November 2008 - Posts - Main Street Meltdown
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Main Street Meltdown

November 2008 - Posts

  • The Worst is Yet to Come?

     With banks failing, unemployment rising and the stock market in freefall, many people are hoping the U.S. economy has "hit bottom", and better times are on the way next year.

    Don't bet on it.

    The International Monetary Fund's chief economist,  Olivier Blanchard, says worse times are on the way and the economy won't begin to improve until sometime in 2010.  Echoing this sentiment, president-elect Obama said the U.S. could experience the loss of "millions" of jobs next year.  With projections of gloom and doom just around the corner, what can we do to "recession proof" ourselves as much as possible?

    1.  Insure your most basic needs.  Namely, shelter and food.  Stick any extra money you have now in a high-yield, FDIC-insured savings account to help cover rent or mortgage payments should the worse happen and you lose your job.  Ideally, your emergency fund should have three to six months of living expenses in it, but if you don't have an emergency fund, sock away as much as you can now.  Take a part-time job.  Bank away unexpected windfalls.  Sell stuff you don't need anymore on eBay.  Stockpile dried goods in a closet designated your "emergency pantry".  This might include canned goods you stock up on at a great sale, bulk purchases of rice and dried beans, tinned meats, anything that will keep for long periods of time until you really need it.  

    2.  Diversify.  Your retirement account should already be diversified.  This means "don't stick all your eggs in one basket".  Your retirement account should NEVER consist mainly of stock in the company you work for.  The more diversified your account is, the better it will weather the storm.  

    3.  Don't buy things you don't need.  This is hard right before Christmas, but now is not the time to make large purchases of luxury items like high-end electronics, appliances and cars.  If you can't pay cash for it, don't buy it.  

    4.  Be the "go to" person at work.  If you work for someone other than yourself, make yourself indespensible. Volunteer to take on additional projects, strive to do your best work, and look for ways to make your employer more money or find better ways of doing things.  Be the first to arrive and the last to leave each day.  If you are a model employee, the boss will look elsewhere if they have to start trimming payroll.

     5.  Diversify your income.  Don't just have one source of income. Do things on the side, as long as it doesn't violate an agreement you have with your main employer.  Do some consulting, Sell your arts and crafts.  Become an avid eBayer...anything you can do to bring in extra income.  Sock the extra cash away in your emergency fund.  

    If the head economist of the IMF and the incoming president of the U.S. are saying that things are going to get much worse before they get better, we should probably listen to them.   We all have a head-start if we haven't yet been affected by hit the economy has taken.  Take advantage of it.

  • With Money Tight, Layaway Makes a Big Comeback

     With money and credit tight, and the prospects of a dismal holiday shopping season looming ahead, more retailers are embracing something that many had once thought was about as hip as a rotary phone:  layaway.  Sears recently announced it was bringing back layaway after noting that it has worked quite well for Kmart.  

    Layway is something that has been around since the Great Depression.  Customers pick out an item they want to purchase from the store, pay a small down payment fee to have the retailer store the item in their stockroom, or "lay it away" for them, and the customer then makes weekly payments on the item until it is paid off.  Once the item is completely paid for, the customer picks up the item from the store.  Retailers like layaway because it is a means of racking up sales from consumers who may not otherwise be able to make the purchase, due either to a shorfall in funds or a lack of credit.

    For customers, there are some advantages to using layaway versus a credit card:  no interest, no late fees, no penalties for missed payments and no dings on a credit report.  The downside to layaway:  possible "over-shopping", and if the item isn't paid off in the agreed-upon time the store may put the item back on sale, and you could lose any money paid on the item up to that point.  Most retailers will return money on items not completely paid for, minus a "re-stocking fee".  Be sure to ask about a retailer's layaway policy before paying the down payment or filling out a layaway form.

    Layaway isn't something confined to brick-and-mortar retailers, either.  Some online retailers also offer layaway, and sites such as eLayaway.com allow consumers to shop at many different retailers and make small payments toward their purchases.  


  • More Parents Desperately Ditching Daycare

     Wall Street finance companies and the Big Three automakers aren't the only businesses in need of a bailout these days.  Higher unemployment and a reduction in work hours at many businesses across the country are leading to a downturn in another industry:  daycare centers.  

     Parents without jobs or those who have seen their paycheck shrink have been forced to make some tough decisions in regard to the care of their children.  Faced with increasing household bills and less money to pay them, parents are cutting back.  In some cases, that means reducing the number of days each week that they bring their children to a daycare center.  In others, it means their children will stop going altogether.

    Daycare operators worry that with few other options, parents will bring their children to unlicensed daycare centers. State licensing ensures that daycare centers have met certain standards for safety, cleanliness and education.  Unlicensed centers, operating illegally, could pose certain hazards for kids. 

    According to a report released earlier this year by the National Association of Child Care Resource and Referral Agencies, the average price of full-time care for an infant in a center was as high as $14,951 per year.  For a 4-year-old in a center, parents paid up to $10,787 a year for full-time care.

