Otium in the Time of COVID-19: Initial Lessons and Observations
Posted On March 29, 2020
It’s breathtaking how much can change in a matter of days and weeks. Once downplayed by some of the world’s leaders, the ongoing pandemic of the novel coronavirus disease (COVID-19) has now quickly swept the globe. As a result, the world’s economy is in a virtual standstill, stock markets tanked (and remain volatile) and nearly everyone’s way of life has been completedly upended, with no end in sight.
Just last week (the week ending March 21, 2020), a record 3.3 million Americans filed for unemployment benefits. (Update (5/17): Subsequently, 6.9m, 6.6m, 5.2m, 4.4m, 3.9m, 3.2m and 3.0m initial unemployment claims (seasonally adjusted) were filed for the weeks ending March 28 through May 9th, bringing the 8-week total to 36.5m. Nuts.)
In the US and elsewhere, the main priority now is to flatten the curve to avoid overwhelming hospitals and healthcare workers and to give researchers time to study the novel coronavirus and to eventually develop a vaccine. No one knows for sure how this crisis will play out (although there are some promising signs from the countries that took early action) or if/how the world will change going forward.
In the meantime, regular people can do their part to help by maintaining social distancing and good hygiene, while living their lives as best they can under the circumstances.
The New Normal: Month One
As for me, it’s been nearly a month since my company proactively mandated that employees work from home. All businesses in my area, except for grocery stores and other essential places, have been shut down. When we bring groceries or take out into our home, we take care to wipe everything down first or re-heat food before eating it.
I’m still getting used to this new normal. But, this unexpected seismic shift has given me a new perspective and clarity on my pursuit of otium and financial independence, while raising new considerations to think about and plan for going forward.
Lessons and Observations So Far
The goal of this post is to gather my scattered thoughts and distill that into a narrative of my experiences so far. I intend to revisit and explore many of these topics further, as I try to continue pursuing my goals.
First, however, I’d like to acknowledge that I’m privileged and fortunate to be in a position to better weather this storm than many, including not being among those at higher risk for severe illness. Some of that is due to mere timing and luck (such as my current age), some of it is influenced by me (such as my career path). It doesn’t mean I will come out of this unscathed, but it puts me on firmer footing and gives me a greater margin of safety. I don’t take any of that for granted. I’m also grateful to all of the healthcare workers, law enforcement, grocery store workers, delivery persons and others on the front lines for helping to ensure, at their personal risk, that civilization as we know it doesn’t completely collapse.
Having said that, what I’ve learned and observed so far — especially as it relates to pursuing otium and financial independence — can be grouped in the following main categories:
- Current Job
- Personal Life
- Grateful for my job and paycheck: Boy am I grateful to have my job right now. During these volatile times, it’s reassuring to continue earning a steady paycheck, have a community of co-workers to work and talk regularly with, be able to count on the support and resources of a company behind me, and have solid health insurance. Not having to worry about any of those things is a blessing; it’s difficult enough to manage the current uncertainty and disruptions to daily life.
- Proud to be contributing to the fight against COVID-19: My company is actively helping customers navigate and manage the current crisis, including coordinating the manufacture and supply of protective equipment and supporting health care workers, and I’m proud to be working at a company that’s doing that.
- Trying (and preferring) remote work. I’m grateful to have a job as a knowledge worker, which is conducive to remote work, and to have a company that’s set up well for it. Unfortunately, jobs in the hospitality, travel, restaurant and many other industries require workers to be physically present, so the current pandemic is impacting them especially hard. While I wish it could have been under happier circumstances, I value this opportunity to try remote work without having had to look for a new job that was work-from-anywhere from the start. I will think and write more about this later, but for now, suffice it to say that so far, I much prefer remote work (at least with the current setup) to working in an office. This experience gives me some food for thought, as I think about what life after my current job could look like.
- Delaying when I leave my job: I still plan to leave my current job eventually, as I’d like more freedom in life. But, given the current uncertainty and the opportunity to make more progress toward my financial goals, it makes sense to put off quitting for the foreseeeable future, especially if I can continue working from home for a while longer and if the workload continues to be manageable.
- Relieved to have cash reserves: I’m of a similar school of thought as Physician on FIRE and Mr. Tako Escapes when it comes to holding a significant amount of cash in reserve. So, although the stock market dropped by 20-30% in the past month and my investments dropped by several hundreds of thousands of dollars on paper as a consequence, I haven’t lost any sleep over it. As I’m still earning a paycheck (and adding to my cash reserves), I’m starting to deploy more cash to add to existing investments, which remain discounted from recent highs. I don’t think “this time is different.” But, as the future is uncertain, I’m investing gradually (dollar cost averaging) instead of investing in a lump sum.
