I think it’s safe to say we are all concerned about the economic downturn.
From December 2007 through June 2009, the United States lived through what is now known as The Great Recession, the longest since WWII. Though the recession has official ended, it’s after effects still live on.
Lending standards have tightened and access to lines of credit especially installment type credit (which is what we use to buy large ticket items such homes and cars, or pay for college) are more difficult especially for those with blemishes on their credit reports and hence lower credit scores.
So, what should the everyday investor & consumer be concerned about in these uncertain times?
I have an acronym to help us remember what we should be doing right now …
E.X.P.R.E.S.S.
Expenses
Do an assessment of your monthly household spending and ensure your money is being spent in an economical and wise way.
Know what you are spending on housing, autos, food, fuel, and other recreational activities — set realistic expenditures of your monthly income for these basis expenditures. It would be a good idea to enlist the cost savings tips we’ve read so much about over the last several months on how to save on gas and get more bang for our buck at the grocery store.
Preparation
The best way to know what you’re spending is to prepare a monthly household budget.
- 35% of your monthly income should go toward your house (rents or mortgage payments)
- 25% household expenses
- 10% auto/auto upkeep
- 5% recreation
The remaining 25% needs to go to your retirement and your savings.
Retirement
Do not stop making monthly contributions to your 401(k) plan or other retirement accounts (that are insured and protected by the FDIC or SIPC). Besides the tax savings … if you have more than 10 years before retirement continuing the direct investments into such plans outweighs market downturns. Just view your monthly contributions in today’s economy as if you’re buying stocks on sale, these equities will hopefully appreciate and be more valuable to you years down the road when retirement is closer.
Emotions
Don’t be an emotional investor. In these turbulent times its good to take emotions out the investing equation and aim to seek …
Safety
Now if your less than five years to retirement or if you’re an investor with cash savings that your want to keep protected. Now’s a good time to move those funds to a safe and liquid refuge — such as short-term Treasury bills or a Treasury-only money funds … like American Century Capital Preservation Fund (CPFXX; Dreyfus 100% U.S. Treasury Money Market Fund (DUSXX; Fidelity U.S. Treasury Money Market Fund (FDLXX); and Weiss Treasury Only MoneyFund (WEOXX).
Savings
No matter what, always put something away each month for emergency savings. We should aim to have 6 months worth of monthly income in a personal savings account for those unexpected emergency. If you’re finding it hard to sock away $50 or $100 per month in a savings account … it just may be credit card debt.
Make strides to decrease your credit card debt …
- Make the call. Call every one of your credit card companies and request a lower interest rate. Did you know nearly 60% of consumers who call to request a lower rate actually receive it?
- Seek low not high. If you’re known to carry a balance month after month find a credit card with a low APR.
- Shop around. Look for a new card with a favorable rate that will allow you to transfer your balances. But, make sure you pay off the balance before the introductory rate expires. And always look for rates that have a 0-2% introductory rate that’s good for at least 6 months to 1 year.
- Plan of attack. Attack your higher interest rate balances first and in the interim pay the minimum balance on your lower rate cards, but send double, triple … even quadruple the minimum payments to the higher rate card.
“The Baby Boomer Crunch”
Baby Boomers, those born between 1946 and 1964, number 76 million persons strong. They are major contributors to the U.S. economy and comprise nearly 28% of the adult U.S. population.
But according to a recent AP article that focused on an AARP survey, 1 in 10 Baby Boomers are feeling the brunt of the current economic slowdown. The article stated that, “these individuals are finding themselves having to borrow money for everyday living expenses and to seek help from family, friends or charities.”
Now, if baby boomers, whom I consider to be an economic powerhouse, are facing some financial difficulties at this time, what does this mean for other generations younger and older?
In light of current economic situation, what actions can these 1 in 10 boomers take to weather the economic storm?
Here are five actions to take now to save money in the future …
Boomer Action #1. Find cheaper prescriptions.
Two initiatives come to mind for those seeking to save money on mounting prescription costs:
a. Partnership for Prescription Assistance
This program touts that it offers a “single point of access to more than 475 public and private patient assistance programs, including more than 180 programs offered by pharmaceutical companies.”
