Monday, November 3, 2008

Financial Preparedness: 10 Ways to Beat the Recession

My husband e-mailed me this article and I thought it was worth sharing with the rest of you. If you're like me, you're concerned about the effects of a recession on you and your family. Many people feel like they are powerless to change the economic situation and that adds to their feelings of anxiety. The author of this article, Brian Reeder, did some research and found some simple things you can do to beat the recession.

  1. Network - Networking is a great tool to maintain a large group of people that can help you if need be. It keeps potential income options open, and by consistently expanding your network, you’re consistently expanding your income opportunities. Plus, if you’re in a crunch and need some cash, it’s better to be able to ask 50 people than 5. The Key: Be yourself! Get to know the people you meet, show them who you are. Someone who knows you and is interested in who you are is much more likely to help you out than someone you met once and exchanged business cards with.

  2. Establish a personal budget - This is something that seems like common sense, but a surprising number of people have never done it. Once you get all your expenditures on paper (or the screen), it’s much easier to see where your money is going and where you need to cut back. The Key: Find a system that works for you. Having a spreadsheet may work for someone, but may be a headache to others. The biggest reason people don’t establish a budget is because it’s time consuming - us a free program like expensr to eliminate this time waste.

  3. Understand what a recession is - What is a recession? How about a depression? Aside from the depr v. rec, I had no idea. Now I know that “The economy will typically expand steadily for six to 10 years and then enter a recession for six months to two years. The point where the recession begins is known as a peak, and the point where it ends as known as a trough. Following the trough, the economy expands again toward another peak.” (howstuffworks) So the recession is really a healthy phase in the economic cycle, it's just awful being in one. A depression on the other hand, is a long-term economic state characterized by unemployment and low prices and low levels of trade and investment.

  4. Get out of debt - this is easier said than done, but the first key is to eliminate credit card debt. If you have thousands in credit card debt and have money in the bank to cover it (and still have a healthy buffer), pay it off. Your savings in interest payments every month will justify this pay-off within months, not years. If you don’t have the cash on hand to pay off that debt, pick up a part-time job solely to make payments on it. I know that some people can’t do this, but they may be able to use the next tool.

  5. Consolidate your debt - The best way to consolidate your debt is not through some shady website that just wants your information. It’s going to your financial institution and asking them how. They will be more than willing to help - they want you to be able to make the payments every month. If you find someone that won’t help, go to another branch, or another bank. Smaller credit unions are usually the best to deal with - they act like real people. For the most part.

  6. Find part-time work to supplement income - Find an industry that doesn’t require prior experience or education, and minimal training. Also find an industry that isn’t going anywhere, and will survive through the recession. My advice: get a job in the service industry. You can find a job in practically any industry on craiglist. Find something you enjoy doing and don’t have to go to school for. Plus, tips are NOT a bad thing.

  7. Have a back-up fund - One of the biggest hurdles people will have to leap over is losing their job. It is (usually) an unexpected problem, and never a welcome one. The best thing to do is plan for it. Make sure you have a minimum 3 month buffer in your bank account so that you can survive after it happens. Unemployment will only cover part of your expenses, and the problem people get into is getting multiple credit cards to cover the remaining expense. Then, even if you find a job, you have a mountain of debt to get over, immediately putting you in the red and stressing you out.

  8. Focus on the basics - Frivolity has to be the first to go if your budget is tight. If it’s the difference between paying rent and going out to dinner, hopefully the decision isn’t a difficult one. But, this is dependent on making a budget - if you don’t know where you stand, how can you know what you have to spend? This isn’t to say you shouldn’t have fun though - you just need to find alternative ways to have it (see below)!

  9. Have a secure place to keep your money - Both in your bank, and in your pocket. I would suggest carrying your wallet in your front pocket, and keeping minimum cash on you. If I have cash I will spend it. I know that, so I make it a point to only take with my what I can spend. Also, make sure you have all the necessary phone numbers and account numbers written down in one place, outside of your wallet. That way if your wallet gets stolen, you can easily call and cancel your credit cards.

  10. Be happy - Find cheap/free ways to find happiness. Go to the park, take a walk, get books/movies from the library, have a “cooking night” with your friends where you all pitch in. Their are a lot of ways to enjoy life without spending money. As the quote says, “the best things in life are free”…


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Preparedness Quotes

"When faced with the choice to buy, consume, or engage in worldly things and activities, we all need to learn to say to one another, 'We can’t afford it, even though we want it!' or 'We can afford it, but we don’t need it—and we really don’t even want it!'" - Elder Robert D. Hales, April 2009 General Conference

"Many areas of the world have experienced difficult economic times. Businesses have failed, jobs have been lost, and investments have been jeopardized. We must make certain that those for whom we share responsibility do not go hungry or unclothed or unsheltered. When the priesthood of this Church works together as one in meeting these vexing conditions, near miracles take place.

