What? LOL! You think (from your original post) that none of the following are simply "helping you individually"?

        Frequent flyer points
        My tip: Use them up if you can find something you want.

        Gift cards
        My tip: Use them up ASAP if practical

        Cash tired up in non-financial accounts
        My tip: Withdraw the cash if you can or only keep small amounts

        None of these will help businesses. What you've got there will help you potentially minimise your own individual losses if the businesses go down! Businesses need incoming cashflow - not collection on their liabilities!

        • cloudy on 24/03/2020 - 14:03

          You are suggesting we stop spending (correct me if im wrong).

          I'm suggesting you draw on what you have earnt, or is yours.

          I should also put on that list, not to buy pre-paid vouchers or sorts, but that's basically gift cards.

          There's a fundamental difference.

          There is nothing wrong with taking what is yours, there is something wrong with simply stop spending on things you need.

          • bobbified on 24/03/2020 - 14:10
            +4

            @cloudy: I'm saying that your original post was for the purposes of "protecting yourself" financially, and your original suggestions are just that. Nothing really to do with helping businesses. And if it somehow does help the businesses, it would be a secondary effect.

            • cloudy on 24/03/2020 - 14:18

              @bobbified: I'm haven't made any suggestions about helping business by saying stop spending on things you need.

              I don't really think a discussion of eco is conclusively or helpful, but I think its fair to say if everyone chooses or is forced to stop spending, jobs will be lost. And the trickle down effect im seeing with friends are, even if you don't work in those related industries you will also be let go too.

              So stop spending can hurt yourself is what I am saying.

              But spending your gift card for instance helps both you and keeps the wheels of business and employment churning. The two are not mutually exclusive.

    • Fredfloresjr on 24/03/2020 - 12:54
      +1

      and eneloops

  • spackbace on 24/03/2020 - 12:53
    +1

    1 tip would be to cut down bills where possible. Lower your NBN from 100 to 50 if you don't need it, look up the Netflix and Youtube Premium hacks on here (if those subscriptions are necessary), switch your phone plan to a low-cost option (Boost $150 or similar).

    • cloudy on 24/03/2020 - 13:01
      +3

      There are lots of good ways to reduce expenses and risks yes, I'm just writing about lesser thought of ones.

      I've read plenty of "how to save" threads before, I think what I've chosen to list is often never mentioned if ever.

  • tsunamisurfer on 24/03/2020 - 13:13
    +3

    First and foremost is having savings and being ahead in mortgage payments.

    We have had a decade of good times so people should have been using that to build up an emergency fund for occasions like this. This includes Renters how have consistently had a lower cost of accommodation than buyers, now is the time to get those savings ready.

    Reduce all costs
    - Cancel Gym
    - Cancel things like Netflix. Watch TV, or alternative methods of downloading content.
    - Cook yourself, make big batches of food so it is cheaper per meal.
    - Reduce the intake of expensive steaks, and start complementing meats with staples like Rice or pasta.

    • petry on 24/03/2020 - 14:22

      Expensive steak? unreal…filed under surreal…

    • fossilfuel on 24/03/2020 - 20:58
      +2
      • Reduce the intake of expensive steaks, and start complementing meats with staples like Rice or pasta.

      Don't eat meat with staples, that's not good for your stomach.

      • Euphemistic on 25/03/2020 - 08:39
        +2

        Staples in the stomach can reduce your appetite by leaving less room for food. Many overweight people have these implanted to cut down how much they eat.

  • netjock on 24/03/2020 - 13:15
    +1

    Get off ozbargains! Or more specifically don't buy anything that is non essential.

    Don't buy delivered food like Hello Fresh, Uber Eats etc.

    Eat stuff fresh and plentiful in supply. Pumpkin, Potatoes etc are in good supply and not too expensive. You can still eat the expensive stuff but just don't put so much in your stir fry.

    Practice self control now will be helpful when things really go down the drain.