- My (equity-heavy) asset allocation is likely appropriate for now: Excluding cash, nearly all of my taxable and nontaxable accounts are invested in equity securities, which are historically associated with higher risk and reward. Since I haven’t lost any sleep over recent signficant market declines, that’s one data point that my asset allocation is not too aggressive for my risk tolerance. I plan to work for a while longer and don’t plan on relying on investments to cover expenses in the next several years, so I can afford to remain invested in equity and assuming more risk.
- Wake up call to better prepare for financial independence: That said, recent market volatility has really underscored that I need to get more serious about planning for financial independence. My goal is to eventually have sufficient passive income to cover my expenses. But, as I reinvest dividend income and haven’t relied on it to cover my expenses, historically I hadn’t paid much attention to my passive income (although Personal Capital does that automatically). Going forward, I’m going to be more precise and active about tracking my passive income, similar to how Mr. Tako Escapes does it on a monthly basis. And, in addition to better measuring passive income, I need to come up with a better strategy for how I structure my investments, with an eye toward eventually being able to live exclusively off of passive income. For instance, I may reduce my holdings of shares of single companies (particularly those that don’t pay any dividends) and reinvest in broad market index funds that pay some dividends, and also avoid chasing high yields.
- I married the right person: Now that we’re both working from home, I’m spending more time with my spouse than ever before. Most of our weekdays are spent in separate work areas, so we can better concentrate, but, without a commute or social events, we have more time to cook, hang out and be around each other. And that has been wonderful. It didn’t take current events to make me think so, but I’m grateful to have quality time with my spouse. I’m also learning to be better about respecting space and not interrupting, among other things. The important thing is that we both care enough to be considerate of the other person, which will hopefully help our marriage survive the ups and downs for decades to come.
- Introverts are built for this: The current shutdown of our city hasn’t actually changed that much about our daily lives or weekend or evening activities. I still pursue my hobbies (such as playing piano and making bread and pasta), exercise, cook, read and do many of the things I would normally do. I actually have more time to do those activities now. I wish I could see my friends and family in person (and not just over a video conference) and I now need to be more strategic about shopping for groceries, but otherwise life has largely been the same (and even improved in many respects). This time gives me a glimpse of what retiring early could look like (largely the same, but with more time for personal activities and projects) and I have to say that I like it.
- Not having kids makes the current situation easier: For us, not having kids is a personal choice, motivated more about wanting freedom and flexibility in our lives and less about financial considerations. With local schools and daycare facilities currently closed, it’s been a struggle for friends and co-workers with young kids to keep them occupied throughout the day and to balance that with working from home. There are many positives about having kids that I will never experience, even if I see nephews and nieces or friends’ children, and I don’t know who will take care of us when we get older, but in the current situation, I’m thankful that I don’t need to take care of a child in addition to everything else that’s going on.
- Planning for future healthcare: I’m not currently in a demographic group that would put me at greater risk for COVID-19, but in the coming years and decades I will be (and who knows what future pandemics will be like). I need to think more about what type of health insurance I would get if/when I leave a full-time job and how I can best prepare for health care in the future as I get older.
- Plans change (and that’s okay): As mentioned before, I don’t have a target date for leaving my job or a specific net worth goal that I’m aiming for. Given recent events, I’m even less sure now when I’ll leave, and when and whether markets will recover sufficiently to allow me to achieve financial independence. But, I’m okay adapting to the circumstances, even if that means working longer than I had anticipated, as long as I continue to make progress toward my ideal life. There are many positives about my current job (as described above and in prior posts) and my legal skills and experience continue to be in demand, so I think I will be okay and will still have choices.
Some days are better than others. Who knows what the future will hold. Perhaps things will get much worse in the coming days and weeks, and we will look back fondly at this (comparatively) idyllic time and our present naïveté.
But, there’s hope from the experiences of China, South Korea, Taiwan, Singapore and other countries in flattening the curve and returning to some semblance of normality. And, I have faith in the talent and ingenuity of the world’s scientists and researchers to find a vaccine or mitigate the worst impacts of the disease.
Lastly, I’m hopeful that positive changes will emerge from this crisis, both (i) from a personal standpoint (assuming continued good health) and (ii) for broader society (including building resiliency in global systems, prioritizing truth and facts in the news and for decision making, and improving protections for the least privileged and most vulnerable in terms of healthcare and other public services).
In the meantime, I hope you and your loved ones stay safe and healthy, and wish that we can all enjoy better days ahead.