Surviving the Curent Economic Downturn

Politicians argue about whether we are in an economic downturn. It does not matter whether you call it an economic downturn; recession, or depression, working class families are having trouble meeting their obligations. Many believed the recent Stimulus Bill would provide relief to working class families. Well, the promises fell a little short. It is time we take matters into our own hands. So how does the everyday family survive the current economic downturn?

Act like the one being laid off.
Every day, we hear about people being laid off. I hope that you are not one of those individuals; however, acting like someone who has been laid off can be very helpful during this current economic downturn.

Often, we go through life and give little thought to our financial health. We take our families to the movies, to the mall, out for dinner, and think little about whipping out the credit cards. When we are laid off, our perception changes greatly. We begin to think about things like a budget and cutting back on $100 jeans and $200 shoes. Acting like someone who is being laid off now can provide the financial health necessary to survive a lay off later.

Write a budget
Dave Ramsey often says, "a budget makes your money behave." Would you plan to spend $400 this month at Taco Bell? Most people would not. Yet, when my wife and I looked at our bank, statement we found out we did just that. We did our first budget the next day. You may think, "That was stupid but I don't spend money." Consider this, if you buy a soda every morning for $1.49 you are spending $44.70 a month on soda. Small purchases do add up.

Living by a budget makes you feel like you got a raise. My wife and I were surprised to find out how much money we spent at fast food restaurants. My wife started packing my lunch each evening. This small step has saved us almost $200 a month. Before I upset anyone, I am not saying that every wife should pack her husband's lunch. This is just the system that works for us.

Writing a budget can help your marriage/relationship. When my wife and I started doing a budget, we found we fought less. The budget allowed us to discuss how the money should be spent beforehand. We discussed issues like "should we buy new clothes or tires", "do we have the money for a trip," and "should we save for a trip." Making these decisions before the money was in the bank allowed us to make sure our spending was in line with our family's goals.

Stop asking, "What is the payment?"
Many people state that Congress should not spend more than taxes bring in. Yet, they do not hesitate to pay for a McDonald's hamburger on a credit card. We do not think about how much debt we have; only how much it costs monthly. Economic downturns (like our current economic downturn) cause people to add up their debt. Often, they are appalled to find out their credit card balanced equal the family car.

Credit card companies, banks, and other financial institutions have successfully fostered the "payment only" mentality. After all, they make their money charging you interest. Yet, this behavior only leads to revolving debt. If you do not want to find yourself eating Alpo at retirement, you must start asking what it costs and stop whipping out the credit cards.

Build an emergency fund.
Our current economic downturn has caused great financial instability. An emergency fund allows your family to breathe a little easier. It allows you the security of knowing you could survive a short-term layoff. Your should strive to have an emergency fund of three to six months of your income. This is the time that many human resource professionals state it takes to find a new job.

I am not a financial genius or financial planner. I am just a working class American that has learned an important fact. We must take care of our families first because no one will do it for us. This statement is even more important during the current economic downturn. I have outlined four steps that seem very simple. Should you decide to follow them, you will find your mood changing, fights with your spouse or kids reduce, and even better health. These benefits come from having the financial stability to not fear any economic downturn.