    • 87percent on 24/03/2020 - 15:58
      +1

      its not just now that people shouldn't be non essential stuff, one of the stupidest comments people always make on OzBargain threads is "don't know why i needed X item, but i bought it"

      • netjock on 24/03/2020 - 22:56

        Was having that chat the other day with some of the older generation. If you're in uni with a part time job, get a good graduate job and you're suddenly spending it up. You working a few years and make six figures and your lifestyle quickly catches up.

        No buffers at all.

    • irajohn90 on 29/03/2020 - 14:36

      In these times, most certainly most people should look at reducing discretionary spending. Specially those at risk.

      Although the dilemma we face is that the less we all spend the more the economy retracts.

      Tourism will most certainly not recover in 2020 and those in that industry will suffer the most. This is because other countries may not recover from the virus the same time as other countries, leading to continued restrictions. Retail is taking a dive along with hospitality as well. Although, home delivery services such as Uber, Deliveroo is what's helping keep that industry afloat.

  • SBOB on 24/03/2020 - 13:27

    Use them up if you can find something you want.

    pretty tough there. Even gift cards all gone on the QFF shopping site

  • roundnumbersonly on 24/03/2020 - 14:08
    +2

    I've got a little bit of $$ sitting in my shopback/cashrewards accounts…should I withdraw them now?

    • cloudy on 24/03/2020 - 14:19
      +5

      From what I can tell, there's no reward for leaving it in. So why not? I should have added that to my list :)

  • petry on 24/03/2020 - 14:21

    Why bother buying anything if you're going to die in a few weeks?

    • cloudy on 24/03/2020 - 14:24
      +2

      why bother dying with money, when you can splurge it for a few weeks knowing you will die?

      • petry on 24/03/2020 - 14:25

        so you reckon that the state government's will be paying the yank undertakers who took control of the business before covid - just another coincidence - a cheap rate for mass burning?

        or you just want to be burden even when you're dead?

  • Cluster on 24/03/2020 - 14:51
    +5

    Unfortunately the best way to protect yourself financially at this time is to spend as little as possible. Look through all your bills and see where you can make cuts. Try to buy really cheap food. Obviously eating out and going to a bar is out, so that will in itself save quite a lot of money.

    This of course is bad for the economy and will lead to even more job cuts, but when everyone is asked to stay at home and we don't know how many months these restrictions will be in place, my finances come before worrying about anyone else's.

    And don't forget to thank the Chinese Communist Party for failing to prevent this disaster. They chose to cover up, deny, and arrest the doctor trying to warn people that a new disease had emerged, all the way back in December. Thank you sincerely.

    • netjock on 24/03/2020 - 23:03
      +1

      LOL by far the biggest contributor to COVID 19 in Australia is America

      We'll find you the bat that had coronavirus so it can answer to you.

  • JimmyF on 24/03/2020 - 14:55

    Frequent flyer points

    Creates a death spiral, by forcing them to burn up more cash faster providing these goods, rather than using that cash for other things.

    Online buying

    Agree, but in general just buy from well known places that don't seem shady.

    Gift cards

    depends, I don't see coles/bunnings/wollies going under any time soon. Some smaller more iffy retailers, well yes use them up. But that was the same before all this came about.

    Cash tired up in non-financial accounts

    Fair enough.

    • cloudy on 24/03/2020 - 15:08

      Creates a death spiral, by forcing them to burn up more cash faster providing these goods, rather than using that cash for other things.

      These loyalty schemes are not supposed to be so large on their balance sheets that it can cause a death spiral. If it does end them, they are too big for their own good.

      Agree, but in general just buy from well known places that don't seem shady.
      Plenty of reputable places will fold. So it's best to take the precaution.

      I don't see coles/bunnings/wollies going under any time soon
      Completely agree, I don't wanna make people fearful and think any of those establishment will fold. Just saying theres plenty of smaller retailesr who offer gift cards too.

      • JimmyF on 24/03/2020 - 15:56

        These loyalty schemes are not supposed to be so large on their balance sheets that it can cause a death spiral. If it does end them, they are too big for their own good.

        They're not normally a drain under day to day operations, but lets be honest, airlines won't be flying for the next 6 months international, that is a MASSIVE hit on the bottom line. Domestic flights will pretty much been ground to a halt also for at least 2 months as all the boarders lock down. People won't be moving about.

