Tuesday, September 16, 2008

Its Time to Get Greedy: 3 Steps For Uncertain Times

This week has been quite a ride already and we're not even half done. Lehman Brothers is bankrupt, B of A buying Merrill Lynch, and AIG not looking so hot, searching for some emergency money.....

One of the most important things you can have in this kind of uncertain time is an emergency fund. Not only should you have it, it should be big. The next best thing you can do is cut expenses and do all that you can to shore up your financial footing because who knows where the financial axe is coming from?

I know that for many people out there, it is simply too late to do much in the short term about their emergency fund and way too difficult to figure out what to do to move their money around in any significant way.

There are 3 things small things you should consider doing though, right now, before the summer ends in order to start picking up some stability in these uncertain times:

1. Make sure that your "safe" money is really safe. If its safe money, it is in an account that has FDIC insurance. Check their site to make sure it is a bank with insurance, and check the bank to make sure that all of your money meets the criteria for the insurance.

2. Spend money on maintenance. When money gets tight, it starts to become tempting to go longer between oil changes, skip doctor/dentist visits because they are expensive with copays etc. This is exactly the time when you cannot afford to forgo these items. More than anything, times are uncertain and maintenance inevitably saves money by fixing small problems before they get big. So fork over that 30 dollars for your cleaning now, and avoid a 300 dollar filling later.

3. Get another "job". What I mean here is simple. I believe that we're going to see longer periods of less jobs. It almost never hurts to have more money coming in; nearly everyone can find a way to make more money. If you have multiple income sources, you're less likely to be hurt during a possible job loss or spike in prices. There may be a time soon (if it is not upon us yet) where jobs may be harder to come by. Swoop in on any job opportunities now, while they're out there...at the very least, its a jump on the money you might want to have for the holidays.

All of these steps are geared toward your greed. The reason for this is rather simple. In order to live to fight another day, you need to conserve as much as you can in order to be positioned correctly to take advantage of any opportunities that present themselves when the market tide starts to turn. This is exactly what Buffet does by accumulating cash.

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