Things You Can Do Now to Beat the Recession
First and foremost - do not panic! Recessions come and go and economic recovery is going to happen. You will and can survive this period of economic decline. Following these money saving tips and you just might thrive.
Develop your greatest asset - Your attitude! It’s the way you respond to life and all of its circumstances. It is more important than how much money you have or how much you owe. Stay positive and things will get better!
In these challenging times, your attitude will either be your greatest asset or worst liability. If you are fearful, negative or just plain depressed you will guarantee your own misery and financial doom. The key to changing your attitude is to reprogram your mind. It`s a matter of focus because whatever you choose to focus on is what you will move toward. Energy flows where attention goes! Focus on positive and it will happen!
Assess your resources. Figure out exactly what you earn, what you own and what you owe. What potential benefits, such as insurance, do you have? How long would it take your unemployment benefits to kick in and to get that first check in the event you are laid off? Do you have enough cash to bridge the gap? Of all the things you own, what could be liquidated and how long would it take to accomplish that?
Live below your means. It`s a simple strategy: Spend less than you earn. Stop living paycheck to paycheck. Start swimming against the tide of the consumer credit culture that says you can have it all and then makes it possible for you to consistently spend more than you earn.
A good rule of thumb: Adjust your lifestyle so that it fits within 80 percent of your income. That ensures you will never be broke, no matter what happens. Reducing expenses is a noble endeavor, but you can`t expect to go from spending 125 percent of your income to 80 percent overnight. But if you start NOW and take it a step at a time, you will be amazed how quickly your financial picture will change for the better.
Accept that lifestyle changes are necessary, rather than trying to find ways to keep living the way you have been. You`ll have to buck a system that insists you deserve everything now and you can pay for it later. But that`s good. The consumer credit system is self-serving. It sees you as nothing more than a profit center.
Look at every place you spend money. What can you do to spend less? What expenditures can you eliminate altogether and where can you cut back, even if it`s only a little? The pay off for living below your means is that in time you will have money for what`s important to you and the freedom to do the things you want to do.
Live below your means. You`ll sleep better at night and be happier by day. Track your spending using an excel program such as this one.
http://office.microsoft.com/en-us/templates/TC010233421033.aspx
Get out of unsecured debt. The minimum payment on credit card debt is calculated as a percentage of your current balance. The minimum payment drops as your balance is paid, but thanks to the magic of compounding you`ll end up paying for a long, long time if you allow the credit card company to determine the way you pay off the balance. If you have a $1,000 balance at 18 percent with minimum payments of 2.5 percent of the outstanding balance -- and you pay just the minimum required each month -- it will take you 153 months (almost 13 years!) to be rid of that single debt. And you will have shelled out another $1,115 interest to that creditor for the privilege.
First you must determine to add no more purchases to your existing credit card balances. Next you must "fix" your payments -- whatever your minimum payments are this month, decide you will pay that same amount every month even if your creditors will take less. It is very important that you "fix" your payments. When you finish paying the first debt, rejoice and then take that payment and add it to the payment of the next debt in line. When it is paid, take both payments from the two now-paid debts and increase the payment on the third debt in line by that total amount. And on and on.
If you diligently follow this plan you will be out of debt in a matter of years (like two or three) not decades.
Build a nest egg. Start right now to accumulate cash. Don`t stop until you have nested away an amount equal to pay your bills for a full three months (six is better). Then leave it alone. Don`t borrow from it or play around with it in any way. This is a sacred sum because it could mean the difference between survival or disaster in lean times. A good target: $10,000. Sure, that`s a lot of money. So start with $1, then make it $2. Before you know it you will have $50 and enough to put into a safe place where it can begin to earn interest and you can continue to "feed" your fund.
When deciding where to park your “nest egg“, think safety first. If you can earn interest all the better, but do not put this money at risk.
Refinance your mortgage. Mortgage rates are lower than they`ve been in 30 years, and lenders are hungry. That presents an amazing window of opportunity to reduce your interest rate and convert variable-rate mortgages to fixed-interest rate mortgages. Many mortgage lenders are offering no points, no cost, no fee programs. If you have a good track record and clean credit report, you are in a beautiful position to drastically reduce the cost of your mortgage. If you have an equity or second mortgage, you may be able to roll it into a low-rate first mortgage. The most logical place to start: Your current mortgage holder. Call and ask what program they have for you. Staying with your lender may save you the cost of an appraisal and other fees.
Unless you plan to move in the next year or so, go for a 30- or 15- year fixed rate. If you are willing to "buy down" the rate, you might get an interest rate in the low-six- or high-five percent range. You`ll have to pay "points" (a point is equal to one percent of the loan amount) for each 1/8 to 1/4 percent interest rate reduction below the going fixed-rate no-fee deal. You`ll have to run the numbers, but this could be an excellent way to go if you can recoup the points in lower payments within say two years. Strategy: Refinance to a lower interest rate but then continue making the payments you are used to. You will pay off your mortgage much sooner and avoid paying a ton of interest.
Put the lid on stress. Stress is not only hazardous to your health, it can make otherwise tolerable events of life unbearable. Stress skews your judgment, makes you more prone to make hasty, stupid financial decisions. Releasing the stress in your life will help to clear your mind so you can manage your finances calmly and intelligently.
1. Don`t rely on your memory. Write down everything -- appointments, when library books are due, etc.
2. Get up 15 minutes earlier so you don`t start the day already behind.
3. Embrace integrity. Do nothing that leads you to tell a lie.
4. Keep a duplicate car key in your wallet.
5. Don`t procrastinate. Hard work is simply the accumulation of easy things you didn`t do when you should have.
6. Organize your home and work space so that everything has its place. It is stressful and time consuming to lose things.
7. Plan ahead. Don`t let your gas tank go below a quarter tank. Buy stamps when you still have some. You get the idea.
8. Simplify, simplify, simplify.
9. Get enough sleep. Some of us need an alarm clock to remind us to go to bed.
10. Breathe deeply. Stress promotes shallow, short breaths. Check your breathing throughout the day and take several slow, deep breaths. Altogether now ... in through the nose, out through the mouth s-l-o-w-l-y.
11. Resolve to be tender with the young, compassionate with the aged, sympathetic with the striving and tolerant with the weak and erring -- for sometime in your life you will have been all of these.
12. For every one thing that goes wrong, there are 50 or 100 blessings. Count them. If your employer downsizes some will lose their jobs. And many will not. Make sure you`re one of them. Keep your expense account significantly below your authorized amount. Don`t complain but instead develop authentic gratitude for your job. Don`t whine, demand or play workplace politics. Keep a low profile. Do more than is required without demanding recognition.
Stay in the market. If you are in the stock market, don`t sell. Stick it out. Remember, until you actually sell you haven`t lost anything, even if on paper it appears that you have. History has shown stocks to be a great long-term investment. Don`t fret, don`t stew, don`t hover. Just get on with your life and devote your energy and attention to the other nine items in this list.
Avoid scams. They are the natural outgrowth of a stunted economy so brace yourself for the onslaught. You`ll be able to paper a small room in your home with all of the pre-approved offers for credit cards, loans and "opportunities" to get rich quick. (Actually that papering thing is not a bad idea if you`re looking for a cheeky decorating idea.) Run from anything that promises instant wealth with little work.
Shun new credit because it will lead to new debt.
Money is magnetic energy. You are a magnet attracting to you all things, via the signal you are emitting through your thoughts and feelings. - The Secret Book
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