So much of what we read is all high level safe stuff about what people should do when facing tough economic times. And a whole lot of that advice is good for the masses, but what about what is best for the individual, you.
The government wants consumers not to lose confidence during tough times. The economy needs you to keep spending money to fuel business but when you’ve done your part and you are tapped out, there is no safety net for your financial failure.
Your spending to keep the economy afloat is at the personal risk of the financial health of you and your family. As an individual, the reality is that you are disposable, but as part of a collective of consumers, you are indispensible.
So this article will focus on top ten realities and what you should do as an individual when facing financial insecurity.
- Cash Is King – While you don’t need to go so far as converting your cash to gold and burying it in your backyard but you should treat cash in hand like gold.
It is much easier to control the outflow of cash that you’ve already earned and hold than it is to refill the cash reservoir. You need to take an ever more concentrated gaze of the outflow and ask yourself if you really need whatever it is that you are buying. If it does not have to be bought now, don’t. Hold onto all the cash you can.
Think about it like this, your cash is like water and as you set out across the desert you’d want to ration and protect the water that you started with because you don’t know what situations you’ll run into along the way. It could be a long, hot, dry and dusty journey.
- Credit is Not Cash – Anything you buy on credit now, that you absolutely can’t pay off this month is going to be a tightening noose around your neck as the weeks and months pass. That credit, when spent, immediately converts from a shiny attractive thing, credit, to a dark and horrid mass, debt.
Once credit is converted to debt it must be served, you must give up cash to pay for it and if you feed it only enough to make it content, it will cost you dearly over the years and years it will take to pay off.
You need to stop thinking about available credit as a safety net, it’s not. Start thinking about your credit cards as only a financial instrument that allows you to make a purchase today on borrowed money and repay it tomorrow with your precious cash.
- Run Away And Live To Fight Another Day – Now is not the time to try to increase your status with things. In fact it is the time to be cool by shedding things. If you can sell the plane you are struggling to keep, sell it. If the lease is up on the shiny fast car, replace it with a used car that costs less each month.
What used to be shiny and cool is now just going to be a rope around your financial neck. You don’t have to go so far as to wear Birkenstocks but scaling back will definitely be real cool when you are living less stressed than your high flying friends that will be freaking out on how to make it through the month.
You can always buy most stuff in the future and you’ll be better able to if you shed stuff now because those actions will protect your credit score and credit report. If you try to hold on to all the stuff you’ve got during tough times, I guarantee it will drag your cash or your credit down.
- Throw Stuff Away – If you are currently paying for a storage place to keep your stuff, go take a second look at what you’ve got in there. Go through all the stuff in there and either make room for it in your home or get rid of it.
Now is not the time to pay to store stuff. You can use that $150+ extra in your pocket each month.
- Sell Stuff – Put stuff you can get rid of on eBay or Craigslist or have a yard sale. Just try to get some cash for the stuff you no longer need. If it does not sell, throw it away.
If you don’t want to hassle with selling it, and you are just that lazy like me, then contact one of the many companies that will sell it for you and keep a percentage for their troubles. You can turn trash to cash and that cash only helps to refill your pockets a bit, or a lot if you factor in the savings for the storage place you just dumped.
- Do Not Cancel Your Health Insurance – If you are thinking of cutting out your health insurance to make ends meet, don’t.
All it takes in one unforeseen and unexpected event to bankrupt you with medical bills.
- Stop Paying Bills – If you’ve paid for the basic expenses like food, shelter and clothing and you don’t have enough money to pay your credit cards, don’t pay them. It will make the credit card companies angry and hurt your credit but it all that can be overcome. Creditors will only be happy when you send in the minimum payment but that will only keep them happy this month.
The worst that will happen to you if you don’t pay the bills is some late fees, maybe your interest rate gets jacked up, some nastygrams or unhappy phone calls. There isn’t much a debt collector can do when you are friendly, nice and honest on the phone and just tell them you don’t have any money to send them. Try to make the debt collector smile, make a friend of them and help them to have a better day, but under no circumstances should you promise to make a payment you either can’t afford or have to use savings to pay.
