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Like all of you, I’m horrified by the events of the last few weeks. In hindsight, none of us should probably be surprised after seeing what happened in China just a couple of months ago.
And yet, it seems crazy just how quickly life “as we know it” has changed in this country. So, I figured I might as well put a post with some random thoughts on the matter.
Travel plans
Not surprisingly, all of my travel plans within the next few months have been cancelled. Unfortunately, that includes my carefully planned trip to Japan and Hawaii. I was hoping to at least salvage the Hawaii portion, but 14-day quarantine for visitors has squashed that thought.
Technically, the quarantine is currently in effect until May 20th, but I have every idea that it will be extended. Plus, I don’t want to be in the first batch of visitors anyway. I’m not sure it would feel like a vacation when all the locals are giving you a stink eye.
It’s obviously not a huge deal in the grand scheme of things, and it would be tone-deaf to whine about a lost trip. But I would be lying if I said that I’m not disappointed to pull the plug. I’ve spent a lot of time planning the itinerary, booking the award tickets, etc. This is my fourth trip in a row to be cancelled/modified. But it is what it is. As Bill Gates has recently said, it’s tough to go on with your life and “ignore that pile of bodies in the corner.”
Long term, I’m fairly sure that things will return to semi-normal. When? It’s hard to say, but I predict that a successful treatment for the new virus would be a game changer, at least when it comes to flights and land vacations. If that happens, I might even try to rebook a trip to Japan at the end of July of this year. But it’s very unlikely.
I believe that airlines may do temperature checks and even require taking a coronavirus test as long as it’s widely available and not cost-prohibitive. Obviously, that won’t happen next week or even next month, but I predict that by the end of summer the airlines will start increasing capacity, though with new barriers to entry.
I’m not very optimistic when it comes to cruises. I honestly believe the industry is in a terrible spot, and there will be several bankruptcies resulting from this crisis. As I’ve told Nancy, I don’t think I would be comfortable going on a cruise until there is a vaccine.
Accumulating miles and points via credit cards
There will be minor changes to my strategy. If I see a good deal, I will still sign up for a card. Why wouldn’t I? Crisis or no crisis, there is never a bad time to collect miles and points at a super low cost, aka switching credit cards. Anybody who says otherwise is being ridiculous.
But what if you lose your job? That’s an even bigger reason to sign up for the card now, while banks will still approve you. Of course, if you suspect that you may need to move and apply for new mortgage, that’s a different story. If you can’t control your spending, then don’t be tempted either. Otherwise, why pass up on a good deal, right?
Sure, signup bonuses may increase in a near future, but that’s like trying to time the market. So, if you are eligible for new bonus on Chase Sapphire Preferred, there is no good reason to delay applying.
Speaking of, the main change I was referring to earlier has to do with the type of currency offered. For example, it would take a lot to tempt me to sign-up for Cathay Pacific credit card from Synchrony bank. I’m not convinced that the airline will stay in business due to this crisis.
One exception is United miles. I highly value this currency, especially after I used it for last-minute tickets to Europe, so my parents wouldn’t have to live in Frankfurt airport for weeks or possibly months. I plan to use Plastiq (my referral link) to prepay the loan on my husband’s Ford Mustang, so I can collect an additional 25k United miles sign-up bonus on my new Chase United card. A sliver lining for a foolish yet fun purchase.
I also don’t need any more hotel points or certificates. I can’t even use up the ones I have because of stay-at-home recommendation. On the other hand, flexible points and cash are king in my neck of the woods. That’s true for normal time, but especially so now.
I’m ruthless when it comes to renewing credit cards with annual fees, now more than ever. I’ve said before that I only keep products that give me some perk upfront. That’s why I have a small collection of hotel credit cards that give points or annual certificates. If I can’t maximize them, there is always a Hyatt Place an hour away where my kids can enjoy the pool and a hot tub. I hope for the best, but prepare for the worst. This year has definitely been the worst. Worse than worst, in fact.
I currently have several hotel certs that will expire in a few months and I’m not sure I will be able to use them, to be honest. Fortunately, Hilton has extended the expiration of weekend certs to next August, so that helps. Your next move, Hyatt? I’ll probably be able to come up with a few local getaways this summer, but perhaps I should trim my credit card collection going forward.
Those of you who have cards with $550 annual fees, maybe it’s time to let them go. What good is Centurion lounge access if you aren’t able to fly anywhere? Uber credit is nice unless there is a stay-at-home order.
Finances
Since my husband and I got married, we made a point of keeping our overall expenses and debts low. We paid off our mortgage at 33 and bought cars with cash. Though I did break that rule 3.5 years ago when we purchased my husband a brand new Ford Mustang via 0% financing loan. I’m a sucker and wanted to make him happy. Personally, I drive a 2009 scratched up Toyota Sienna with 160k miles on it.
Why am I telling you all this? Well, the reason we try to keep expenses low is so we can always live on one income. You never know what may happen, especially when you have kids. Our county’s schools are currently closed, and will likely stay that way until the end of the school year. So, somebody has to be home with the kids and teach them stuff. Or something.