    "The cost of care is out of reach for too many families," said Linda Smith, Executive Director of NACCRRA.  "No parent should have to choose a poor-quality child care setting just because they cannot afford anything better for their children."

    Parents and the High Price of Child Care: 2008 Update provides results from a 2008 survey of Child Care Resource & Referral (CCR&R) State Networks, which asked for the average 2007 prices charged by child care programs listed in CCR&R databases.  Located in every state and most communities across the nation, CCR&Rs provide services in 99.3 percent of inhabited zip codes.  CCR&Rs work with parents to connect them with the child care that meets their needs and with caregivers to help raise the quality of child care in their communities.

    To download a copy of the full report, please visit www.naccrra.org.


    To find a child care resource center near you, go to www.childcareaware.org.

  • More Employees Getting Scrooged This Christmas

     Depending on what type of business you work for, chances are you're getting Scrooged this Christmas.  Due to the tough economy, more companies are skipping their annual Christmas parties this year.  

    According to CNNMoney,  just 81 percent of 108 companies taking part in Battalia Winston Amrop's annual survey said they will have a company-sponsored holiday celebration this year, compared with 85 percent last year.  

    This is nothing new of course.  Whenever the economy has a downturn, or a company has a bad year, the frills such as free snacks, sodas and company-sponsored celebrations are the first things to go.  It's all part of a company tightening its belt.  

    It could be worse, of course.  The company could choose to cut costs by laying off employees, which many businesses are doing.  Faced with that option, doing away with the company Christmas party doesn't seem so bad.  

    That's not going to do much for morale at the office.  Lower morale at the workplace could lead to lower productivity, which means the company becomes even less profitable.   Although the company may have saved money by cutting out the Christmas party and other perks, it evenutally pays in other areas.  Fortunately, there is a happy medium.

    1.  Scale back.  There is no law that says the Christmas party has to be held at the Four Seasons.  Scale back the extravagant party plans to something less formal.  Instead of a full four course meal and open bar, have a wine and cheese affair with a gift exchange.  

    2.  Pitch in.  If you work for a small business and times are tight, the employees can all pitch in a few dollars to help defray the cost of the holiday festivities.  The company could give in other ways, such as an hour's worth of open bar, a certain number of free drink tickets, or entertainment for the event if it's an alcohol-free function.  

    3.  Go family-friendly.  Instead of a big formal evening that's adults-only, make it a family-friendly affair.  The company could host a night at the local ice rink and serve hot chocolate, or rent out a movie theater and host a Christmas movie night.  If there is a professional sports team in town everyone could go out and catch a game, with the boss picking up the tickets.  The possibilities are endless.

    4.  Keep the spirit.  Still can't splurge for the company Christmas party?  Do something completely different and do some giving instead of receiving.  Co-workers and managers could band together and volunteer for a specifc charity, serve or deliver meals, wrap gifts for needy children or hold a toy drive.  Nothing will make you (and your company) feel better than doing something for someone whose needs are greater than your own.  Besides, isn't that what Christmas is really about?


  • Are You Really Saving a Buck at the Dollar Store?

     I love shopping at the Dollar Store.  What's not to like?  Right away, I know the price (everything is a dollar...sometimes two for a dollar!), there is a wide variety of items, and I'm saving a lot of money.  Or am I?  A dollar for each item seems cheap enough, but is it really a bargain?  The real answer is:  it depends.  

    Most of the items I buy at dollar stores are either food items that I know I'm getting for a steal, or cleaning products, if it is something that I don't make at home myself with vinegar and lemon juice.  However, there are items at the dollar store where you could be paying more than you need to...even for a dollar.

    First, when buying cleaning products or toiletries, check the size.  Many items in those aisles are actually smaller than the regular sized packages.  That is how the store can get away with charging only a dollar for them.  What you are actually getting in some cases is a glorified sample-sized package.  

    Check the food packages.  Is the item expired, or will it expire within a day of purchase?  The same goes for pet food. If it is expired, it's not really a bargain.  Check the sizes on these items, too.  

    It's best to skip the toys. More often than not, the toys and lunch boxes are made in China, and they could contain lead-based paint.  Also, check electrical items.  Make sure they carry the UL, or "Underwriters Laboratories"  seal.  This certfies that the item is safe to use with U.S. electrical outlets.  If the item doesn't have the UL seal, skip it.  You are just risking an electrical fire.  

     Before stocking up on items at the dollar store, shop around.  You might be surprised that you can get many of the same items for even less than a dollar at other discount stores such as Family Dollar, Dollar General or Wal-Mart.  Dollar stores do have some great bargains, but they are able to offer these bargains because they are able to get the items they sell in bulk at a lower price, they are able to purchase close-out items from other stores at pennies on the dollar, and they sell some items for a dollar that really would sell for less than a dollar at many other stores. 

    As always, keep a price book, shop around, and make sure that you really are saving a buck at the dollar store.  



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