To find out if you’re eligible for any prescription assistance, visit them at: https://www.pparx.org/Intro.php
b. Wal-Mart’s $4 prescription program
I’m certain most of us have heard about this program on the news or seen the advertisement on television. But, just in case you haven’t, the retail giant now has “over 350 prescription drugs and more than 1,000 over-the-counter medications at only $4 per 30-day supply” and 90-day subscriptions for $10. For more information visit:
http://www.walmart.com/pharmacy.
Boomer Action #2. Become a member.
Would you like to trim the fat from monthly expenditures for just $12.50 per year? If you are at least 50 years young, then you’re eligible to join an exclusive club: AARP (American Association of Retired Persons).
I have a close relative who is now over 50 and is still not a member and I think they are missing out! AARP offers great discounts for individuals 50 and over. How would you like to save money on your auto insurance bill, be eligible for reasonable life insurance, or take advantage of discounts on prescription and vision care as well as dental, health, and long term care insurance?
AARP offers extensive savings on the above items and will also help you find lower prices from many things from car rentals to homeowner’s insurance and even 35% off the list price of designated book titles from Barnes and Noble. If you haven’t joined yet, you’re missing out on great savings.
Boomer Action #3. Take advantage of banking programs.
Some banks have special account services for customers 50 years and older. These programs usually allow these customers to take advantage of competitive interest on all balances with little or no additional requirements.
Boomer Action #4. Lower your grocery bill.
- Find a few ways to incorporate store-brand items while making your regular name-brand item purchases at your local grocery store.
- Do not neglect to clip those coupons or take advantage of weekly in-store grocery specials; tossing away the local grocery store flier is equivalent to throwing dollar bills into the trash.
- You may or may not have heard of a food co-op before, but they are all around us. A food cooperative consists of customer owned businesses that supply grocery items of the top quality and best value to their members. Do an Internet search for a local food co-op in your area and see if it fits your lifestyle.
- Buy local produce at farmers’ markets this summer. These food items can be bought by the bushel, basket or pound with noticeable savings.
- If you have any leftovers after a dinner, maybe a couple of times per week, pack them away and eat them for lunch the next day. Every little bit counts.
5 Tips for Selling a Home in a Buyer’s Market
No doubt about it, this housing market is awful. And if you’re trying to sell your home in this market you will most likely face some challenges.
But what can you do to make the most of your homes sell in this buyers market?
Here are 5 tips:
Tip #1. Clean it out. Before your even place your home on the market, make every effort to clean your home from top to bottom. Make any necessary cosmetic updates such as touch-up painting walls and baseboards or replacing any missing cabinet knobs. Also, consider donating items you haven’t used in many years to charitable organizations thus reaping the tax deductible benefits. Another alternative to donating is to have a yard sale or give items to family and friends.
Tip #2. Store it up. If you don’t want to part with any of your home’s contents then consider renting a storage unit to house these belongings, so they are out of the way and most importantly out of the house.
Tip #3. Stage it: When a potential home buyer enters your home, they want to imagine what it will be like to live there themselves. This can be difficult to do if your family heirlooms, photos or personal affects are on display. So, take down any family portraits, put away all memorabilia like trophies or those treasured knick-knacks when showing your home.
Tip #4. Price it to Sell. If you really need to sell your home in this market, be prepared to take a price hit, frankly speaking there’s so much competition out there especially with the record # of foreclosures on the market — selling your home at the price you desire probably won’t work. Once you retain a realtor, make certain the sell price is at least comparable if not slightly below what other homes are selling for in your neighborhood.
Tip #5. Make it worthwhile to the buyers. To make your home more appealing to potential new buyers, consider offering incentives. By incentives I’m referring to taking out a warranty on all major appliances and household systems in the home for up to 1 year. This may give buyers solace in knowing that if any major appliance were to break within a year of buying the house, that they are covered with no out of pocket expenses.
Also, consider offering to pay some if not all of the closing costs for the buyer. These are costs that are above and beyond the price of the property itself. They are the Mortgage Application Fees, Points, Inspection Fees and Survey Fees.
If a potential buyer knows you are absorbing such costs, they may be more inclined to buy your home.