Fortunately, my secular work was flexible enough that I could walk away when that happened. While my income provided more flexibility in the budget, it wasn’t essential. And I will be able to go back if I choose to do so. The point is, our relatively lean budget affords me the luxury of staying home, and I am so grateful. I’ll probably be keeping my old Sienna for years to come.
Our society is obsessed with having the newest gadgets and spending money like there is no tomorrow. Consequently, when a crisis hits, many aren’t able to weather it. To be clear, I’m not referring to low-income families who are barely making ends meet as is. That would be obnoxious.
But if you are an upper middle-class family with no savings, I urge you to make some changes right now. Maybe forego a major vacation next year and set up an emergency fund instead. This is especially true if you have young kids at home. Last month has shown us that you should always expect the unexpected and not get too comfortable when it comes to your paycheck.
I recommend setting up a Roth IRA via Vanguard.com for an emergency fund, so you can have the best of both worlds. Just don’t put it in stocks.
Speaking of, I’ve just funded an IRA and put money in a high-dividend mutual fund. I don’t plan to touch it for many years, so if it loses value in a short term, I’m not super concerned. Cash is king right now, but I don’t think it’s wise to give up on stocks completely. YMMV.
Mental health
The news items and images we are seeing are disturbing, to say the least. And the worst is yet to come. I’m referring to toilet paper shortage, of course! Well, I’m ready.
This photo is from three years ago (just an FYI due to some comments I recently got)
All joking aside, it’s very unsettling time right now for the whole country. Plus, several of my husband’s relatives work in healthcare, and Florida is one of the hot spots. That said, it’s important to remember that we can only control so much.
Mental anguish and obsessively following the latest disturbing news isn’t going to cause this virus to magically disappear or make my family more safe. But staying home and foregoing all travel for awhile can. Just ask the celebrities who can’t resist posting selfies in their luxurious mansions.
I highly recommend reading this article: A letter to the UK from Italy: this is what we know about your future. It might as well have been addressed to the world. While our county is not under “stay at home” order (for now), I could relate to the author’s feelings.
“First of all, you’ll eat. Not just because it will be one of the few last things that you can still do.”
This is such an Italian thing to say, but it happens to be true. I find myself eating more than usual, maybe as a comfort mechanism. And I’m seriously addicted to stuffing my face with Belarus candy that my mom brought me recently. Maybe because it takes me back to my childhood when I didn’t have to worry about keeping my family safe from a pandemic.
“Many of you will fall asleep vowing that the very first thing you’ll do as soon as lockdown is over is file for divorce.”
My husband has been working from home for the last week. It’s been wonderful and miserable at the same time. I love my husband very much, he is my best friend. But we definitely bicker more than usual. While I’m most definitely not filing for divorce when all this is over, I plan to cherish my alone time. You bet I will.
“Your children will be schooled online. They’ll be horrible nuisances; they’ll give you joy.”
So true.
“You will try not to think about the lonely deaths inside the ICU.”
Yep.
“Being locked up in a house with a pretty garden or in an overcrowded housing project will not be the same.”
I’ve never been as grateful as I am now to NOT live in a large city. Having a yard and a porch to sit on is something I normally take for granted.
I can’t even imagine being stuck in a tiny NYC apartment, I would lose my mind. If you are in this situation, my heart goes out to you.
“…When all of this is over, the world won’t be the same.”
Amen.
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Author: Leana
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
@Leana,
I see that a married couple is in the 12% bracket at a much higher amount than a single person.
Anyway, I must have missed the part where you were talking about this being an IRA account. It definitely does not make sense to buy muni bonds in an IRA. If what you are doing is working there’s no reason to change.
BTW, it wouldn’t let me reply to you as it must not be that many levels of nesting comments.
@Eric Yeah, I’m absolutely not complaining about being middle-class! We are fortunate my husband still has a job. No pay cut so far, thank goodness.
I honestly don’t know if my investment strategy is sound. I hope so. I guess time will tell.
@Leana,
You mentioned buying a “high-dividend mutual fund”. What is the yearly rate on the dividend? What is the ticker symbol so I can look into it?
@Eric Sure thing. The ticker symbol is VHYAX. You can see this page on Vanguard to learn more https://investor.vanguard.com/mutual-funds/profile/overview/vhyax
I will warn you, I’m no financial expert. This is an index fund that consists of large companies, and all the market risks apply. It did well over the last five years, but stock market is obviously extremely unpredictable right now. I’m investing yearly in a traditional IRA that I hope not to touch for many years. It’s likely I will rebalance it once we get closer to retirement.
I just did a quick calculation and it seems to pay about a 3% dividend per year. That’s not bad but I wouldn’t consider it “high yield” (I know it’s called “High Dividend Yield”).
Have you ever looked into buying muni bonds? They sometimes have a better yield than that and are usually exempt from Federal taxes.
