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The Worst is Yet to Come? - Main Street Meltdown
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Main Street Meltdown

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.

Comments

 

cheapChic said:

Intersting facts, we all need to save no matter what..

November 24, 2008 11:41 PM
 

frugal_fun said:

This is good advise for any time period.  People only seem to think of this stuff when things get bad, though. :(

November 26, 2008 9:16 AM
 

what is the best money market account | Intel.com said:

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November 29, 2008 2:10 AM

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