Preparing for a season of uncertainty
As the effects of COVID-19 reverberate through all businesses in our economy, fishermen must also buckle down on their finances. Now is the time to do some extra financial planning to make sure you can ride the wave of uncertainty that may affect your fishery and your profits from upcoming seasons. Below are some items that you DO have control over that can help prepare you for any instability that lies ahead.
Review your upcoming expenses – Be sure to understand your upcoming boat projects and prioritize based on necessity. You may find you can shave off some pre-season expenses that may ease your finances.
Review your cash amounts – If your off-season income has been adversely affected by COVID-19, get an idea of where that will put your cash balances as you head into the season. Make sure you have enough set aside for necessary costs, emergencies and 2019 taxes.
Processor Credit – some processors offer credit cards or loans pre-season. Leverage these to cover costs if your cash balances will be thin.
Review and compare insurance – Insurance policies can be unnecessarily high and go unreviewed for years. Do your diligence and reach out to a different insurance company to get comparisons. There may be more competitive rates. Ask other fishermen with similar vessels what they are paying for their coverages. If you are a second year skipper with your first season behind you, it’s possible that more favorable options are now available to you as you are seen as having lower risk.
Extended tax filing – recent government action extended the tax deadline from April 15th 2020 to July 15th 2020. You can also extend (as usual) until October 15th. You should always keep enough in cash from the prior season to cover that year’s tax bill. If you are expecting to need fishing income from Spring/Summer 2020 to cover your 2019 tax bill or maximize retirement account contributions, especially those for a Solo 401k, extending to October 15th may be wise to give yourself flexibility.
If you are a home owner, consider a refinance of your mortgage – Rates are at all-time lows. You could speed up paying off your house, or pay less per month by locking in a lower interest rate. If your current rate is above 4%, it would be wise to get a quote from your mortgage broker.
About Robert
Robert Seid is a financial advisor and Partner at Blue Summit Wealth Management, an independent wealth advisory firm in San Diego, CA. He also captains an Alaska commercial fishing vessel in Bristol Bay. His experience in both industries provides him the perspective to share financial guidance specifically geared for commercial fishermen. To learn more about how Robert and Blue Summit can help you and your operation succeed, please visit www.bluesummitwealth.com or email him at robert@bluesummitwealth.com.
Robert started in the Bristol Bay fishery in 2011 as a green crew member, walking the yards to find his first opportunity. His love for nature and adventure found a home in Bristol Bay and, after his first year on the water, he was hooked. He has returned every year since and purchased his own vessel in 2019. As a skipper, his dedication to commercial fishing has only continued to grow.
