Surviving the Financial Panic

I originally wrote this post several months ago, and decided against posting it. But I had a friend recently lose his job and the insulation from living in Utah means the economy is starting to hit closer to home… I thought now would be a good time to put it up. I know, I know. It’s a serious post. I’ll be back to the normal idiocies soon enough.

In the meantime, enjoy a rare “serious” post…

Okay. I’m no economist, but I’ve been watching our nation go up and down for over three decades now and studied its history much farther into its past that that. If there’s one thing I’ve learned from studying our great nation’s history, it’s that history does indeed repeat itself.

I’ve read up on several articles regarding the economy, even talked with some real deal economists (one of which predicted years ago exactly what is happening right now), and I’ve come to the conclusion that if there were ever a time to not freak out, that time is now.

Here is some general advice from economists that are smarter than me.

Start Saving Automatically

Most people don’t save. You should. Set up a high-yield account (ING’s money market account pays over 3% at the time of this writing) and set up automatic monthly deposits to it. Keep it there for an absolute emergency, such as a job loss. And no, a sudden craving for a Whopper or caving to the high-pressure salesman on the late-night infomercial is not considered an emergency.

This advice never changes. You should be saving whether times are good or bad.

Had you been saving up to this point, then you’d already be prepared in case something bad does happen. It’s not too late! Start saving now! And remember: that Mason jar you’ve been using as a piggy bank doesn’t pay interest. Open an FDIC-insured account that does.

Don’t Lose Your Job

This is a “well duh!” moment, right? Not as much as you think. If you are not an invaluable asset to your company (and don’t make the mistake of thinking that you are) then make yourself that way. This doesn’t mean dressing in a minstrel suit and singing songs of joy to your boss. Butt kissing only goes so far.

Taking on extra work, volunteering for vital projects, and keeping yourself visible to the upper echelons just might save you if and when the next round of layoffs come ’round.

The complainers and negative thinkers will probably be the first to go. Avoid those people so management won’t associate you with them and lump you in during layoff time.

Spend Money Like You’ve Already Lost Your Job

If you lost your job today, what financial changes would you make in order to stretch your money as far as possible? Stop paying the outrageous $15/month fee for the porno channel? Use that $15 on a set of rabbit ears and cancel cable TV altogether? Downgrade your cell phone plan? Cancel your subscription to Hustler Magazine?

Do those things now and put that extra money into the high-yield account you’ve set up. You have set that up already, right?

Keep Your 401k Going

Something I’ve heard a lot from people is “I just lost X thousand dollars from my 401k!” or something similar. Here’s the thing… you haven’t actually lost anything (from a certain point of view as my Jedi friends might say). You only lose if you cash out. Keep contributing to it and when the market rebounds, you’ll get all that money that you “lost” back.

Remember, your 401k is a long term investment. And don’t stop contributing, especially if you have an employer match. That’s like a guaranteed 100% gain right there! It would be foolish to give that up.

In Conclusion

There’s nothing new here. In fact, this is all stuff you probably already know… so just do what you know to be right. Surviving the financial panic means not panicking. When good times come back, Hustler Magazine and the porno channel will still be there waiting for you.

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