Tuesday, 23 Sep 2008
photo credit: Mike Licht, NotionsCapital.com
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?
September 30th, 2008 at 11:23 am
All great points, I totally agree.
Thanks for the tips.
October 1st, 2008 at 10:03 am
Great points. Our family has been doing a ton of deal-hunting. My wife is busy clipping coupons and doing what she can to reduce our spending as much as possible. I’m still putting money into my 401k (NEVER stop contributing!), and pushing to put every extra penny on our existing debts.
December 16th, 2008 at 10:42 pm
Great Advice. My husband and I are still pretty young (mid 20’s) but we took money out of our retirement to get us out of a jam and realized that it probably was a bad idea when it was next to impossible to replace it. We made a decision to take a larger than normal portion from his paycheck to replenish and obtain his company 401K match. In the long run, we feel that this decision will be worth it for the sacrifices we are making now.