As a result of the financial turmoil, there are plenty of families which will be torn between putting aside money for retirement, and saving for college for their children’s college education.  Many parents now paying for private school in grades K-12 are now rethinking that decision.  As for college costs, they keep rising, and enrollment in local community colleges is skyrocketing. Yet do parents always have to pay for college?  If high school age children are encouraged to do everything they can to apply for all available grants, treating it almost like a part time job, they may find that there is cash available.  In addition, holding down a part time job or two in the summer can give teens a way to afford school.  When parents give up financial security in their old age in favor of paying tuition today, that is probably a far bigger danger than the impact on their children of having to attend a community college instead of a major private university.

There are plenty of state colleges that are priced under $20,000 per year for state residents, including tuition, fees, books, and room and board.  A part time job that pays $10-15 an hour can cover a large portion of that amount.  Community colleges are far less, especially if the student lives at home for a year or two.

Spend Less for Entertainment

Do you really have to cut back on entertainment jut because your budget is cut back?  Not really.  There are really hundreds of things you can do, for less.  One website, GoCityKids, offers lists of things to do, free and paid, for dozens of locations around the country.  Public libraries are now swamped with requests for movie rentals, music rentals, and the old-fashioned book.  Many municipal and college libraries show films to the public.  Schools, colleges and local orchestras offer free concerts.  Some communities sell discount tickets to events like theater and concerts, along with movie and museum tickets.

Are We Addicted to 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.

Related articles by Zemanta

• Top 5 Online Banks: Savings or Checking Accounts

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.

I’m not a finance expert, just a middle-class American watching the financial nightmare unfold in front of my eyes, and I’m deciding to do something about it.  Putting more cash aside, taking steps to bring in more cash, and save, save, save is the goal. I don’t have a $$ amount I’m trying to reach – yet – instead, the idea is to make sure that whatever happens, I’m not broke.

This is not about “personal finance’ or what to do with your retirement, or how to get out of debt. This is way more basic:  about having money in hand, or tradeable/sellable skills, or whatever is needed, to survive a massive economic blowout – and if the blowout doesn’t happen, I don’t think I’ll complain in that case either!

Here’s what I’m talking about:

- Figuring out how to save as much as possible, by buying less (or nothing), getting deals, and conserving.

- Finding best places to put the cash so it’s relatively sage – that is, the best rates on savings accounts, specific investments, other ideas. (Hint: This means NOT mean paying off credit cards first!)

- Making extra money – the fast kind, not the job kind; I’m not talking about overnight millionaires or anything, just ways to get a couple hundred (or maybe more!) coming in each week?

I think this crash is just the start.  Stocks may not come back because the wages and jobs aren’t there that are needed to fund consumption without credit.  We won’t have income because as customers we’re too broke to buy. It’s a vicious circle, and without credit no one’s going anywhere.

So, in the mean time, the goal is to keep cash coming in, prevent it from going out, and and do whatever it takes to protect your finances.  Inflation is going to be the next bugaboo, but one thing at a time for now!  I’m working on a list of ideas I’ll post here.

Related articles by Zemanta

• Use Separate Accounts to Automate Your Finances [How To]
• Urgent personal finance advice
• Simplifying Finances Saves You Money

For a while there, I started to think that we’d never need to see a paper bill again.  We can use debit cards to access our banks, credit cards when we don’t have money in the bank, and just throw those pennies you get for change right onto the street.

Well, with this credit crisis, I think it’s time to start putting your cash in your pocket, and using it for everything instead of plastic.  It might be time to start thinking in terms of a cash and barter economy.

I also think it’s time to get your money out of the bank. I mean, why mess around, just in case?  I have no problem with saying this, since I keep hearing from bankers on tee vee about how the fundamental nature of baking is going to change anyway, and the way we think about it.  All I know is, in times like this, it’s the little guy who is likely to have the most taken from him, and I don’t personally think the risk is worth keeping my money in some institution for a measley 2% or even 3%.  OK so there’s inflation – but I am just saying it might be a good idea to keep your cash in hand, on the sidelines, and look for some kind of opportunity that is safer than a bank.

As for retirement funds, I moved mine out of the stock market last year.  (I recommended the same thing to my coworkers but they just said “Oh that’s to much for me to think about”. I bet they’re thinking now!) I don’t like that it has to sit in any bank right now, but at least I’m invested in the same thing the Chinese are – Treasuries.

Related articles by Zemanta

• More Americans charging less, spending less