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Thursday, March 11, 2010

Surviving the Economic Storm

While most people consider themselves well prepared in the event of a flood, hurricane or tornado, an equally devastating storm can endanger your survival and is currently an even greater threat to your survival. This is the current storm of unemployment that is now sweeping across the country that is leaving a trail of devastation in its wake. With current lengths of unemployment that are in excess of 6 months, it is important to have a strategy in place to effectively protect yourself and your family should you suddenly find your self unemployed.
Common Sense Solutions for Dealing with Unemployment
1. Get out of debt. This is by far the most important thing you can do to be better prepared. It will be virtually impossible to sustain your standard of living if you are trying to exist under a mountain of debt. That mountain of debt can crush you if you aren’t prepared.

2. Save more. If you haven’t started saving more money, you are going to get left behind in a hurry. While in the past most people have been notoriously bad at saving money, this is rapidly changing and current levels of savings are at an all time high in our history. This isn’t going to help our consumer driven economy much but I suspect that the people saving more won’t be too worried about the ones who aren't.

3. Spend less. You can’t spend your way out of debt, no matter what the politicians are saying, and high levels of spending on items that are not essential will make it almost impossible to increase your savings and will only lead to increased levels of debt.

4. Build an emergency fund. You may not need 6 months worth of income in your emergency fund but you will definitely need 6 months worth of expenses. While income may stop or become greatly reduced, your expenses will continue and may even increase. You can figure out how big an emergency fund you need by figuring your current monthly expenses and multiplying by 6. Mortgage or rent, utility expenses, health care and vehicle expenses will make up a significant portion of your needs. BTW, make sure you are sitting down when you do this as the results may shock you.

5. Keep the pantry stocked. You and your family will need to eat on a regular basis, even if you are unemployed. Having a six month supply of groceries on hand won’t hurt if you happen to find yourself unemployed. A little extra goes a long way and is just as important as your emergency fund. You won’t find a better reason to keep a little extra food around than long term unemployment.

6. Learn to grow your own food. Gardening is a great way to keep costs down while keeping food on the table. Even in an urban setting, a small garden can make a huge difference. It’s also a great way to relieve some of the stress that comes with unemployment.

7. Maintain your health and fitness. Regular checkups in order to keep your current health and fitness at optimum levels will be essential. Unexpected medical expenses or health problems while you are unemployed won’t help your situation.

8. Prepare to do more with less. Even a part-time job or one that generates significantly less income will be better than no income and will allow you to minimize the drain on your emergency fund while unemployed.

9. Prepare to do without. In a crisis there are some things you will have to learn to live without until your economic conditions improve. That extra phone, cable TV, second car or that fishing boat may have to wait for better economic times.

10. Learn to handle the stress of unemployment. Find things to do with your extra time that will help to decrease your stress levels without increasing your debt. Take a short walk or hike each day, read that book you never seem to have time for or do a little gardening. Maintain an active lifestyle to fill the gaps in your time while unemployed.

While many people are expressing concerns about the current high levels of unemployment, it is really the length of that unemployment that should be your main concern. The average length of unemployment has risen to levels that are currently the highest since they first started keeping track of this type of data.

Are you prepared for unemployment?

Staying above the water line!


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