Money Sense Tips

Anticipate Recession

While economists comment that the last two recessions lasted for eight months respectively, it is no comfort to learn that the housing crisis has not yet reached bottom, fuel prices are continuing to rise in light of recent events, and more and more companies are closing down leaving thousands of people unemployed.

Wages have decreased, more families are in debt than ever before, health-care costs continue to rise, and our grocery bills have eaten into our household budgets significantly.

What does this recession mean for you and me?  It means we have to tighten our bootstraps (if we haven’t already) and begin planning for any eventuality.

In order to alleviate the burden of all these factors, the best advice economists can offer is to take a fiscally conservative stance on our spending habits.  Here are some additional suggestions:

* Stick to a monthly budget
* Refrain from buying expensive items on credit ( See Live Within Your Means)
* Set up a fund for emergencies (at least two months’ income)
* Try to add the maximum amount allowed to your pension/retirement fund
* Stay healthy with a proper diet and exercise program (This is a preventative measure that will reduce the cost of prescription drugs and other health-related costs)
* Pay down debts
* Purchase with cash
* Buy groceries in bulk utilizing coupons whenever you can ( See 7 Simple Methods to Save Money on Groceries)
* If you have teenage children who are receiving an allowance, determine if they can apply for a part-time job after school
* Increase your deductibles on car and homeowner’s insurance
* Keep your automobile well-maintained
* Winterize your home and use energy-efficient appliances and light bulbs
* Walk whenever possible instead of driving to a local store

Anything you can do to reduce the amount of expenditures can only help you through this economic downturn.  In the meantime, stay calm, focus on your budget, and save as much as you can.

If you are interested to learn how to survive better in the year 2009, you must get this Suze Orman’s 2009 Action Plan Book.

Suze Orman

With the stock markets in a downswing and the weak economy threatening your home value and job security, one way to keep money in your wallet—and your investment accounts—is to limit the (sometimes hidden) fees:

Retirement savings: Do you know how much it costs you to invest in the funds in your 401(k)? The difference between paying high and low fees can add up to tens of thousands of dollars. Call your plan provider to make sure your funds don’t charge sales commissions (called a “front-end load” or “deferred-sales charge”) and that the annual expense ratio is no higher than 1 percent. If your plan doesn’t offer lowcost options, you and your colleagues should make a ruckus—the law is clear that 401(k)s must be operated for the employee’s benefit, and high-cost funds are of no help to you. The same goes for your Roth IRA—no-load funds and low-expense ratios are the surest way to boost your bottom line. Fidelity, T. Rowe Price, and Vanguard all offer many low-cost funds.

Credit card: If your monthly payment isn’t on time, you’ll be slapped with a late fee as high as $39. Do that three times a year, and you’ve donated nearly $120 to the credit card company. Late payments also hurt your FICO score. And never, ever take out a cash advance on your credit card. The cost is often 3 percent of the amount borrowed, and the interest rate can be higher than 20 percent.

Bank account: It’s easy to be hit with fees of $3 or more when you use an ATM—a charge from your own bank plus the one from which you withdraw cash. Do that twice a month, and you’re spending at least $72 a year.

Recurring payments: Some bills, such as your insurance premium, allow you to choose between making one big annual payment and a series of installments. If you can afford the one-time deal, you’ll avoid the $5 or so service charge levied when you pay quarterly or monthly—that’s $20 to $60 a year. It’s easy to save $200 annually by eliminating these types of fees. Invest that $200 a year for 20 years, earn an annualized 8 percent gain, and you’ve got nearly $10,000. It pays to be a fee fiend.

Suze Orman has always been my favourite financial expert. Just the end of year 2008, she came out with a new book called
Suze Orman’s 2009 Action Plan This book received great reviews from my customers. Read it today!