by Jeffrey Fanger
The news is grim. But before you sell that stock portfolio and start hoarding gold coins and canned meat, take a few minutes to think about your true economic condition.
- How much monthly household income have you really lost?
- How much previously available credit has your bank or credit card company actually rescinded?
- What hard assets have you lost?
I’m not talking about what you could lose if… or about losses that aren’t realized yet (such as the value of your investments that are just being held). Look at the money you lived on day-to-day, the credit you used on a regular basis, and the things you need in your daily life. Are they still at or near their pre-recession level?
If your answer is Yes, take a minute to absorb the realization that maybe you don’t need to be as fearful as the media would have you believe. Then consider what reasonable steps you want to take, without overreacting. (Next month, we’ll talk about your options if your answer is No.)
Develop a plan for what you can do to cut costs or add income, and rank your ideas in order of your willingness to follow through. Do you want to implement some of your ideas now, or is it simply an emergency plan you can pull out if needed? Are there investments you can make (yes, spending money now might be a good idea) that will increase your security and stability?
For example, if you plan to eventually retire in, say, Arizona, this is the best opportunity you will likely ever have of getting a great deal. If your circumstances change and you want to “downsize”, you will already have a place to go.
Perhaps you could reorganize your home and auto insurance so that it is all with one company, taking advantage of multi-policy discounts. Or consider trading your vehicle for one with a less expensive monthly payment. With all of the incentives currently available you could actually get more for less.
No doubt we all have spent a few nights tossing and turning as we mull the “worst case scenario” and how to prevent it. The truth is, no individual can prevent what is going on in the overall economy. You can only analyze your own circumstances, create a plan, and understand what events will trigger you to take action.
Often an outside advisor can find new approaches that you had not considered. At Fanger & Davidson we have assisted many clients in reorganizing and protecting their personal and business assets. Contact us for help creating a plan to deal with any economic changes you might face.