        All outgoings for plane leases, lounge rentals and so on are not going to stop for them. They won't get a free 'pass' like joe blogs is going to get from the bank.

        Qantas can only offload 2/3 of its staff, it still has 10k people on the books being paid, office buildings and so all sucking the money out of the cash while none coming in.

        So yes hitting up the loyalty scheme and cashing out the points is just another drain on the cash for them. Do it if you must for sure.

        Completely agree, I don't wanna make people fearful and think any of those establishment will fold. Just saying theres plenty of smaller retailesr who offer gift cards too.

        Agreed, which is as I said

        Some smaller more iffy retailers, well yes use them up. But that was the same before all this came about.

    • amanvell on 24/03/2020 - 21:49

      Creates a death spiral, by forcing them to burn up more cash faster providing these goods, rather than using that cash for other things.

      Don't forget that many points are gained on credit cards that you pay annual fees for the privilege of gaining points. If they suddenly decide to devalue or restrict (or cancel) them, then you have been paying fees, and will continue to pay fees, for no gain.

      I'm not an economist, but airlines only make money with planes in the air, and putting a freeze on points redemptions seems to me to be a likely first step to reduce cash burn.

      • JimmyF on 24/03/2020 - 22:07

        airlines only make money with planes in the air

        Correct, they are just taxis in the sky….. Parked planes don't make money!

        putting a freeze on points redemptions seems to me to be a likely first step to reduce cash burn.

        Agreed, this will be the first step if there is a massive rush

  • Euphemistic on 24/03/2020 - 15:59
    +3

    While I tend to agree with the tips, these are hardly going to protect you financially. No mention of wages, savings, not spending, investment strategies etc.

    I'm not going to offer advice because I'm not qualified except to say agree with the first reply. ALWAYS have some sort of rainy day fund. As a single person I used to try to ensure there was $1500 minimum cash available at any time. Now with a family I probably need 4x that (but have more right now)

    • cloudy on 24/03/2020 - 16:16
      +2

      I didn’t write this to go over topics that has been written over and over before in past threads. Many aspects I feel like has been thrashed out before. I’m just focusing on areas where I don’t usually see any mention, such as FFP.

      • Euphemistic on 24/03/2020 - 18:25
        -2

        Then the title is very misleading.

  • DoctorCalculon on 24/03/2020 - 19:42
    +1

    Is anyone here keeping an eye on their super? My investment strategy was set to Moderate. I just saw a record loss of $25,000 in less than a month. WTF!!!
    I cannot even get hold of my super company for an explanation due to a huge number of call volumes at the moment.

    • SBOB on 24/03/2020 - 20:15

      got a million dollar investment, thats not much of a loss
      got a 250k investment, well, thats pretty good in the scheme of things
      got a 100k investment, well, thats excessive for 'moderate'

      not sure what calling them will do… worlds ending, unless you're retiring soon (and if so, moderate/balance isnt what you would likely have been in) just forget it and worry about the more stressful things going on at the moment

      • DoctorCalculon on 24/03/2020 - 20:37

        This loss happened whilst my super was being rolled over to a new Employer plan with a new provider by the trustee.
        I had no access to my super until just recently I decided to check if my new member number was active. The welcome pack hasn't even arrived by mail yet.

        My first instinct even before checking was to set everything to cash. However, the damage was already done. Of course, I would want an explanation for how they can justify that kind of loss when the funds were with the new provider for not even a month, and they had neglected to provide member access sooner.

        got a 100k investment, well, thats excessive for 'moderate'

        Of course, it is. I am f'ing furious.

        worlds ending

        We are not there yet. China has managed to control this thing.

        • SBOB on 24/03/2020 - 21:11
          +2

          China has managed to control this thing.

          if you believe everything they release news wise to the world… sure
          not sure I'm 100% believing its going to be 'controlled' that quickly

        • Mad Max on 24/03/2020 - 22:39

          Are you with BT?
          They unilaterally decided to close existing BT funds and migrate people to a new BT fund. They charged people a fee for that in the form of a buy/sell spread and they locked people out of their super accounts for many weeks while the market was falling preventing people from switching to less risky options.

