Let's face the hard facts. 2009 has not been a banner year. In many respects, it has been the year that should not have been. One of the better aspects of 2009 is the wake-up call we all received: It can happen to any of us at any time. None of are immune unless we are prepared. Now that we're awake, let's pay attention. Some of the lessons gleaned from 2009 can provide our outlook into 2010 and beyond. Our maxim should be the same as the Boy Scout motto: "BE PREPARED." Will it be easy? I very much doubt it. But it could be the only thing to save us when the next hammer falls. How do we prepare, you ask? Let's look at some time tested methods that really work. Here they are:
Examine your goals -
What do you want to accomplish and in what timeframe? Financial issues are, at root, decisions about what is important to us and what is not. How we choose to spend our money should reflect matters which are important to our well being and our future, not whim, or fancy, or things to boost our ego. It's always better to be safe than sorry.
Take control - Set up a spending plan or budget -
Develop a plan. Housing, utilities, food and clothing, transportation, medical expense, and monthly bills, should take the priority positions. Discretionary spending should be at the bottom on the list. It is extremely important to make sure our bills get paid on time.
Increase Savings -
Spend less than you earn and put money aside for the rainy day that will eventually come. Wow, what a concept. I can still my mom and dad's voices reverberating around the inside of my head on this one. This is a great place to put your discretionary spending allowance until you have three (3) to six (6) months living expenses set aside as your reserve.
Pay down debt -
With the credit card rules and the banking industry rush to make as many changes to interest rates it is imperative to reduce debt is all areas of your life. Credit card issuers are raising rates, instituting fees, and reducing credit limits. You cannot afford to max out your credit. It will have a serious impact on your credit score and could leave you without the credit line you thought you had. Credit cards can provide an element of security in bad times, but debt itself is inherently destructive. You will never know true freedom without calling a halt to deficit spending. The more debt you have the less options and leverage you have in case of emergencies.
Develop an emergency plan -
Jobs, and income, can end at any time. Plan for how you will eliminate expenses that allow you to continue to make payment on the basic necessities of life while acquiring your next income opportunity.
Be honest with yourself and family -
If you have been impacted by the recession, admit it and quite trying to live like it passed you by, because you will continue to add debt and considerable stress to your lives. Financial matters are the mumber one (1) cause of family strife.
Focus on the long term -
Don't be short sighted. People can get caught up in the hype and react instead of responding to changing conditions. If you have a long term plan, it should serve you well in good times as well difficult times when they come.
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