Copyright © 2009 Fred Vanhoosen
The best place to start on surviving this recession is to look around your home, see what you need, see what you want, and decide between those items.
It is very easy to say I need a new entertainment center, and at that moment jump in the car and go buy it. But, if you are taking the current economic conditions seriously and worrying about what tomorrow might hold in store for us, then waiting may make more sense than impulse buying.
Often, the entertainment center can wait for better times and more secure economic conditions.
It takes real courage to say that you will save the money instead, maybe even putting that money into a saving account that could earn a trickle of interest until you need it far worse than you need it now.
As we look towards the unknown economic environment of tomorrow, it is important to consider that tomorrow could potentially be worse than today. If that were to happen, you will need some savings to fall back on, when that rainy day comes knocking.
That is why starting and sticking to a responsible budget may help you weather the coming economic environment. Please don't get me wrong... I am not saying that worse days are coming... I am generally an optimist, so taking the negative view of tomorrow is not in my DNA. But we never truly know what tomorrow might hold in store for us.
I have seen the good, the bad and the ugly in my personal finances - even during good times. For years, I ran through life, living the good life, buying what I wanted when I wanted it, because I had tens of thousand dollars in my savings account. Then the bad days came rather unexpectedly, and my savings were drained to almost nothing in the matter of only a few months...
Even as I write this today, the good times are returning for me, but my savings have not been recovered to the level they were at just three years ago.
Having recently - in the last few years - seen the drama that can come to one who does not have enough money coming in to cover all of the bills in a timely manner, I am reminded to return to my more conservative roots. And in doing so, I can show you how you can join me in the road to a fat savings account and future good times.
I have been up and I have been down during my life. I was glad to put the bill collectors behind me. And for nearly a decade, I rode the wave of prosperity, never hearing from a single creditor about a late payment. And then when my finances began to bottom, the bill collectors started to call.
I came close to a car repossession and house foreclosue - within two weeks of total financial disaster. And then with my back to the wall, I was finally able to turn the corner and start rebuilding my good name. I don't hear from any bill collectors anymore. Thank goodness.
Stop The Financial Bleeding
The first step to correcting a potential financial disaster is to figure out what you can afford to keep and what you can bear to get rid of. When the bottom fell out for us, we put our second vehicle up for sale. Once we were rid of that gas-guzzling, always breaking-down, newer SUV - I despise Hyundai today for that reason - then we were able to stop the financial bleeding. But we still needed a second vehicle.
So we shopped for a used vehicle that would meet our needs and found one 200 miles away for just $5,000. The van was in good shape, but it had a cosmetic issue that reduced the overall price of the vehicle, by more than $5,000 according to the prices of comparable vehicles with comparable mileage. We could deal with that unsightly dent, so long as the vehicle served its function. We paid our mechanic to travel with us to check out the vehicle, and then we offered the dealer $800 less than the asking price, so that we could pay all cash. The dealer agreed and we took home our new, used Dodge Grand Caravan.
Now, we no longer bleed money to keep two vehicles in the driveway.
We eliminated one car payment, and we managed to get a second vehicle that we could reliably count on to carry us where we need to go.
Set Up A Budget And Stick To It
There are some things in life that cannot be escaped... As the old joke goes, two of those items are death and taxes.
But honestly, there is also a home, water, electricity, telephones, transportation and food.
Figure out how much money you need to have available to pay for each of these items, and then watch the remainder of your money carefully.
Designate how much money you have available for your home, utilities, groceries, transportation, and entertainment in each calendar month. And then make a sincere effort not to exceed the money you have alloted for each item.
Occasionally, you will run into unexpected expenses - like owning a Hyundai. The vehicle was just outside its warranty, and we were forced to spend a whopping $6,000 in back-to-back-to-back-to-back-to-back repairs to keep that silly thing on the road. We blew through $6,000 of our savings in just three months time... And for most of that time, we were restricted to having only our small economy car to serve the needs of our family of five.
Despite what the Hyundai commercials suggest, you could not pay me enough money to ever own another Hyundai!
There I go on another Hyundai rant...
Be sure to set up a portion of your monthly income to put into savings. We would have been up a creek without a paddle if we did not have the savings we needed to keep fixing that piece of crap Hyundai and to buy its replacement for cash money.
Reduce Your Monthly Expenses
This is actually much easier than you would think. Besides not buying a Hyundai, reducing your monthly expenses can be pretty easy and straight-forward.
In Conclusion
When we started to feel a serious financial pinch, we took actions that eventually led to us being able to stabilize and recover our personal finances.
But the good news is that we are no longer worrying about whether we will be able to keep our house and cars. We are set up to recover from our financial woes, and with discipline, you also will be able to do as we have done.
About the Author:
Fred Vanhoosen writes about money issues. While he recommends that one should be careful about using cash advance loans in times of dire need, he also knows that sometimes we need fast access to fast money to cover an unexpected expense. When that happens, Fred recommends http://www.fastcash4all.net/ for your payday loan needs.
Read more Articles written by Fred Vanhoosen.
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