Tips To Follow In Recovery And The Next Booming Economy
Tuesday, May 11, 2010, 2:59 AM | 1 Comment
Most folks did OK and better in the previous booming economies if any of us can remember that far back. However, for some folks [read millions] it turned to be financial misery in disguise. They spent heavily and consequently borrowed heavily, with their eyes closed from their financial surroundings. If they were able to see bad days coming, they didn’t bother and kept spending and borrowing. Some of us were drowning in the financial slums that were being created seemingly on Ad Hoc basis and with no apparent planning.
Americans and to some extent Europeans have become used to the idea that they can live on other people’s money which include mortgage, credit card and personal loans. Some folks still don’t realize that the money does not belong to them. When they rent the money and use it for their livelihood, they are supposed to return it intact to the original owner within the agreed-upon time.
The good side of spending and borrowing
Spending and the consequent borrowing are not such bad ideas. The national economy is two-third based on consumers’ spending. Consumers’ borrowing, on the other hand, is good for financial institutions. It seems to be a major part of their bread and butter. The combination of spending and borrowing is what the national economy needs and thrives upon.
Now, many experts believe the economy is on a rebound. It has started showing some signs. Sooner or later, the recovering economy will turn into a booming economy. The wiser folks who have learned and hopefully are still learning from the financial misery they have put themselves into, voluntarily or otherwise, will have enacted some austerity programs in their financial lives.
This time around, the financially miserable folks who spent and borrowed heavily like there was no tomorrow must develop and follow some financial discipline. Otherwise they would be repeating the fool’s parody of imitating the Jones’. We must stop doing that and the sooner we start, the better we will be.
FDIC advises us that financial miseries that millions are facing are also due to stock market losses and reduced yields on CDs (certificates of deposit) and bonds, especially for senior citizens who rely on this income for living expenses. And, if you live paycheck-to-paycheck, it’s hard to build a rainy-day fund to weather a financial setback.
Remember your family comes first
In the recovery phase and hopefully the coming booming economy, follow the tips and information below to your utmost effort so that you won’t feel sorry the next time around. Good and bad days are always ahead of us. The old adage “What goes up must come down and hopefully the reverse is true as well.”
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Set priorities
Look at your monthly income and your spending. Make sure you are able to continue payments on your home, utility bills and insurance.
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Insurance if you can afford it
Make sure you have enough of three types of insurance to protect your family: 1) disability insurance to replace lost income during a serious illness, 2) life insurance in case a wage earner dies, and 3) health insurance to cover big medical bills.
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Spending
Possibilities for cutting on your spending include: restaurant meals, entertainment (including expensive ball games and “premium” TV channels), and costly Internet and phone services you really don’t need or use. You can decide to give up some expenses temporarily, and you may find you really didn’t need them anyway.
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Borrowing & paying back
Remember that the interest you pay on mortgage, credit card and personal loans is expense and can be exuberantly high if you fail to control it. Follow 1) Tips for the technical side of how to get out of debt and 2) One Big tip to get out of debt – change your mindset.
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Saving for future
As long as you follow the mantra of “spend less than you make”, you will have a good, decent amount of saving in a short time. Follow 1) Stop and learn to live within your means, and then 2) Pay special attention to your personal finances.
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Ask when you need help
The moment you realize – at the first sign – that you are getting into debt, do something about it. You may be able to solve your problems on your own by doing some research at your local library or on the Internet. But many people may need to turn to a knowledgeable friend or relative for advice. Your employer may have an arrangement with financial counselors as part of your employee benefits. Or, you can go to a credit counseling service that, at little or no cost, can help you get out of debt.
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Beware of scams and scums
Unfortunately, con artists are always around, but they can be especially dangerous during uncertain times. They can con you in employment, investments or retirement savings. You can be easily taken in by attractive-sounding financial offers that, in reality, are frauds.
In a Nutshell
During the current recession which apparently is on the way to full recovery and hopefully we will once again experience the booming economy, we ought to be prepared for the good times and lower spending and borrowing to increase the quality and livelihood of our individual financial life.
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