Best virus money moves you can make: Attack household debt, hone job hunting skills

Investors are rightly unsettled by the fog of economic uncertainty involving COVID-19 (the coronavirus) as the infection spreads outside China. Investors are trying to gauge whether the virus will be contained and when. They are wondering how big the economic fallout from the virus will be, especially in China. The earnings of multinational corporations with their vast global supply chains and far-flung business units are at risk to measures taken to stem the spread of the virus.

That said, the U.S. economy is remarkably resilient. The stock market has also repeatedly shrugged off bad news. Odds are central bankers will ease policy to offset any worrisome signs of economic weakness, another reason Wall Street commentary seems geared toward recommending investors buy on the dip.

The problem with buy-on-the-dip mentality is the strategy works until it no longer does. The optimists will be right until they aren't. No one knows how wide the infection will spread or how big or small the economic reverberations will be in coming weeks.

Instead of trying to time the markets at times like these, focus on what you can control: lowering your household's financial risk. Here are two examples:

First, it's a reasonable guess that many households are carrying too much debt. American households are paying for nearly $14 trillion in debt, a record level according to the Federal Reserve Bank of New York. The increase has been led by mortgages, but auto, credit card and student loan debts are also up. A classic risk reduction strategy is to start directing more cash into paying down debts, with a priority on credit cards, home equity and auto loans.

Second, getting laid off at any age is tough, but if you are nearing the retirement years the risks associated with losing a job are higher. Older unemployed workers are more likely to join the ranks of the long-term unemployed. When they land a job, it typically pays less than their previous position.

One risk-reduction idea is to practice looking for a job without actually applying. You will learn what employers are looking for in their job postings with this exercise. More important, nurture your network of colleagues, former workmates and acquaintances. Job referrals mostly come through personal networks.

Figuring out where your household is most financially vulnerable and taking steps to reduce risk is smart personal finance. Let the pros figure out proper valuations for stocks and bonds in an unfolding COVID-19 environment.

Chris Farrell is senior economics contributor, "Marketplace"; commentator, Minnesota Public Radio.