Simplify to Survive the Coronavirus Crisis: A Few Reassuring Thoughts

Does anyone remember Abraham Maslow? He was the one that identified that human beings are motivated by five basic categories of needs. His theory is that higher needs only begin to emerge when people feel they have sufficiently satisfied the previous need. And while poverty is still a global issue and income gaps continue to widen by some measures, one could argue that at least in developed countries, the majority of the population has successfully satisfied the most basic physiological needs and turned their focus to the next level of Maslow’s hierarchy. (See diagram below)

Until now.

With the Covid-19 crisis bringing the global economy to an abrupt halt, some of those basic needs have suddenly become a priority again. The situation only gets worse by the necessity to isolate oneself to prevent or slow the spread of the virus. At a time when emotional support needs are at their highest, we are forced to deal with these challenges on our own – with help from others coming only from a distance.

As our livelihoods have come under pressure and our health has been threatened, looking past the immediate challenges we face is daunting, if not impossible. It is a good time to revisit Maslow and his hierarchy of needs, particularly now that meeting the most basic of needs is in jeopardy for many.

Maslow’s Hierarchy of Needs

The most essential of those needs, that is, the need to breath, nourish our bodies, and quench our thirst, have taken on a new level of importance. Many of the things we take for granted on a daily basis have now become items that fly off the shelves at supermarkets – things like water, milk, meat, and toilet paper.  If you are lucky enough to have the resources to buy these products, even when they’re not available – at least there is some assurances that they will be restocked – even if the availability of those items becomes a bit sporadic.

Breathing, the most basic of needs, is a need we don’t give any thought to unless we are robbed of the ability to do so. The virus attacks the respiratory system making it difficult to breath, but for those not infected, even the simple act of breathing near someone who is infected could be dangerous – so now we must wear masks to protect ourselves from others and to protect others from us – from breathing on each other.  

Our sleep patterns have also changed, either by the stress of the situation, concerns about paying bills, or when our children are waking up in the middle of the night because of nightmares about giant bugs. (That’s the situation in our household)

The next two higher needs in the hierarchy have been just as negatively impacted too – health, employment, family and social stability. With health concerns prevalent in our everyday lives, employment and employment prospects at risk, and the need for love and belonging unfulfilled due to the need for social distancing, it’s no surprise we’re back to square one on the hierarchy.  

Interestingly, despite the uncertainty around our physiological needs and safety and security needs, we are making a valiant effort to fulfill the need to love and be loved, and to belong. That sense of connection we crave as human beings, however, has been reduced to short social gatherings through video conferencing. It’s been a great option to stay in touch with friends and family but when last I checked, a virtual hug just isn’t quite the same as a real one. And if you’re Cuban, a greeting without the traditional kiss on the cheek isn’t the same virtually. Plus someone might wonder what the deal is with all the lip marks on my screen. (Hold the remarks)

The situation we find ourselves in is enough for many of us to take up meditation – focusing on the here and now. I mean, if you’re struggling to keep your head above water after falling into a Class VI rapid, the last thing on your mind is what you’re going to have for dinner that night. That’s kind of what this feels like for many folks. What do you do if you fall into the rapids? Try to grab the safety rope. Try to stay calm. Try not to let go of your paddle. Simple rules but so difficult to do when thrown into that situation. That’s the state we’re in – one where we need to simplify.  

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Simplify to Survive

When faced with adversity, one of the best things we can do is to simplify. Adversity has a way of making us unfocused. Little things start piling up and feel like impossible obstacles to overcome. The feeling of being overwhelmed then paralyzes us and prevents us from doing the simple things that will allow us to get through. During these turbulent times, going back to basics isn’t just essential, it’s necessary. The ability to meet our basic needs is in jeopardy, and while it’s difficult to think about planning when planning is about the future, it’s important to take a step back and figure out how to breath, eat, drink, rest, and stay safe during unfamiliar times.

From a financial perspective, some individuals and families are getting by because their jobs are continuing to pay them as they work from home, or they have enough of a nest egg to draw from to reduce the financial strain this might otherwise cause. Others are relying heavily on government assistance until things normalize. Either way, one of the most basic financial tools at our disposal is a budget. Ugh! A budget? Yes, a personal budget is always taken for granted. No one likes to prepare a budget and very few people can actually stick to a budget. To make things worse, a budget might not even make sense to think about when your income has all but disappeared –  but there’s some value and psychological assurances of having one and trying to stick to it – especially during difficult times.