@Eric Thanks for the tip! I need to research this option a bit more. I understand it’s an attractive choice for those in high income bracket. I suspect that won’t help me a whole lot, as I hope to draw just enough not to pay any federal taxes in retirement. Well, assuming we can still cover travel costs via miles and points! Our portfolio is quite modest, and I should honestly be saving more each year. But there is so much to see in the world. This year we haven’t spent a lot on travel, but that will hopefully change in 2021. Travel is one area where I don’t mind splurging, retirement be darned. 🙂
What do you consider a high income bracket? Last year I was in the 22% bracket and I think saving that amount is pretty good.
Of course the main negative is the maturity is many years away but you could sell the bond (possibly at a loss) if you are really desperate for the funds.
@Eric We are actually in 12% income bracket. When I say we are an average middle-class family, I’m definitely not kidding. The thing with traditional IRA’s is that they are technically taxable when you take distributions. However, if you don’t have any other wages, then standard deduction will likely wipe them out ( as long as you withdraw at 59 1/2). Social security is currently not taxable either. That’s what I was referring to when I said that I’m hoping to never pay any taxes on these contributions regardless. Of course, life rarely works out the way you plan it. Just look at this year!
Jennifer and Cindy I meant. And yes as mentioned above it is very difficult not to take advantage of some of the great deals out there right now. I want to book a couple different trips but my wife talked me out of it. I think she is right and more than likely they will still be there when we get a little more clarity on where this is all headed.
@Erik It is hard to know what to do. I like to plan things way ahead, but it’s probably not the best thing in this environment. I’m hopeful things settle down in a few months, but who knows. I have to remind myself that travel should be the least of my concerns right now. As long as we are healthy and my husband has a job (and we have toilet paper, haha), I don’t have anything to complain about,
You serious need that much toilet paper when people are scavenging for 1 pack??? Disgusting.
@Purdon Jennifer You need to relax. This photo is from three years ago, and I was joking.
Jokes are funny. Your NOT!
@Cindy I honestly didn’t mean to trigger you in any way. You were clearly offended by my sense of humor and that’s fine. Everyone is entitled to their own opinion. I hope you are having a good day, and I’m not being sarcastic. It’s a stressful time for everyone.
Wow, it was clearly just a joke. Jennifer and Purdon you two need to relax a little bit. Go outside and gets some fresh air. Stressful times for everyone but no need to take it out on others. Stay safe everyone!
Leana,
I am in NYC locked in a small apartment 🙂
But I am very lucky because my building has a large garden and I can go to kick a soccer ball with my 7 year old son and walk around.
I had a credit card strategy all setup for mid april. Finally I was going to be out of the woods (5/24) and I was studying carefully my application strategy. I considered to apply for the BA card because I love Avios. Maybe a Marriott card for a couple of hotel nights. Or IHG because I had one 7 years ago and closed after 1 year.
Now everything seems so distant and my only concern is to keep my job (so far so good) and to be able to visit my family in Brazil. I am sure international travel is going to change and maybe quarentine is going to be the new normal for a while making overseas travel impossible. But I am still watching the fares for August to go to Brazil. Last week Latam was charging $280 RT. Almost free. But I didn’t purchase because there is a great chance the airline can go belly up and I will be out of $600.
I feel very safe at home and thanks for the posts. It is a great distraction and it is nice to talk about miles and points despite the terrible times.
Be safe and healthy from your long time reader.
Tania
Tania, it’s so good to hear from you! I’m glad you are doing OK. Yes, having a garden in the building definitely helps. It’s the little things that we normally take for granted that make all the difference. Florida governor has just announced a “stay at home” order for our state, sigh. I miss going to the beach, now more than ever. I’m not sure when we will be able to go, but it’s the first thing I want to do when the lockdown is lifted. But it’s silly to complain about these this stuff considering what some have to deal with at the moment.
I do hope you make it to Brazil in late summer, but I agree that buying tickets now is too risky. I was really tempted to use miles on Japan at the end of July/beginning of August, but my husband talked me out of it. No sense in speculating.
Hope you keep your job!
@ Leana — I hope you don’t plan to travel in July.
@Gene I most likely won’t. It will honestly depend on how things look at the time. We comply with guidelines from the government as well as CDC. I’m a rule follower. But at some point things should hopefully settle down. When that will happen is anyone’s guess. I have several certs from Hyatt cards due to cancelling Japan trip, so I’m hoping to at least utilize them locally. But if I don’t, it’s not the end of the world.
Please! Don’t hoard Toilet paper! Your picture of that was just awful! Perhaps you can donate some of that. It’s because of your stock pile that there is no TP in stock! Don’t be selfish! Think of others during these difficult times.
@Cindy The photo is from three years ago, BEFORE the pandemic. Got a good deal from Staples. I was joking here, obviously. Not that it’s any of your business, but I only have a few rolls of toilet paper at the moment. Also, you can still order toilet paper on Amazon. I get that folks are angry right now, but this is a bit ridiculous.