Posted on Tuesday 23 September 2008
Yeah, the economy is bad right now. It’s been on the news for months and most everyone is feeling it, either in their pockets or investment accounts. So here are a few tips on what NOT to do in this sluggish economy.
- Live off your credit cards – It’s really essential now to put the cards away. Your focus should be on establishing cash reserves and reducing any existing debt. Take your credit cards out of your wallet so you won’t be tempted. If necessary, freeze them in a bowl of water in the freezer.
- Raid your retirement – Withdrawing retirement funds is a permanent fix to a temporary situation. In addition to pay penalties and taxes, you will miss out on years of compounding. That $10K you withdraw today could have been as much as $100K at retirement.
- Tapping your home equity – Even if someone will give you a home equity loan in this market, it’s still a bad idea. There’s no indication the decline in housing prices will stop anytime soon and you don’t want to be stuck owing more than your house is worth.
Have you changed your spending or investing habits in this economy?