A budget helps you figure out where your money will be spent. It doesn’t mean you don’t have the flexibility to deviate from it, but measuring your spending versus your budget might shed some light on some interesting spending habits you’re taking for granted. It is also a great way to identify needs versus wants to help make your money go just a little bit longer. You might be able to find several $5 or $10 savings and with enough of them, they could add up to some meaningful expense reductions. If you dig deep, you might even identify a few larger expense items to reduce– as painful as they might be to eliminate. I mean, do you really need 200+ channels on your cable subscription and 5 DVR devices?

Managing Debt

During the Covid-19 crisis, many creditors have extended assistance to debtors by deferring payments for several months with the potential for further deferrals if needed. For individuals who lost their jobs or have taken a hit financially, this has been a huge help. But creditors aren’t just deferring payments automatically. You have to call and request some financial relief if you are impacted by the crisis. Most credit card and mortgage companies are providing very flexible options. The same goes for holders of student debt, although if the student loan is being held by the government, then those payments will automatically be deferred for 6 months – with no interest accruing. If you’re not sure if your student loan payment has been automatically deferred, just call.

Make a list of all of your current debts and call each one of them to request financial relief. Include your credit cards, mortgage, car loan, and any personal loans you may have. If you don’t call to ask for assistance, there’s a good chance your creditor assumes you have not been impacted and will continue to make your payments as scheduled. It’s important for you to reach out and let them know what your situation is.

Maintaining LT View

The crisis has hit like a bolt of lightning and many people are still shocked by the swift impact it has had on our everyday lives. I don’t mean the social distancing aspects of it – that part has gotten old already – people are ready to mingle and congregate again. I’m referring to the fact that when the virus impact was first felt and the economy started to shut down, the financial impact didn’t resonate right away. It was only weeks later when paychecks stopped coming in that people started to truly feel the financial strain.

Now that savings accounts have started dwindling and there is no news of an imminent return to normalcy, stress levels rise further, bills go unpaid, and as hope fades, the uncertainty of tomorrow starts to feel more like an extension of today.

In the short-term, there have been very few indications that things are getting better. Other than the slower growth of new cases – flattening of the curve – there hasn’t been much in the form of good news. Even the potential opening up of businesses by some states and cities has a hint of hesitancy. The good news of opening back up is clouded with the potential of reinvigorating the spread of the virus. And many business owners have already come out publicly to say that even if allowed to open, they weren’t going to open until the situation has improved further. Opinions vary on whether the timing of opening up is good or bad – only time will tell.  

The key to maintaining our sanity is to look long-term. Whether this event-driven recession turns into a secular recession remains to be seen. In a best case scenario, the economy recovers quickly enough to halt the abrupt decline in economic activity and returns to the moderate level of growth we had been showing – after a short period of abnormal ‘catch-up’ growth. But the longer economic activity remains depressed, the greater the risk that this becomes a self-feeding negative situation – workers remain unemployed, spending declines further, company’s lay off more workers due to declining profits, spending declines further, and on and on.

In the long-run, however, the economy will recover, the stock market will recover, and life as we knew it will go back to normal, even if the concept of normal becomes slightly different than it was just a few months ago.

A New Normal?

What was normal just a few months ago may not resemble the new normal that will survive after this pandemic. And even if it does, even if normal changes but is very close to what it was, it will take a considerable amount of time to get there.

Despite the effort for cities to reopen –the reality is that while some people will try to immediately go back to their normal lives, others will be more hesitant. I believe a very small group will make an attempt to normalize their lives – these are the groups that have protested the government shutdown mandates. But most people will ease back into it, indicating that  ‘normal’ is much further away than just lifting the government mandates. As I already mentioned, some business owners may decide not to reopen even if allowed to do so.

The lifting of government shutdown orders will certainly be the first step, allowing those that want to open to do so and for consumers that want to congregate to do so. But as I mentioned, this is a small minority and rest of the population will likely remain cautious until there is some form of treatment available.  

It could be a treatment that reduces the effects and/or helps a sick person recover faster and will be less likely to contaminate others. A treatment for the virus will give people some assurances that it’s affects and spread can be better controlled. But a return to normalcy will still be with trepidation until a vaccine is developed and a best case scenario for that is 12-18 months, according to some experts.  

In the meantime, we have to hold on to the rope, remain calm, and keep our heads above water.

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