          • DoctorCalculon on 25/03/2020 - 19:36

            @Mad Max:

            they locked people out of their super accounts for many weeks while the market was falling preventing people from switching to less risky options

            Precisely the same thing happened.
            Funds rolled over on the 21 Feb 2020. I call them the following week regarding my account. They cannot look up my member number, and wait for the welcome pack in the mail. Three weeks later, and still the same answer. My account has not been fully created yet.

        • jetblack on 25/03/2020 - 08:23
          +1

          Wouldn't 'moderate', very generally speaking, be expected to somewhat keep in line with the markets (while aggressive would swing hard, conservative relatively stable)?

          25% loss on moderate option wouldn't be that crazy, that's exactly what the markets have done.

    • Jugg.Judy on 28/03/2020 - 03:54

      Hmm, aren't you suppose to be in ICU or something?

      • DoctorCalculon on 28/03/2020 - 19:42

        Hmm, aren't you suppose to be in ICU or something?

        WTF! In ICU for what? COVID-19?

        • Jugg.Judy on 29/03/2020 - 01:24

          It's a joke, name checked out.

  • [Deactivated] on 24/03/2020 - 19:48
    -1

    Tl;DR - Use common sense. What a waste of OzBargain's resources this thread is.

    • cloudy on 24/03/2020 - 20:13

      Most people don’t understand risk, even aspiring risk analyst will probably brush this off. Ey? Lol

      • [Deactivated] on 24/03/2020 - 23:33
        -2

        That thread became irrelevant a long time ago. Try use information that actually applies to someone's situation next time. Ey? Lol

    • cloudy on 22/04/2020 - 19:58

      https://www.ozbargain.com.au/node/532200

      Hope your telling half of ozb to use common sense.

  • TEER3X on 24/03/2020 - 22:09

    Move to a communist country, capitalism is dead

    • netjock on 24/03/2020 - 23:05
      +1

      Probably one of the safest places to be right now. At least they can stop people like the Bondi Bunch last weekend spreading COVID 19 around like it is about to expire.

  • darque on 25/03/2020 - 08:58

    To offset losses in the stock market, personally I'm hedging against a bear fund such as BBUS which will put a stem the bleeding for now!

    • [Deactivated] on 25/03/2020 - 10:42

      You clearly didn't check futures before the markets opened did you? Have a look at your portfolio now and come join the loss porn club haha

  • FrugalDealHunter on 25/03/2020 - 10:22

    What are the chances banks freeze redraw in mortgages when they feel the pinch?

    • cloudy on 25/03/2020 - 10:49

      One of the most unlikely events I can imagine. It’s the type of action that draws on a bank run, as it signals desperation for funds. So they don’t want to do that

      • FrugalDealHunter on 25/03/2020 - 13:11

        I would’ve said same about toilet paper hoarding if you asked me months ago.

        • cloudy on 25/03/2020 - 23:57

          That’s true, but individuals hoarding tp has no reputations risk to individual.

  • OzHunterNSW on 25/03/2020 - 12:15
    -1

    Rubbish… the world is going to explode into one huge party.

    The first thing I am going to do is fly off to China, and Vietnam. Next India. Next a round trip of the world.

    Shares are going to skyrocket…. just look at the consumerism going on now!

  • bluesky on 25/03/2020 - 18:25

    Don't put all your money in one bank account, tempting as it may be due to convenience, to maximise interest, etc. If the bank's operation is interrupted, for whatever reason, you still want to have access to some funds, as the problem may take time to resolve.

  • CheepAsChips on 26/03/2020 - 05:13
    -1

    Not sure you can protect yourself, large portion of the nation could become "financially walking dead".

    What can you do - ask the smiling assassin (PM) questions:
    How much is our debt (droughts, fire, coronavirus)
    Where is Govt handout coming from.
    Who & How will it be paid back.

    Start asking your MP questions, before our Great Nation has a new owner.

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