In our financial lives, a short term focus will result in an emotional roller coaster that rises and falls with the current state of the economy. Excellent stock returns and solid savings rates will bring hope and comfort; stock market downturns and zeroed out interest rates will bring disappointment and anxiety. Conversely, a long term focus means that we will notice the short term ups and downs without being consumed by them--even in the midst of a pandemic. More importantly, maintaining a long term focus means developing flexible strategies that are applicable during both fruitful and barren financial times. For example, during this season of Covid-19, when the Fed rate is likely to remain at zero for the foreseeable future; we can complain, or take advantage of the opportunities at hand: There is the opportunity to pay down debt, which offers an effective rate of return equal to the interest rate of the debt (e.g., an extra principal payment of 5000.00 on a 4% mortgage is like earning 4%). It is an opportunity for those who do not yet have emergency savings--to begin putting aside 3 to 6 months worth of expenses in a savings account--as one must have emergency savings regardless of interest rates. If you have been debating whether to put that extra couple thousand into a CD or a long needed home repair--well now is the time to get your home fixed up. While I have shared just a few examples here, please pay attention to Ken's counsel, and the posts of many experienced savers on this site who have added their wisdom and experience about strategies during lean times. The bottom line here is that maintaining a long term focus with respect to savings and finances will be of great benefit both financially and emotionally; and will allow for peace of mind during the best and worst of times.
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