- Don’t Use Savings to Pay Some Bills – What! I know, it sounds crazy, after all isn’t that what savings is for? Well, kind of. In uncertain economic times, if you lose your job or your income is cut back, you may not know when it will be restored to previous levels. You need to use that money to pay the essentials, and not all your bills are essentials. Mortgage, rent, car payment, food, medical insurance, etc., those are essentials. Other bills aren’t.
Creditors will be pacified for this month when you reach into your savings to pay the bill but when you reach bottom they will not thank you for all the months before that you drained your savings to make them happy. No, they will be just as disgruntled and unhappy as if you had stopped paying them months ago. Draining your savings didn’t change the inevitable, just delayed it, in worse shape, and left you dry.
If you do anything with your savings, move it to a bit more distant high paying savings account that will earn you more as it sits there and be less accessible to immediate temptation.
- It’s Not Worth What You Want – If you are trying to sell your house or some fancy car and people keep making you insulting low offers, get off your high horse and take a clear headed look at what it is that you are selling.
Holding out for more often leaves you nothing. You don’t get cash unless you sell and in any economy the fair price is that price at which the buyer and seller agree. Period. If you need to unload some asset noose around your neck, then you might have to sell it at a loss.
Far too often people ruin the sale of their home because of the value that they place on their home. When you bought it you were told it was going to go way up in value and when the real estate agent came to help you sell it they said it was worth a lot but you’ve got to look through that smokescreen.
The original promise that your home was going to go way up was a marketing tool to persuade you to buy it and the high value that the real estate agent told you when you put it on the market was an inflated value to make you think you would get more and list your home with them so they’d get a commission.
- Consider the Unthinkable – If you have followed all of these steps and you are still finding it hard to survive then you should learn more about the unthinkable – bankruptcy.
Bankruptcy feels shameful, feels dirty and can be the secret you’ll want to keep from people at work, but the reality is that bankruptcy is a legal and viable way to clear debts that are now dragging you down. The vast majority of people that find themselves in these difficult financial situations wound up there because of factors beyond their control. Either they had their income cut, got sick, had a change of marital status, etc.
It is a bigger tragedy to watch people struggle along for years trying to satisfy debts when they could have used that time to rebuild a new and better future. You have to ask yourself if it is reasonable for us to allow a family to go month-to-month with no health insurance because they can’t afford it or to go bankrupt, clear bills they can’t afford and now be able to afford health insurance.
Talking to a bankruptcy attorney to get a free bankruptcy review does not mean you will go bankrupt but it will allow you to become more informed about how bankruptcy may help or hurt you. You can’t make good choices unless you have all the facts. Speak to a bankruptcy attorney for free and learn the reality of bankruptcy for you before you simply decide against it on an emotional level.
- Remember What Is Really Important – Being able to spend at will and buy what you want, feels good. Having really nice stuff to show people how successful you are, is a high. But at times like this, trying to hold on tightly to what is no longer sustainable creates stress and friction in your life.
This stress and friction create tension and pressure at work and at home. Suddenly, before you know it, you are living in fear, depression, uncertainty and wherever you turn you can’t see anything good or happy in your life.
Now is the time to set some new priorities about what is most important. Is it more important to pay that credit card bill you can’t afford or to go to your kid’s game? Is it better to hug your girlfriend and share with her how much you love her, or to fight about what you can’t change?
Now is the time to find gratitude in your life and to be grateful for the simple daily pleasures. If someone holds the door open for you, thank them. Hold the door open for someone else.
Random acts of kindness not only make someone else feel better in tough times, but make you feel better also. Instead of enduring your suffering in silence, just do whatever little things you can to be nice and find moments of joy instead of solid days of pain. Trust me, it is a big help.