Managing Chaos (L.V.)

Managing Chaos (L.V.)

The financial climate is somewhat unpredictable right now. As the world economy comes to a screeching halt, it would seem to me with a Presidential Election three weeks away, a candidate would outline a plan a take the lead. It just shows me how weak leadership in America has become. Since when did a leader need approval to start plowing a direction? Leaders are born to lead. Although I have not been placed in a position to make governmental policy decisions, and no matter how many conversations I have had with the television, the fact still remains that I will not be heard in the masses. Still, even though thousands may not follow, I am outlining my family’s plan to weather the coming months and take control of my financial future. If you wish, I encourage you to read and apply whatever you like to your life.

Of course, it’s time to take a hard look at your spending. I would not encourage a halt on your spending, but I would eliminate the waste in small to medium ticket items. Do you really need to eat out eleven times a week? Can we share or borrow items that are not weekly uses? Instead of the new lawnmower, ask you neighbor if you can borrow theirs. Make sure to fill it up with gas as a thank you. Tough times can really bring people together. Look at this as an opportunity to work together and get to know people. From a personal standpoint, Johannah and I got to know our neighbors best during difficult times. Once your waste is under-control, this might be the right time to make a big ticket purchase. There are some great deals on cars, homes, stocks, and other long term investment items. It is a great time to start a 401k with stock prices at incredible lows. Sure everyone isn’t on the bandwagon, but the bandwagon historically ends up jumping off a cliff. Now is the time to buy a big ticket item, but only if you can afford it and your job is stable.

Take this opportunity to strengthen the relationship with your employer. The truth is most businesses will probably make some job cuts. Most of them will be people that were under-performing, on probation, or temp help. You don’t have to be the best in the company at what you do, but a great way to lose your job is being close to the bottom. Expect to do more without extra pay. Don’t be discouraged though. As the economy recovers, your employer will look to first reward current employees before making new hires. Get some added education. In a tight job market, even the smallest of differences between applicants can have impact. Adding a new certification or even a couple of evening classes will draw attention to your multiple skill sets. A rigid job market calls for flexibility. Make sure you are a shining example of someone who can do more than is required. Again, do not find yourself at the bottom.

If that was not challanging enough, you need a cash cushion. Even if it means paying down your debt in smaller increments. Cash is is king in an economy that changes almost daily. Do not rely on credit and fixed assets to cover emergency expenses. Ideally, your cash cushion should amount to 3 months living expenses, but one month is an absolute must. So if you don’t have it, roll up your shelves and get to work at a temporary second job. It sucks, but if you lose your job you will be thankful. It takes time to find a job. In extreme cases, if the job market drys up in your area, you will even need money to move. The last thing you want is a bankruptcy on your record. If you are in a hole now, there is hope. However, getting out of a hole is often dirtier than digging one. Balance your attack with added income and thriftiness. I am a strong advocate for not killing yourself to get wealth, so you may need to sell of some of those toys and possibly for quite a bit less than you paid. Look at your progress like this: first identify the problem and the problem is almost always overspending. Second, stop the destructive behavior. Third, live within your means and that does not include second job income. Fourth, build a cushion to your living expenses. Finally, start paying off your debt while investing in your future.

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