Writing A Happy Ending to The Recession

The doom and gloom news goes on – regardless of a little pep in the stock market lately. The real economic factors in our lives keep us jittery: job losses mount, taxes are going up, gas prices seem to show no weakness and mortgage rates are skyrocketing, even while underwriting standards are getting tougher. While these factors remain out of your control, you can use this new era of financial sobriety to change your personal financial culture.

Even when some of the stress subsides, living differently will make you both wealthier and more secure, even when the next financial crisis strikes.

1. Get a job that makes money. Obviously, all jobs pay, but pretend you own the business where you work. Do you bring in money or reduce costs to do business EVERY DAY? If you don’t, you’re at risk. When I was first out of school, a mentor warned me, “You’re either line or you’re staff. Staff is the first to go.” Those words – spoken in a past recession – shook my 24-year-old student-loan bearing soul. Since those times, many jobs have come and gone – and a lot of jobs once considered staff have been eliminated or out-sourced. A friend of mine worried a decade ago that she was vulnerable as a Human Resources professional. Luckily, her division spun itself off and sells their services back to their old employer. She moved from staff to line without changing jobs. Can you re-think your skill set or positioning?

2. Live on less than you earn. I should cue the tape player at this point, but a more modest lifestyle packs more power than any investment recommendation. You live on less, so you need less and you have more stashed away. But let me add that cutting out the Starbucks doesn’t get you to saving 20% of your income. You need to change what are, in the near-term, fixed costs:
• Any debt you have.
• Costs of home ownership.
• Kids’ tuition or support for adult family members.
• Car and boat ownership.

3. Get new friends. Whether it’s weight loss or smoking cessation or spending modification, you need new friends. Here, you need frugal friends who don’t shop for fun, don’t vacation expensively, don’t belong to expensive clubs, and don’t send their children to private schools. If your friends enjoy any of these activities, you will want to share the fun. Finding friends who enjoy pot-lucks, libraries, car pooling, and camping takes time. Likely, they’re the same folks maxing out their 401ks, paying off their mortgages before retirement, and letting their kids share bedrooms. Get a library card and check out, The Millionaire Next Door.

You can be wealthier.

By Marie Claire Allvine