Saturday, November 1, 2008
Protecting Your Personal Finances During a Recession,
The Changing Credit Habits of U.S. Consumers,
Monthly Contest Winner,
Getting a Raise in a Weak Economy
Protecting Your Personal Finances During a Recession
If you are concerned about today’s economy, you are not alone. The credit crunch and financial crisis is cause for concern, and even with the financial bailout package approved, it could take months to see any benefit. So what should you do to protect your personal finances and recession-proof your money during this time?
Most banks should continue to function normally. Still, it is worthwhile to take the time to protect what is yours. One important thing to do is make sure your bank is backed by the Federal Deposit Insurance Corporation, better known as the FDIC. If your bank is a member of the FDIC, then your individual accounts are insured up to a certain amount. Be sure to check with your bank to ensure that they are members of the FDIC and that your accounts are protected. Visit www.myFDICinsurance.gov for more information.
The next step is to ensure the FDIC protects your retirement accounts. The FDIC provides coverage for retirement accounts like IRA’s that are with FDIC insured institutions. Again, check with your retirement accounts or financial planner to ensure that they are.
Look into money market funds. Traditionally money market funds are considered “safe” for saving cash with less risky investments. Though, recent developments have some people wondering if money market funds are actually a safer option. Recently the Treasury Department provided additional guarantees to money market funds in order to assuage the anxiety. Generally speaking, this is still a safe option, especially now that the Treasury Department has backed money market investments with additional funds. There are still some wrinkles in the plan, so be sure to speak with your financial planner before making any major decisions.
An area of major anxiety is credit, and the credit crisis is a major factor in the recent economic upheaval. Applying for a car or home loan could prove to be downright impossible unless you have perfect credit. The most important thing is to keep your credit score as clean as possible and remember that time and patience might be your biggest assets right now. As soon as the market cools, loans should become easier to obtain, but you may just have to wait a few months.
What if your brokerage firm runs into financial trouble? This is an important question being asked by today’s investors. The most important thing is to check and see if your brokerage firm is a member of the Securities Investor Protection Corporation, or SIPC. SIPC covers investors up to a certain dollar amount in the event a brokerage firm fails or securities are stolen. Remember, however, that SIPC does not protect people who have lost money due to bad investments and drops in the market. This is due, in part, to the fact that investing in stocks is considered high risk. Basically, SPIC is guaranteeing a certain dollar amount towards the company should it fail.
Finally, if you are a homeowner, it is crucial to protect your home and/or your credit. If you are paying your mortgage on time and have the available funds, this isn’t a worry for you. But, if you are at risk of losing your home, or destroying your credit, it may be best to consider selling your home or taking out a second mortgage. Keep in mind that securing a second mortgage may prove to be impossible at this time, in which case selling the home may be your only option.
Before you make any decisions on your personal finances, be sure to check with your financial planner. And, as always, be sure your financial planner is certified and has reliable references. The decisions you make now regarding your finances can affect you and your family for the rest of your lives.
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The Changing Credit Habits of U.S. Consumers
It was not too long ago that people didn’t drown in their debt. Cash was used for all purchases unless there was an emergency. Patience was a way of life. Fast-forward to present time and what we find is a “get it now” mentality among American consumers. This “get it now” mentality has caused much of the financial crisis that we are in today, and both banks and consumers are responsible. What has resulted is tighter, less obtainable credit, even with the recent passing of the $700 billion “bailout” plan.
A shift is now happening in how Americans use and view credit and debt. Most of the country’s lenders are already tightening their lending policies. In addition, credit limits are being slashed.
And, according to an article on www.cleveland.com, “New Tighter Credit Will Change The Way Americans Live With Debt” by Michelle Jarbo and Mark Gillespie, “it's a wake-up call to American families, who are toting more than $2.58 trillion in debt after years of building up balances on mortgages, car loans, credit cards, and college loans.”
The process of breaking our addiction to debt will not be an easy one. Americans are going to be forced to return to an old way of life where buying a home will require a 20% down payment and buying or leasing a car won’t be considered a right. Student loans will also rise, making Americans look more at the process of saving for education.
Overall, experts are recommending that American’s borrow less and start using cash to pay for purchases and save more. Keeping up with the Joneses has taken on a different meaning, where it is considered foolish to try and keep up. Hopefully as Americans are forced to save, the economy will stabilize and a new breed of responsible consumers will emerge.
Congratulations to This Month's Winner
Getting a Raise in a Week Economy
The economy is obviously in crisis mode. The recent government intervention promises some relief, but it will likely take months to see the benefit. Although the economy is looking uncertain, it is not impossible to. A survey by the Economic Research Institute, says that companies are expected to distribute raises of approximately 4% this year.
Experts say there are key ways to accomplish getting a raise that involve avoiding common mistakes. According to an article by Laura Rowley on www.yahoo.com, these are the six mistakes that should be avoided:
1. Not Asking. Most people assume that during a sluggish economy, a raise isn’t feasible. This simply isn’t true. While unemployment has risen slightly, most companies aren’t instituting major layoffs. Employees are still needed, especially those who meet key performance objectives and go above and beyond the call of duty.
2. Justifying Your Request. Most employees believe they need to justify a raise. And yes, it is important to show how you are critical to the success of the organization, but not for personal reasons. For example, if you helped design a process that reduced company expenses by 50%, then by all means present that as a reason for a raise. Don’t use personal justifications like I just bought a house or had a baby. Companies aren’t designed to respond to personal requests, but they thrive on money added to the bottom line.
3. Asking at the Wrong Time. You don’t have to wait until your performance review to ask. Timing is critical. Ask when you have done something spectacular like landing a new client or making a huge sale. Do not ask during a vacation month or one where you have been sick a lot.
4. Tooting Your Own Horn. Build alliances with people who are key to an organization’s success. Cross functions and get involved in projects that may require you to stay extra hours above your normal duties. Get people talking about how great you are, so that you don’t need to “toot your own horn”. Be sure, however, to keep your relationship with your supervisor strong and not overstep your boundaries. Always keep him/her informed.
5. Promoting Your Unconventional Style. Like it or not, there is a corporate style. Being severely different in the way you dress, communicate, and socialize, will only hurt your career. You can maintain your individuality in subtle ways without being too outwardly different.
6. Listening Instead of Watching. Pay attention to who the company promotes and rewards. Sometimes a company will preach values, but then do the opposite. For example, if a company says it is going to reward those who have a good work/life balance but then ends up giving bonuses only to those who worked long hours, they aren’t practicing what they preach. In this case, working longer hours would be the appropriate course of action when seeking a pay increase, regardless of the company’s work/life balance mantra.
Following these tips can help you earn a raise even in a soft economy. If you cannot get the raise you are looking for, analyze the reason why. What aren’t you doing? Or, is the company really not interested in keeping you? Sometimes soul searching is in order to determine what needs to be done to get that raise. Most importantly, keep the lines of communication open with your supervisor and encourage an honest dialogue.
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