How does Middle America survive the financial crisis? Cut unnecessary expenses and raise cash!
This generation has not had to learn how to survive as many grandparents did during the Great Depression. So their survival skills have not been honed to even know where to begin. Are we headed to another Depression? No one knows but I can see people scared and wondering what they will do. People have time to still do what's necessary to prepare themselves. In the Great Depression that started with the stock market Crash in October of 1929 many people lost their jobs. If you have a lot of debt right now and are living paycheck to paycheck you might ask yourself the question, what will I do if I lose my job? How much time can I go before I have no cash? The wealthy always have plenty to live on but for the rest of society, many were encouraged to consume beyond their means. They were issued a lot of credit cards and credit was the way to buy "stuff". Those days are over. In the very near future, you will only be able to buy things with cash. I saw the very first changes leading this new reality on my last trip to Los Angeles from San Francisco. I normally use my credit card to pay for gasoline for my car but on the last trip I came across 2 gas stations that changed from credit cards to cash.
Credit is the problem today and the solution is an increase in liquidity. Liquidity is CASH! I am not worried that you won't be able to access your cash. But the prudent, conservative ensures that they don't have any more in their bank than is insured by FDIC, $100,000 for single account holders and $200,000 for joint account ownership.
Expect the unemployment rate to reach as high as 8-9% nationally and as much as $10-11% in states like California.
Do what you can to perform at an exceptional level in your job. As companies are forced to cut back, it will be the bottom 10% performers that will be let go. If you don't know what your employer considers exceptional performance, ask them and tell them you want to be in the top 10% of employees in the company. Then do the hard work to get into that select group. Remember, you can't control if your employer is successful as a whole, but you can give them a better chance of survival by doing a great job.
Look at your monthly expenses and get a handle as to where you are currently spending your money. Look at what you are buying habitually and ask yourself whether it is a necessity. Look at how many phone lines and numbers you have and ask if all are truly necessary or could you reduce the number. Look at how to reduce your energy bill each month. Look at how to reduce your driving by using the internet and video conferencing as a way to meet and talk to people or family, instead of driving to them. Look at planned trips or big expenses and ask whether it is prudent to spend the money given the unknown effect of this bailout on the economy.
It isn't going to be a pretty picture for a few years. Get use to thinking about this stuff now while you have time to act and not have to react. I don't want to alarm you but it is a little late for that now given the press over the weekend on the bailout/rescue plan. Ideally you will want to have a minimum of 1 years worth of cash to pay for everything you will need. More is better. GOOD LUCK.
UPDATE: The Dow today dropped 777 points for the largest point drop in history. Coincidentally, this post was my 777th Blog post since I started in May 2005.
Credit is the problem today and the solution is an increase in liquidity. Liquidity is CASH! I am not worried that you won't be able to access your cash. But the prudent, conservative ensures that they don't have any more in their bank than is insured by FDIC, $100,000 for single account holders and $200,000 for joint account ownership.
Expect the unemployment rate to reach as high as 8-9% nationally and as much as $10-11% in states like California.
Do what you can to perform at an exceptional level in your job. As companies are forced to cut back, it will be the bottom 10% performers that will be let go. If you don't know what your employer considers exceptional performance, ask them and tell them you want to be in the top 10% of employees in the company. Then do the hard work to get into that select group. Remember, you can't control if your employer is successful as a whole, but you can give them a better chance of survival by doing a great job.
Look at your monthly expenses and get a handle as to where you are currently spending your money. Look at what you are buying habitually and ask yourself whether it is a necessity. Look at how many phone lines and numbers you have and ask if all are truly necessary or could you reduce the number. Look at how to reduce your energy bill each month. Look at how to reduce your driving by using the internet and video conferencing as a way to meet and talk to people or family, instead of driving to them. Look at planned trips or big expenses and ask whether it is prudent to spend the money given the unknown effect of this bailout on the economy.
It isn't going to be a pretty picture for a few years. Get use to thinking about this stuff now while you have time to act and not have to react. I don't want to alarm you but it is a little late for that now given the press over the weekend on the bailout/rescue plan. Ideally you will want to have a minimum of 1 years worth of cash to pay for everything you will need. More is better. GOOD LUCK.
UPDATE: The Dow today dropped 777 points for the largest point drop in history. Coincidentally, this post was my 777th Blog post since I started in May 2005.
Labels: 777 point drop, bailout, credit, cut expenses, Dow, Middle America, rescue plan, unemployment
posted by Charles Amico at 6:22 AM
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