Recession Proof Your Finances
Now more than ever you need to recession proof your finances. We may not be headed into another great depression but we are in the midst of hard times that require buckling down and making wise financial decisions.
You can save hundreds of dollars a month by making small changes to your monthly spending. And during a time of economic downturn every dollar counts.
Are we headed for a recession or depression? The old saying is "a recession is when your neighbor loses his job; a depression is when you lose yours." Either way it will be tough times for everyone.
Recession Proof Steps
1. Cash is king. Now more than ever you need at least six months of wages set aside for emergencies. If you lose your job you need to have something to live on while you job hunt. And during a economic downturn, job hunting takes time.
2. Cut back on spending. Eliminate any unnecessary spending. Now is the time to cut back on extras and start putting more into savings.
3. Get rid of debt. Divert as much money as possible to eliminate your debt after you have built up your emergency fund to at least a minimum of three months wages, preferably six months.
4. Get a budget. A budget is a spending plan for your money. You need to have a plan in order to invest, save and spend.
5. Invest wisely. Do your homework on any investments before you commit. If you do not feel comfortable investing in a down market, seek expert advice. Financial advisors can guide you into the right investments based on your short-term and long-term goals.
5. Take care of what you have. Keep you car maintained to make it last longer. Keep all home maintenance current to avoid costly repairs later. Do as much as you can yourself and get a professional for anything beyond your capabilities.
Protect Your Money
In times such as this it is important to save as much as you can in case we are in a long-term recession. Don't panic, but be frugal. The worst is yet to come and planning for this is important. The economy continues to deteriorate which usually results in job losses, falling home values, high energy prices, slow growth and as we are already seeing a financial meltdown.
What should you do?
~ Make sure your bank accounts are federally insured. The FDIC guarantees deposits up to $100,000 per person. As of October 3, 2008, Congress will temporarily increase FDIC deposit insurance from $100,000 to $250,000 per person through December 31, 2009. http://www.fdic.gov/
~ Make sure your brokerage accounts are federally insured. The Securities Investor Protection Corp. will make sure that you get your shares and/or bonds back if your brokerage firm fails. However, it does not guarantee the investments' value. Visit www.SIPC.org for more details and to see if your brokerage firm is covered.
