Like many people around the world, the pandemic has made me feel worried and stressed.
It's often a struggle to sleep at night and I have to work very hard to keep my brain's 'fight or flight' mechanism from overwhelming my ability to think clearly or productively. Of course, sometimes I fail entirely.
Personally, I'm uncertain about the future as where I'll work once my contract in the UAE is up is unclear. I'm also concerned for the health of my family in the US, where Covid-19 still runs rampant, and for my career in general as an international schoolteacher.
Yet I know I am in much better financial shape than many others during this turbulent time. While I am fortunate in a number ways, one way has really stood out to me recently and that is the fact that my life is very simple.
Here, I will explain the value simplicity can give you in uncertain times and how it can prevent you from facing financial ruin.
Imagine a man, let's call him Tom. Tom has lived in the UAE for a number of years and had an executive position with a solid company. He earned a great salary and was living the life he'd always dreamt of – then Covid-19 struck.
He lived in a picture-perfect villa that he purchased a few years ago and was gradually paying off. He also had a property in the UK for holidays, a dream car and two children in outstanding private schools that gave them the best future he could afford. There may have even been a boat in the picture. He could afford his mortgage and car loan payments, the school fees and life's general expenses, but he barely saved at all, just a small amount each month.
As the effects of the pandemic started to take their toll on the global economy, Tom lost his job with little prospect of working in the near or medium term. So, how will he pay his two mortgages? How will he pay off his car? How can he sell his villa when property values have declined, and he owes more than it's worth?
The luxury he was used to has gone and instead, he has mounting financial obligations and no income to pay them, leading to rising levels of stress.
Living a life you can afford without building up an emergency fund for when things go wrong is a problem I see time and time again. Tom was living within his means but he was not creating any sort of backup fund to support him and his family in a tougher economic climate.
For me to move on, I merely have to turn in the keys to my rented room, return my rented car and pack my bags. I have no car loan, no mortgage, no pets and only enough possessions to fill a few suitcases.
I also have enough cash to live on for several years without working or touching my investments because I've lived below my means for years. I have no outstanding balances on credit cards and my student loans are clear as I paid all my liabilities off years ago through side hustles and living well within my means.
I know my life is not better when it's filled with luxury. It has no more meaning or happiness, just added stress because I have to maintain a certain salary necessary to pay for the upkeep of goods I don't really need.
Another key point is that my investments are all easy to liquidate. I have never bought into a high-fee 'savings plan' that locks me in over the long-term plan that is difficult to extricate myself from. I've been fortunate and educated enough to dodge that trap.
Instead, I've invested in low-fee index funds that I've bought myself through DIY brokerages, which I learnt about through groups such as SimplyFI.org on Facebook. This group helps investors learn about personal finance and investing for free and ensures they don't get lured into financial products than only benefit the seller and not the buyer.
If you're in a position to simplify your life, do so immediately. Only you can determine what you can realistically cut out, but even those things you think you 'can't live without' can easily be dropped and over time you will adapt to your 'new normal'. We are adaptable creatures, and just as we can get used to the dangerous softness of luxury, we can also embrace a more spartan lifestyle that many throughout the ages have realised is much better for us.
Don't end up like Tom, who is struggling to meet his many lifestyle expenses. Keep things simple, stay nimble and stay safe.
Dubai schoolteacher Zach Holz (@HappiestTeach) documents his journey towards financial independence on his personal finance blog The Happiest Teacher