Entries Tagged 'Debt' ↓

As of today, job losses continue to climb despite estimates, mortgage delinquencies are skyrocketing, home prices and home sales continue to drop.

Even with Obama’s new plan, which might work, things don’t look so good.  Having cash set aside would be a really good thing right now.  But so many of us don’t have any cash at all, because we’ve been spending every dime and then some, till now.

It’s not too late to get on the right track though.  Here are some really, really basic ideas to get some cash, right now, to put into a savings account.  But be sure to take the savings and put it into a savings account – don’t just spend on something else.  And for God’s sake don’t invest it in anything!  You need a cushion, NOW.  Nothing shocking here – just basic reminders to DO IT NOW.  (We’ll keep adding ideas in future posts.)

Things to skip or adjust:

- Discretionary spending: Starbucks, or Dunkin for that matter, smokes, buying lunch at work, going out to dinner, vacations (do something cheaper close to home), going shopping for fun, buying junk food at the grocery store (have you see the prices jump lately?), trips to the movie theater, buying the newest cell phone, upgrading your car lease, spending too much on cable channels you don’t watch, traffic tickets, the weekly mani/pedi, home decor, fast food for dinner, clothing you don’t need, magazine subscriptions, appliances that could be fixed instead of replaced, you get the picture. Stop yourself, one day at a time. What did you NOT buy today?  Put that cash into the bank.

- Paying extra on your debt.  Yes don’t pay extra right now.  You’ll pay it down eventually! But for now, pay the minimum, and put the rest into your savings.  What if you get laid off? Would you rather have that money in your pocket, or Bank of America’s?  Will it cost you a little extra in interest? Yes. Will you have cash on hand, in the bank,  if you lose your job? Yes.

- Getting into more debt.  Just. Don’t. Do. It.  It’s how we got into this mess, it’s NOT how to get out. 

Where to find or earn more money:

- An extra job. Picking up an extra amount of cash and putting it all away is a good idea, unless you’ll have to spend $$ on child care, travel or other job-related expenses.  Check Craig’s List for local and part time jobs from home.

- Sell it on eBay and craigs list, or throw a garage sale.  Millions more listings are showing up, but there are buyers out there looking for deals too.  So get rid of that stuff NOW.

- Make a little money online.  I don’t mean scams, but if you have something you’re passionate about, you can set up a blog, for free, learn to attract readers who are just as passionate, offer excellent value and products and ideas, and earn a little extra cash.  Here’s a reasonably priced product that can help you set up a blog to earn money. Will you get rich? not likely.  Will you have a little extra to put away?  You can easily do that.

Where to put your extra cash:

- Your mattress.  Hey, some people feel better having bills within reach.

- High interest savings accounts, like ING or HSBC.  You can earn upwards of 3%, but you’ll need to open a checking account with them too to get cash through a debit card. Research rates here.

- Your local community bank. Their interest rates aren’t great, but by and large they are more stable than the big national banks.  Find out your bank’s rating at Bankrate’s Safe & Sound ratings page.

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So some personal financial gurus tell you to pay off debt till you are “debt free”!  That sounds great! But the idea is, you want to have paid off your debt, past tense, when bad times hit. Now that we’re getting hit with bad times, today, this minute, do you really want to go there?

What if you’ve been paying off debt by taking an extra job, putting an extra $500 a month toward that credit card – and you lose your primary job, your main income?

What would you give to have your hands on that cash you paid debt with?

With times like these, putting more away for emergencies BEFORE you pay down your balances is probably a smarter choice. When times get better, for sure pay down debt.  But if you don’t have much cash set aside, pay the minimums on your debts to stay current, and put the rest in a good high-interest savings account you can get your hands on as soon as you need it.