"We urge all Latter-day Saints to be prudent in their planning, to be conservative in their living, and to avoid excessive or unnecessary debt."
- President Thomas S. Monson, October 2008 Priesthood Session, General Conference

"Avoid the philosophy that yesterday's luxuries have become today's necessities. They aren't necessities until we make them so. Many enter into long-term debt only to find that changes occur; people become ill or incapacitated, companies fail or downsize, jobs are lost, natural disasters befall us. For many reasons, payments on large amounts of debt can no longer be made. Our debt becomes as a Damocles sword hanging over our heads and threatening to destroy us."
- President Thomas S. Monson, April 2006 General Conference

“We have built grain storage and storehouses and stocked them with the necessities of life in the event of a disaster. But the real storehouse is the family storeroom. In words of revelation the Lord has said, ‘Organize yourselves; prepare every needful thing’ (D&C 109:8.)”
President Gordon B. Hinckley

"We need to make both temporal and spiritual preparation for the events prophesied at the time of the Second Coming. And the preparation most likely to be neglected is the one less visible and more difficult--the spiritual. A 72-hour kit of temporal supplies may prove valuable for earthly challenges, but, as the foolish virgins learned to their sorrow, a 24-hour kit of spiritual preparation is of greater and more enduring value.

"We are living in the prophesied time 'when peace shall be taken from the earth' (D&C 1:35,) when 'all things shall be in commotion' and 'men's hearts shall fail them' (D&C 88:91.) There are many temporal causes of commotion, including wars and natural disasters, but an even greater cause of current 'commotion' is spiritual." Elder Dallin H. Oaks

“Every father and mother are the family’s store keepers. They should store whatever their family would like to have in case of an emergency…(and) God will sustain us through our trials.” President James E. Faust

“We live in a most exciting and challenging period in human history. As technology sweeps through every facet of our lives, changes are occurring so rapidly that it can be difficult for us to keep our lives in balance. To maintain some semblance of stability in our lives, it is essential that we plan for our future. I believe it is time, and perhaps with some urgency, to review the counsel we have received in dealing with our personal and family preparedness. We want to be found with oil in our lamps sufficient to endure to the end.”- Elder L. Tom Perry, Ensign, Nov. 1995

"Many more people could ride out the storm-tossed waves in their economic lives if they had their year's supply of food. . . and were debt-free. Today we find that many have followed this counsel in reverse: they have at least a year's supply of debt and are food free." President Thomas S. Monson

"Just as it is important to prepare ourselves spiritually, we must also prepare ourselves for our temporal needs. … We have been instructed for years to follow at least four requirements in preparing for that which is to come.

“First, gain an adequate education. Learn a trade or a profession to enable you to obtain steady employment that will provide remuneration sufficient to care for yourself and your family. …

“Second, live strictly within your income and save something for a rainy day. Incorporate in your lives the discipline of budgeting that which the Lord has blessed you with. As regularly as you pay your tithing, set aside an amount needed for future family requirements. …

“Third, avoid excessive debt. Necessary debt should be incurred only after careful, thoughtful prayer and after obtaining the best possible advice. We need the discipline to stay well within our ability to pay. …

“Fourth, acquire and store a reserve of food and supplies that will sustain life [if local laws permit such storage]. Obtain clothing and build a savings account on a sensible, well-planned basis that can serve well in times of emergency. As long as I can remember, we have been taught to prepare for the future and to obtain a year’s supply of necessities. I would guess that the years of plenty have almost universally caused us to set aside this counsel. I believe the time to disregard this counsel is over. With events in the world today, it must be considered with all seriousness.” - Elder L. Tom Perry, October 1995 General Conference

“Maintain a year's supply. The Lord has urged that his people save for the rainy days, prepare for the difficult times, and put away for emergencies, a year's supply or more of bare necessities so that when comes the flood, the earthquake, the famine, the hurricane, the storms of life, our families can be sustained through the dark days. How many of us have complied with this? We strive with the Lord, finding many excuses: We do not have room for storage. The food spoils. We do not have the funds to do it. We do not like these common foods. It is not needed -- there will always be someone to help in trouble. The government will come to the rescue. And some intend to obey but procrastinate.” - The Teachings of Spencer W. Kimball, p.375

“All too often a family's spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress” - Elder Joseph B. Wirthlin

"Be prepared in all things against the day when tribulations and desolations are sent forth upon the wicked." D&C 29:8

"Too often we bask in our comfortable complacency and rationalize that the ravages of war, economic disaster, famine, and earthquake cannot happen here. Those who believe this are either not aquainted with the revelations of the Lord, or they do not believe them." President Ezra Taft Benson

"Fear not little flock; do good; let earth and hell combine against you, for if ye are built upon my rock, they cannot prevail. . .Look unto me in every thought; doubt not, fear not." D&C 6:34, 36

"I believe that the Ten Virgins represent the people of the Church of Jesus Christ. . . They (five foolish) had the saving, exalting gospel, but it had not been made the center of their lives. They knew the way but gave only a small measure of loyalty and devotion.

"The foolish asked the others to share their oil, but spiritual preparedness cannot be shared in an instant. . . . This was not selfishness or unkindness. The kind of oil that is needed to illuminate the way and light up the darkness is not shareable. . . . In our lives the oil of preparedness is accumulated drop by drop in righteous living." - President Spencer W. Kimball

“We encourage families to have on hand this year’s supply; we say it over and over and over and repeat over and over the scripture of the Lord where he says, “Why call ye me, Lord, Lord and do not the things which I say?” How empty it is as they put their spirituality, so-called, into action and call him by his important names, but fail to do the things which he says." - President Spencer W. Kimball"/>


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