* Take it one day at a time … the new reality for most Americans when it comes to financial recovery.
* Don’t put all your eggs in one basket … a poster child for diversification.
You get the idea. So keeping the “what’s old is new again” mantra in mind, here are some famous sayings from generations before that could serve us well in 2010.
1. Don’t cry over spilled milk. The recession is over and it is time to start putting the pieces back together. It might take awhile (patience is a virtue after all), but you need to start somewhere.
2. Save for a rainy day. Call it an emergency savings fund, rainy day fund, or what you will. The idea is simple, but changing your behavior is not. Money is easy to spend and there’s no question that there is still plenty of “gotta have it now” in everyone. It’s time to slow down on spending and start saving. Easier said than done?
“The key really is to get started saving anything,” says Jill Aleshire, senior vice president and director of consumer banking for Thrivent Financial Bank. “Whether it is $20 a month, $20 a paycheck, whatever it is you can set aside, just get in the habit of saving. An emergency reserve goal should be the amount equal to at least three months income and preferably six months income.”
Next, resist the temptation to raid your savings. While most Americans have plenty of credit card debt (and the issue needs to be addressed as part of your financial picture), resist the temptation to raid the savings to pay it all off immediately. Also, resist the desire to raid the savings for cash purchases. If you succumb, whenever the fund is used, the amount withdrawn should be replenished as soon as possible.
3. A penny saved is a penny earned. For an emergency savings fund, a standard savings account or money market account should meet your needs. However, thinking even longer-term, consider certificates of deposit (CDs). CDs help force you to commit your money for a period of time, so they can help you start to make your savings a more permanent habit. The money is not accessible for the term, but you will earn a higher rate of interest than a standard savings or money market account.
4. You’re walking on thin ice. The economy got bad enough that some Americans had to sacrifice the standard financial protection they always took for granted. If you terminated your life insurance policy, now is the time to begin shopping around for a new one. It’s hard to think about, but if something happened to you, would your family be able to maintain their current lifestyle? Could they stay in the house so the kids would not have to move and switch schools? The time to protect your family is now. And, you know what they say, never put off until tomorrow, what you can do today.
5. Home is where the heart is. It’s also where most of your equity probably is too. Look into home equity loans to help you consolidate debt and get back on your feet. Lending standards are now tighter, but banks want your business and will work with you to meet your needs.
Also, first-time homebuyers still have a once-in-a-lifetime opportunity due to the number of houses on the market, low interest rates, and the possibility of a nice first-time buyer tax credit. In addition, repeat homebuyers can get in on the tax credit action as well, whether they are downsizing or looking for more space. For more information on tax credits, go to www.federalhousingtaxcredit.com.
6. Another day, another dollar. Unless you are sick as a dog. If you are fortunate enough to still be employed, you do not need to look far to see the financial impact of not having a regular income. While your savings should help protect you if you lose your job, what happens if you get sick or injured and cannot work for a period of time? Consider disability income insurance to help cover living expenses and protect your savings should that happen.
“Disability income insurance is designed to provide a monthly benefit to help cover your living expenses in case you become ill or injured and cannot work,” says Bruce Fear, vice president of Protection Products and Solutions for Thrivent Financial for Lutherans. “By setting aside a small portion of your salary – typically just 2 percent to 4 percent (of adjusted gross income) – you’ll continue to receive a monthly income even if you do become disabled.”
7. Lend a helping hand. Reach out to others in need through charitable giving and by volunteering your time and talents. There is plenty of need out there right now and every little bit helps.
8. Stop and smell the roses. We have all been through a lot the past couple of years, virtually none of us untouched by the financial turmoil. Perhaps your most important investment is time spent with family and friends. For more information, go to www.thrivent.com/marketing/savings.html or www.thrivent.com.
Courtesy of ARAcontent and Rob Dandrea, Professional Real Estate Agent with Charles Rutenberg Realty, Clearwater, FL 33764 727-510-2100