• Prepare for the worst

Discussion in 'Economics' started by ByLoSellHi, Jun 1, 2009.

  1. Monday, June 1, 2009
    Make a plan now for financial uncertainty

    In uncertain times, be certain of your plan to deal with the unexpected


    If you fear a layoff is looming, a cash crash is coming or some other monetary time bomb is ticking, it's time to make your financial emergency plan.

    You don't need to stock batteries and Spam, though it couldn't hurt, but you do need to ruthlessly assess your financial situation, your emergency resources and your alternatives -- for the long run, warns Mary Hunt, author of "Debt-Proof Living" and the debtproofliving.com Web site.

    "There's just this fantasy out there," Hunt says. "People are holding on until the real estate market comes back or until they get their six-figure job back, and they think this is temporary. Folks better not plan on that. The road ahead is going to be rough."

    The best shock-absorber is lots and lots of cash. Barring that, be prepared to make big changes to your standard of living and your attitudes about money and life.


    • Go big: Skipping your morning latte and canceling HBO won't cut enough spending to get you through a financial crisis. You need to make big cuts right away to stretch whatever cash you have or still can earn, Hunt says.

    "If you don't have at least six months of living expenses tucked away in a bank, you are in trouble," Hunt says. "If you don't know what six months of expenses is, it better be $20,000 in cash -- and I don't mean your 401(k). Don't wait until you're bankrupt. You need to get to work and find your big thing."

    How big? Try selling a car, pulling the kids out of private school, taking in a roommate or boarder, renting out your house and moving in with family or putting your home on the market -- even for a short sale.

    • Manage your debt: Handling a financial crisis means keeping the lights on, prescriptions filled and food on the table -- not guarding your precious 780 credit score, notes Gerri Detweiler author of "The Ultimate Credit Handbook" and adviser to Credit.com. If that means stiffing Visa to pay the water bill, so be it.

    "We've been told you've got to protect your credit at all cost," Detweiler says, "but what you've really got to focus on is protecting your family from financial disaster."

    Concentrate on paying secured debt -- such as a mortgage or car note -- if you want to keep the house or car -- then prioritize your other debts, she says. Going to a service accredited by the National Foundation for Credit Counseling can trim your interest rates, but you'll have to call your creditors and get into a hardship program if you need to reduce your principal balance or even suspend payments until you get back on your feet, Detweiler advises.

    In some cases, after a few months of not being able to pay, you may be able to negotiate the debt down. It hurts your credit and you may have to pay tax on the forgiven debt, but it's worth considering.

    Be wary of a debt negotiating firm or any other debt solution company, she says, and first check the Credit.com advice, "Fourteen Questions to Ask a Settlement Company."

    • Prepare for the worst: Before you run up credit-card balances or run through cash in hopes of getting through a crisis, stop and ask yourself: Can we really make it, or are we just postponing the inevitable?

    "If you're having trouble making your payments now, it's just going to get worse," says Liz Pulliam Weston, author of "Your Credit Score" and a personal finance columnist for MSN.com. "If you're pretty much doomed, get help now while you have some options instead of flailing around and letting things really go down the toilet."

    That could mean talking to a housing loan counselor or bankruptcy attorney, or even considering walking away from a home you can't afford and can't sell. One thing to absolutely avoid is taking money from an Individual Retirement Account or 401(k) that can be protected in a bankruptcy filing. "If you are thinking about tapping your retirement funds you need to talk to a bankruptcy attorney first," she says.

    • Get ready to go: There's no reason a pink slip should come as a surprise. Get ready now, experts say, to make a clean getaway and start a new job hunt.

    That means copying personal files and contacts from your work computer, and collecting training certificates, company awards, references and any other material that can help you land a new job.

    Also pull together documentation for any benefits you'll be in line to receive after you leave, including pension plan documents, employee handbooks, unpaid expense reports, payroll documents and even a copy of your personnel file.

    "None of this is easy," says Weston of MSN.com. "It's human to be optimistic, but you have to prepare for the worst."
  2. MKTrader


    And just how are those inverse ETFs in your little ETrade account looking today?

  3. this guy is the world's biggest bear.

    bar none.

  4. the1


    The worst is behind us man. We are smack dab in the middle of a technological revolution that makes the industrial revolution look like legos. The "financial crisis" was just a speed bump. 100k jobs will be back. It's all good man. Go smoke a joint or something, put a smile on your face. The good times are right around the corner. Internet 3.0 is hear. You heard of Twitter?
  5. ElCubano


    He is bigger than a bear...could it be the elusive Sasquash?? maybe it evolved to learn how to cut and paste....:p
  6. Who is this opinion columnist for Detroit News, anyways?

    Being this bearish would certainly make sense if you live in Detroit. In which case I totally understand your views. If you don't live in Michigan, you can lighten up a bit.
  7. Price action... price action... price action... price action... price action... price action...
    Price action... price action... price action... price action... price action... price action...
    Price action... price action... price action... price action... price action... price action...
    Price action... price action... price action... price action... price action... price action...
    Price action... price action... price action... price action... price action... price action...
    Price action... price action... price action... price action... price action... price action...

    EVEN WITH ALL THE BAD NEWS THE MARKET IS GOING UP! (read anything about Jesse Livermore)

    My problem with ByLowSellHigh is that he has been saying to be short since 700. He continues to be wrong and stubborn.

    Obviously he probably is not a profitable trader if he can't admit he is wrong (In addition to telling people to short for the pas 250+ pts). And with almost 9,000 posts I think he would be smarter than that..
  8. the1


    I was standing along side a veteran trade a few decades ago down in the pits and I was running numbers and calculating pivots, trying to find where the market was going to top and he turned and looked at me and said these two words, "surf's up." He turned back and went about his business. I didn't say a word but I sure remembered what I'd heard.

  9. Heres the problem. Yes the market is going up, but so are currencies and commodities. They went up in about equal relation to what the dow is up right now. Your portfolio went up 2% with the dow, but your ability to buy stuff went down about 2% at the same time.

    When you watch the markets you have to watch everything. You can't run a business just looking at the asset column and saying "WOW, my assets just increased in value" and completely ignore the Liabilities column. As the dollar loses more and more value, your stocks are going to rise. But that million bucks you make this year in stocks isnt going to mean much if bread costs 1,000 dollars.

    And as for the post about having 20k in cash to get you thru the hard times...thats a bad idea. Dont have cash...(at least not USD cash) Buy Euros on ebay if you have to, but try not to keep any more physical cash than you need for your monthly expenses. Whats shocking about people saying "prepare for the worst" is that scenario they usually paint is not the worst that can happen. It can get a whole lot worse.
  10. Buy CAD if you are bullish on oil/resources. It's been soaring vs. USD and expected to hit par by end of the year. I have never traded FOREX so I am not that knowledgeable on the subject but I am believing the hype.
    #10     Jun 1, 2009