| The recent financial news - banks failing, the Treasury | | | | risk tolerance, time frame and goals, and that you |
| taking over Fannie Mae and Freddie Mac, the stock | | | | rebalance once a year. |
| market dropping several hundred points in one day - | | | | 5. Make sure your money is protected. Your bank |
| may have you feeling a bit helpless when it comes to | | | | accounts are protected by the FDIC, while the SIPC |
| your finances. | | | | protects your investments in the event that your |
| While you may not be able to make the market go | | | | brokerage company fails. Make sure that none of your |
| back up or keep banks from failing, there are steps | | | | accounts are above these limits (generally $100,000 |
| you can take to make your finances as strong as | | | | per owner and per bank for FDIC, and $500,000 per |
| possible in these tough times: | | | | account for SIPC). |
| 1. Fund your emergency fund. It's more important than | | | | 6. Refinance your mortgage or other debts. Interest |
| ever to have an emergency fund, in case you lose | | | | rates are at historical lows, so why not take |
| your job, have unexpected medical expenses, or have | | | | advantage of these low rates to do something good |
| a major house repair, so that you don't have to sell | | | | for your checkbook? Remember, you will pay closing |
| investments (while they're down), or rack up credit | | | | costs anytime you refinance, so it's best to refinance if |
| card debt. The general rule of thumb is to have three | | | | you expect to be in your home for five years or more |
| to six months of living expenses set aside for | | | | and only if you can get your interest rate reduced |
| emergencies. You should keep this money in | | | | 0.75-1.0%. |
| short-term, liquid assets, such as a CD or money | | | | 7. Check your credit report at least once a year. With |
| market account. | | | | the rise in credit card fraud and identity theft, it's crucial |
| 2. Reduce debt. If you have high interest credit card | | | | that you check your credit report periodically. You |
| debt, the greatest return you can get right now is to | | | | should check your credit report at least once a year, |
| pay off that debt. Start by calling your credit card | | | | but 2-3 times per year would be even better. To |
| companies and asking for a lower interest rate (if you | | | | check your credit report for free (doesn't include your |
| have a good credit score, you could get your rates | | | | credit score) go to |
| down to 8-12%, which is much better than paying 20+ | | | | 8. Review your insurance coverage. Check your car, |
| percent). Then make the minimum payments on all of | | | | home, life and health policies to make sure you have |
| your credit cards except the highest interest rate card. | | | | the right coverage at the right price. The last thing you |
| Apply as much as possible to the highest interest rate | | | | want to do in a recession is to incur a financial loss |
| card until it's paid off, then move to the next highest | | | | because your insurance isn't up to date, and you might |
| interest rate card, and so on. | | | | even save a few dollars by raising your deductible or |
| 3. Review your spending. I'm always amazed at how | | | | by discovering discounts that you are entitled to. |
| many people have no idea where their money is going | | | | 9. Invest in yourself. Unless you work for the federal |
| each month. How can you reach your goals if you | | | | government, tough economic times could mean job |
| don't know where your money is going? While | | | | layoffs and higher unemployment. Invest in yourself by |
| budgeting is a bad word to most people, it is important | | | | taking classes to improve your skill sets, or even going |
| that you at least know where your money is going so | | | | back to school to get your degree. The money you |
| you can make informed decisions about where your | | | | spend on your education could make the difference |
| money should go in the future. If you aren't already | | | | between employment and unemployment, and should |
| doing so, now is a great time to start tracking your | | | | pay off in the form of higher salaries over your lifetime. |
| spending using a software program (such as Quicken) | | | | 10. Finally, turn off the news! Unfortunately, the media |
| or even spreadsheets that you create on your own. | | | | focuses on the negative news, which only causes |
| 4. Increase your retirement contributions. Many people | | | | concern and panic (it would be different if they gave |
| panic and stop investing in their 401Ks or other | | | | us the good news too, but the good news is usually |
| retirement accounts when the market is down. When | | | | buried several pages into the newspaper or website). |
| the market is down is actually the best time to invest. | | | | A CNBC reporter said it best, on one of the many |
| Remember "buy low, sell high"? Well, the time to buy | | | | volatile days we've experienced this year... "If you're |
| low is when the market is down! Make sure that you | | | | invested for the long-term, turn off the news, it doesn't |
| are investing in a diversified portfolio that meets your | | | | affect you today". |