Adjusting Household Action Plans to Adapt to Rapidly Changing Circumstances
- As noted in the 3/22 update, with things changing very quickly, I believe we must constantly review new developments and consider how changing circumstances may change our plans for dealing with the virus and its potential consequences.
- On Sunday, New York Governor Cuomo acknowledged no one knows how long we’ll be forced to deal with the coronavirus, but he warned New Yorkers that we may be dealing with the coronavirus and suppression measures for up to 9 or more months (on a news program, the Secretary of the Treasury said that we might be dealing with the coronavirus for 10 to 12 weeks).
- Governor Cuomo also excoriated those in New York City that were disregarding social distancing rules, and he ordered the Mayor of NYC to have a plan to enforce social distancing rules ready within 24 hours, including no group activities in parks.
- While these 2 announcements by Governor Cuomo are only a small sample of what is happening around the country on a constant basis, they raise two important issues for us to consider when deciding how much to prepare.
- First, we may be dealing with this virus for much longer than previously thought by many.
- Second, as people continue to disregard social distancing, there is an increased likelihood that federal, state and/or local governments will impose harsher suppression measures to slow the spread of the virus (including full lockdowns and curfews), especially in locations where there are large numbers of new cases such as New York City.
- As noted in the 3/22 update, the CDC has recommended that:
- all households create a plan of action in case of illness in the household or disruption of daily activities due to COVID-19 in the community (each household should base the details of its plan on the needs and daily routine of your household members).
- In the event of an outbreak of COVID-19 in your community, you should put your household plan into action.
- Although every plan will be different, I will post an updated version of my household plan within a day or two as some might find it helpful (my existing plan was attached to the 3/15 update).
Answer the Touch Questions Now – Dealing with Difficult Questions in a Crisis May Lead to Suboptimal Decisions and Outcomes
- All of us know that we may have to deal with very difficult situations, some of which may require decisions to be made on expedited basis. Such decisions might include such things as (i) what parents should do with their kids if either parent or another kid becomes infected?, and (ii) what should you do if your parent needs to go hospital for any reason?
- So, while very unpleasant to consider negative events, we are living in extraordinary circumstances and anything that could require us to increase our exposure may have significant ramifications for all of our family members. Some events may require quick decisions and be very upsetting or disorienting, which could result in suboptimal decisions and outcomes. Far better to think though the issues and have a carefully considered plan that can be immediately implemented if necessary – just like pilots have a check list to run through if a plane runs into trouble.
Preparing for a Long Haul
- In order for our action plan to be effective, we will need the resources to implement our plan and sustain our family through the outbreak.
- If our household has limited financial resources available, then it becomes particularly important for us to prioritize our needs because during the outbreak (i) our wages may be reduced or suspended for a significant period of time, and (ii) our investments may suffer a substantial reduction in value.
- In situations in which we need to conserve our available cash, we should not only eliminate discretionary expenses, we should determine which expenses can be deferred. For example, in some areas, evictions are not permitted (for 90 days in New York), so rent could be deferred in favor of food or other essential needs. Same for utilities and mortgage payments. In some areas, the courts are closed until further notice, so no legal action is necessary.
- In addition to risk of a material reduction in financial resources, we are facing uncertainties regarding (i) the duration and severity of the outbreak, and (ii) the scope and duration of suppression measures that will be imposed by federal, state and local governments to reduce the spread of the virus.
- So, much like a distressed company, if our financial resources are limited at a time we are facing numerous uncertainties, we should only make payments to critical vendors and defer all other payments.