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Whether you call it a depression or a recession, the United States and the entire world is going through a serious economic downturn. With the unemployment rate surpassing 10% in many areas, learning how to handle finances in a depression is a timely topic.
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Managed Since: 06/09/2009
Views: 60
Money Earned: M$0.56
Page revenue is subject to change as we obtain data from our partners
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Financial expert Suze Orman explains in this video ways to manage your money and invest during times of financial crisis. Orman says the most important thing to remember is not to panic. She advises consumers to make sure their money is insured by the FDIC. She does not advise taking money out of your 401k unless you are older and you really need the cash. -
Introduction
- As of this writing in mid-2009, times are tough, and many people are tightening their belts in anticipation of further economic freefall. Even if you still have your current job, there are several things you can do today to weather the continuing economic storm.
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Step 1: Make a Budget
- If you don't follow a budget, now is the time to make one. Although fancy programs like Quicken and Microsoft Money can help, all you really need is a pen, paper and your bills to make a budget.
- It's often easiest to follow a monthly or weekly budget, versus a yearly one.
- Start keeping records of all expenses and income, even minor ones, as they add up.
- Create a temporary, general budget first, and a more specific one after keeping records for a month or two.
- Calculate your income.
- Calculate you expenses.
- The best way is to calculate averages of several months or weeks, since both income and expenses might differ.
- Divide your expenses in different areas and determine how much you realistically can and should spend on each.
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Step 2: Talk to a Pro
- Visiting a financial planner may cost a little bit of money in the short term, but the help you'll get in putting together a sound financial strategy could save you in the long run. Carefully research the planner first.
- There are several voluntary certifications, including certified financial planner (CFP) and chartered financial counselor (ChFC).
- Some national organizations require planners to take exams to become members.
- Check with the security regulator of the state for complaints against the planner and to verify that the planner is licensed.
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Step 3: Reduce Expenses
- Do your best to pay off any credit card balances and other outstanding debts such as car payments and student loans. Financial planning advisor Dave Ramsey suggests a "snowball" plan where you pay off the smallest debt first, and then once you have paid that debt off, take the money you were paying on the smaller debt, plus the interest you have saved, and use it to pay off the next larger debt.
- Also look at your monthly budget for expenses you can trim, like getting rid of a land line and keeping a cell phone only, or eating at home more and using thrifty ingredients, as suggested by Depression Cooking with Clara's Clara Cannucciari.
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Step 5: Polish Resume
- In case you do get laid off or fired in the future, there's no time like the present to work on your resume. This includes updating the resume document itself, but also means things like getting additional training, networking with contacts and even going on interviews to get job interview experience.
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Step 6: Manage Your Credit Cards
- Research your credit card terms carefully to make sure you are getting the best possible rates and manage your credit card use carefully.
- If possible, pay off the balance each month to avoid increasing debts.
- If that is not possible, consider paying over the minimum balance as much as possible to avoid increasing interests on your debts.
- Use credit cards with caution and pay with debit cards, checks or cash when your budget allows it.
- Consider transferring a balance on a card with higher interest to a card with a lower one.
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Step 7: Have Fun More Cheaply
- Times are tight and things are stressful right now, but you should still do your best to find inexpensive ways to relax, enjoy life and have fun. There are many things you can do that are cheap or free, like going for a walk, renting a movie, or just hanging out with friends. Many outdoor activities are usually free, including visiting a park or beach or going hiking. Some museums are free on specific days of the month.
