Posts Tagged ‘budget’

We are settling in for what will probably be the longest recession we have ever experienced. Unemployment may approach 10 percent by the end of this year.  Mortgage analysts are anticipating nearly eight million homes to enter foreclosure over the next four years.  The number of underwater home mortgages is already over 7.5 million. 

Many companies have reduced or cancelled the matching benefit for their 401k plans. 

 Sound like doomsday?  It’s not. 

It’s easy to forget the other major financial disasters we’ve encountered: The savings and loan crisis that led to the closing of more than 1,000 institutions. The debted economies of Southeast Asia. Russia’s default on debt. The collapse of the hedge fund Long Term Capital Management. Enron.  This is just in the past 30 years. 

In every decade there is a financial calamity.  Sometimes they happen in back-to-back years. Sometimes they happen in one country – and sometimes in several.  Ultimately we have made it through, and have moved on.  

The financial problems of today will be just a blip of a memory in five years. But in the near term, we can’t rely on a stimulus package from the government to heal. Instead, there are things that we can do ourselves today to help us make it through the tough times.  Reducing our expenses now to make up for a lost pay raise or an unexpected layoff is important to make it through the day-to-day bill juggling. 

So here are six things you can do now to help your pocketbook and keep your money in tough times:

• Develop cooking skills.  It’s healthier — and your kids can help and learn a life skill.  It also reduces the expense of dining out. 
• Cut your cable bill.  There are many channels and packages to choose from.  Many of the pay channels show repeats that are on basic rate channels.  Why pay for them?  Renting a movie is even cheaper and you get to watch what you want.  Better yet, gather the family together and play a game. 
• Cut your cell phone bill.  Review your bills.  If you regularly go over your minute allotment, change your plan.  Maybe your children don’t really need a phone at $10/month. Canceling the extra phones can save $120 a year.  Review the extra services that may not be necessary.
• Pay down debt.  The government wants you to spend to keep the economy going.  It’s not your responsibility to do so.  Your responsibility remains within your household.  If you have credit card debt and car loans, now is the time to make bigger payments to pay them down. 
• Rebuild your 401k.  This is a great time to rebuild your savings.  Don’t be scared off by the market conditions.  With the stock market down, your income and dividends will be reinvested at lower prices. In essence, equities are on sale.  This provides larger growth to occur over time. Get some help from a professional to give you more comfort with your nest egg.
• Cancel satellite radio.  Commercial-free satellite radio is questionable as it stands.  Most of their sales come from new cars.  Few new cars are selling.  Sirius XM is already burdened with debt and they have just increased their fees.  Cancelling this service can save a bundle.

Making these changes now, and reviewing other expenses, will help you in the long run and will give you some peace of mind. 

Take care of your household.  Turn off the news.  All in all, we will get through this.