Pandemic Finances

The following article is from regular contributor Kosmo. It was submitted earlier last week, before most of the conversation in the United States has rightfully focused on race and police brutality. I’m busy homeschooling a 6 and 7 year old through finals week (who knew there were kindergarten “finals”?). There’s great unrest in the personal finance blogger community as well. Everything around me seems to be an onion of fighting – just layers upon layers of fighting – home with kids, professional, politically, human rights, science (COVID-19) – did I miss anything?

We’re now about 2.5 months into the COVID-19 pandemic.  Some businesses are starting to open, while others will still be closed for a while.

My wife and I have both been working from home since mid-March.  It’s likely that she’ll be returning to the office in the next month.  My employer has announced that we will be working from home at least through Labor Day.  Even then, offices will only be at 25% capacity for a while.

It’s been a roller coaster ride of good and bad financial news:

Bad news: Investments

The pandemic has cost most people money, and we’re no exception.  The biggest hit was investment accounts.  We’re tracking slightly ahead of the Dow, but are still down for the year.  We’re mid-career, and although we haven’t saved quite as much as we’d have like (thanks, kids), we still have more in investment accounts than most people our age.  That means that we’ve taken a decent hit.

Some of our retirement assets are in pensions from my previous and current employer.  The pension from my previous employer is defined benefit, so there has been no impact.  The pension from my current employer is defined contribution, but can’t lose money.  It basically pays a dividend within a fairly tight range, based on bond rates.

Bad news: Compensation

Unfortunately, my bonus for next year will likely take a hit.  Last year, my bonus was around 10%.  The company will likely struggle to meet some of the ROI-related goals for the year, which will impact bonuses.

My wife’s employer is a hospital, and they have seen significantly decreased revenue.  They are looking at more drastic action, which will likely include some sort of temporary pay cut.  We’re just hoping it’s a small cut.

Bad new: home office costs

We didn’t go crazy setting up home offices, but my wife did need a few things.  She’s a CPA, so a second monitor (and the dock to make it possible) was a must, and she quickly got tired of the chair, so an office chair was a must.  Overall, the costs were about $350.

I didn’t have any costs for my own setup.  Currently, most of my job is involving analysis.  If I was doing a lot of heads-down testing, a second monitor might be a necessity.  For now, I’m happy hunkered down in the corner of the dungeon basement.  (It’s actually a finished basement, so it’s not a bad setup at all.)

Not all bad

I don’t want to dwell too much on the negative.  We’re better off than most people.  My wife’s pay cut will only be temporary, and I’m confident that the market will eventually rebound.  We did qualify for most of the stimulus check, which should offset some of negatives.

Good news: no day care

My kids are 12 and 10.  We’ve been paying people to watch them since they were born.  Day care, BASP (B and After School Program), and summer care.  For the last 2.5 months, they’ve been at home.  We’re still paying a holding fee (because if you lose your spot, you’re screwed), but the cost is much lower.

My daughter won’t be going back.  She’ll be in 7th grade next year and will be taking the bus to school.  It would have been nice (and cheaper) to have that as an option in previous years, but we’re 1.9 miles from the elementary school, and kids must be 2.0 miles from the school in order to qualify for a bus.

My son (going into 5th grade) will be going back at some point.  But by the time I go back to work, we will have saved more than $2000.

Note: the IRS is allowing people to change their flex spending for dependent care, but only if their employer allows it.  If you won’t need your entire flex spending amount, check with HR to see if you can decrease your election.

Good news: long hair

I’m the only member of the household who has had a haircut since March.  No, I’m not a jerk who sneaks out to the barbershop in the dead of night.  For the past twenty years, I’ve used a home haircutting kit to cut my own hair.

My son’s hair is getting a bit shaggy, and we’re currently planning a trip to the cuttery next week, with all possible precautions.

Haircuts are expensive.

Good news: lower discretionary spending

We’re spending a lot less money on discretionary things.  We’re not dining out (although we’re doing delivery a couple of times per week), not buying random stuff at the mall, not buying gas, not incurring wear and tear on the cars.  No date nights, no movies, no sports gambling (because there are no sports).

Instead of buying snacks at the vending machine at work, I’ve been getting 2 liter bottles of generic cola (99 cents) and bags of candy bars.  That’s saving a few dollars per day.  I could save even more if I snacked on water and carrots, but who are we kidding?

[Editor’s Note: Our investment in a custom SodaStream kit has kept us with plenty of fizz. Flavorings, such as diet coke, or calorie-free fruit is very cheap.]

We run a lot of household expenses through our Fidelity Visa, since it automatically puts the 2% cashback into 529 accounts for the kids.  The monthly costs has been about half what it is in a normal month.

What are we spending money on?

We’re still spending some money, of course.  The grocery bill has skyrocketed, since those groceries are now providing nearly every meal.  In  a typical week, the kids would eat at school (2 kids X 5 meals per week = 10), and we would eat several meals out.  So the cost of the typical meal is lower, but almost all of that cost is on the grocery bill now.  (Speaking of food, it’s lunch time for me – time to microwave a Banquet Salisbury steak TV dinner.)

[Editor’s Note: I’ve been occasionally splitting Hungry Man dinners for lunch with 7 year old. It’s hard because he doesn’t eat a lot of different foods.]

As mentioned in my last article,  I have begun collecting stamps.  I’ve spend too much and money on stamps in the past month.  It’s a drop in the bucket compare to what we’ve been saving, but it has definitely become a bit of a money pit.  The good news is that I should be done buying supplies for a while.  I have my tongs, magnifying glass, stock pages, and storage boxes.  So I’ll just be buying stamps now.

I also spent a few bucks buying digital codes for the Jurassic Park and Hunger Games movies.  For a total cost of about $30, I was able to get nine movies.  In a normal situation, I don’t have much time to watch movies.  Lately, I’ve had quite a bit of free time.

We also decided to upgrade tech for the kids.  They currently have Fire 6 tablets.  We actually got a great deal  of them at the time.  By taking advantage of a Prime Day deal and signing up for an Amazon credit card, our total cost was $47 – or $23.50 per unit.  The downside is that they kinda suck, and that they’re now five years old.  Battery life has always been an issue, and it’s getting worse.  Surprisingly, the kids haven’t complained yet, because Minecraft still works.

I found a deal on the 8″ Lenovo Tab 3 and bought two of them.  I have a Lenovo Tab 10 for myself, and it has been a very good user experience.  The Tab 3 doesn’t have the same specs, but it should be good for their needs – Minecraft and streaming video.  We ended up paying $59 each.

Non-financial news

We were planning a vacation to Door County, Wisconsin in a few weeks.  Our AirBNB was very nice and was within walking distance from Lake Michigan in 2017.  We planned a return trip last year, but had to cancel due to a family medical situation.  So we made the same plans for this year.  Unfortunately, with all the uncertainly, we decided to push this back to next year.  Finger crossed that everything works out next year.

What about you?

How have your finances changed?

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