Shutdown-Proofing Your Finances 2019

The great recession of 2009 taught me one thing, the same thing that I believe people will learn from the government shutdown of 2018/2019.

In 2009, I was faced with a huge decision. At the time, Americans we were faced with a recession of epic proportions. The housing market has gone bust and many people were losing their jobs.

The recession did not care if you were a multi-millionaire with several homes or a 9 to 5 paycheck to paycheck person, the recession was going to get you and it was just a matter of time.

I spent the entire year laying off employees and each one of them I would tell the same thing. “You are brilliant, and you should start your own business.” Little did I know that by the end of the year, I would be the one getting my last check.

When I was talking to these employees, giving them the last final walk out with their checks, I was preparing myself emotionally for what would become my own last check.

Fast-forward to 2019, another government shutdown and the remarkable thing is that there are still stories of people who live paycheck to paycheck and not only losing their cars and boats but in some cases their homes.

Haven’t we learned anything from the Great Recession of 2009? Have we not learned that you cannot live so far above your means that you cannot pay your bills? For those of you who need a refresher on the things that you should be doing in order not to get to a place where you are going to lose your home because you miss a paycheck, here are tips on ensuring that you will be financially stable hopefully for the rest of your life.

Put together a systematic Savings Plan. Many people believe that they can live any old way and not suffer any consequences. Putting together a systematic savings plan is your best insurance policy for living a financially stable life. Systematically, you can save five dollars a day and at the end of the month have several hundred dollars. Put all your savings or all your change in a bottle. If you live on Tips, designate 10% of your tip money to savings. Or in my case, I would take all my tips and put them away so that I could not see them. On occasion I will go around and add up the Tips, cash them in, but I would never spend that money unless it was an emergency.

6 Months Emergency Cash reserves. As the government workers are finding out now, a prolonged furlough can happen to anyone. It is only been two weeks and some people are saying that they need to sell their cars. This should not happen. A six-month cash reserve of money that will cover all your bill is a must. This includes your mortgage and any bills that you have on a monthly basis. It is doable and if you ever find yourself in a furloughed position, you’ll find out how critical this is.

Retirement Savings in the form of Stocks, Bonds or Annuities. The Internet has made investing almost as common place as using a word processor. There are hundreds of online sites that only require five dollars to start an investment account. Find them and begin the process of having that money taken out of your check or you can direct deposit that money to start investing in stocks bonds and annuities.

Live within your means. Warren Buffett, the Wolf of Wall Street didn’t become a billionaire by spending every dollar that came into his pocket. As a matter of fact, he is still living in the same home that he and his wife bought back in the 1960s. It’s a modest home but when you’re a billionaire really do you need all of that.

It is imperative that you live within your means. That means you don’t have to try to keep up with the Joneses, just because the Joneses bought a brand-new car. Remember it is you that is living Your life, not your neighbors. So, don’t spend more than you have. Don’t stretch yourself to impress.

Get out of debt. If you are in debt, with high interest credit cards or you have loans that you’ve taken out, it is critical that you do everything you can to get out of debt. Take those credit cards and cut them up. If they are cards you must keep, do what some financial planners have said, put them in a freezer bag, freeze them in water and put them in the refrigerator. When you are tempted to use them, maybe the discomfort of trying to get them out of the freezer will dissuade you from spending that money.

Purchase a Used car rather than new. The smell of a brand-new car is wonderful, but frankly folks the minute you drive off the car lot you lose $10,000 off the price of a brand-new car. The more prudent way of buying a car, is to buy a used vehicle. Save that extra money for anticipated repairs, which may come.

Eat out less. We all love a good steak, lobster, or even a good old fashion pizza from time to time. In order to put more cash in your pocket, eating out less often is going to have to be the rule. On average Americans eat out 3 to 4 times a week. That equals two to $300 per week that they are going to spend on eating out. Imagine saving $450 a month, just on not eating out three or four times a week. You could save that money and literally put it in the bank as savings or you could save up for a vacation.

Carpool to save money. Gas prices are always fluctuating. Another way to save money is to carpool with somebody in your office during the week. You could save on average $100 a week just on the gas savings. If you live in a metropolitan area, your savings could even be more. The tolls going from Jersey to New York can be spendy. The parking in San Francisco which could be $19 a day or per hour could buy a new home.

Secondary Income. The new gig economy has made having a side job very accessible nowadays. Lyft, Uber, Amway all of these are a part of the new era of gig economy. You could freelance or do any number of side jobs that could bring in more money. The amount of money that you could earn just by driving Lyft or Uber could run into the thousands of dollars per month.

Invest Now. You probably heard this from your mom and dad and any number of financial planners, investing as early and as often as possible is one of the most prudent ways of putting more money in your pocket. Imagine you’re an 18-year-old who invests $50 a month starting at the age of 18, and you didn’t touch that money till you were 40. Using the Theory of Compound Interest, that money could be hundreds of thousands of dollars or even a million depending on the investment strategy.

Buy for cash NOT CREDIT. Credit is the best and the worst thing to ever happened in the history of man. Credit can add to the cost of a home 30%. You can get into the house much quicker but it will cost you more in the long-run. My advice to you, buy as much as you can on cash as you can afford. Limit the amount of credit that you are using, because it’s going to cost you more by buying on credit than it is worth. You can also take that money that you would normally be paying on credit and put it towards something more useful… like you.

Shop around for the lowest priced Healthcare, car, home, life Insurance as possible. This is one of the little-known secrets of the rich. Unless you are married to the insurance company that you currently use, then shop around for the lowest price you can get. The price on insurance that you buy on a monthly basis or yearly basis can vary wildly from month to month. Don’t be fearful of calling your agent up and having a review every other month. They are not in the business of saving your money.  They’re in the business of selling you a policy so shop around.

This includes banking, your banker is not in the business of saving your money, he’s in the business of getting your money into his bank, so shop.

Put these simple but powerful tips into action and you’ll find your financial future getting more solid as the weeks go on. Don’t let a furlough, layoff or financial crisis put your future in question. It is up to you to take the necessary steps.

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