NEW YORK, Jan. 16, 2008
Make Your Money Recession-Resistant
Ray Martin Helps You Get Prepared To Weather Possible Storm
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Play CBS Video Video How To Survive Recession Ray Martin speaks with Maggie Rodriguez about steps you can take to recession-proof your finances.
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Ray Martin (CBS/EARLY SHOW)
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Special Report Ray Martin's Money Tips The Early Show money maven offers advice to keep your financial house in order.
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Special Report Money Matters Get words to the wise, from the wise, on handling, making and saving money.
There’s a rising anxiety about the U.S. economy. Fueling this is the news of major financial companies taking huge losses due to subprime mortgage defaults, slumping home values, and consumers' purchasing power being sapped by high energy and food prices. If you’re concerned about a coming slowdown in the economy, you are in good company: Most economists surveyed are predicting a slowdown, at best, and a full-blown recession at worst. A growing chorus of Wall Street investment banks, including Goldman Sachs, Merrill Lynch and Morgan Stanley are stating that the slowdown in the U.S. economy will turn into a recession.
According to public opinion polls, almost six-out-of-ten people believe the economy is already in a recession. An interesting indicator, the “R-word” index” -- the number of stories appearing in the Washington Post and New York Times that use the word “recession” -- has spiked in early 2008. According to The Economist, this simple tool pinpointed the start of the recessions in 1981, 1990 and 2001.
You only have to go back to 2001 to remember the last recession that hit the U.S. economy -- marked by the collapse of the NASDAQ stock market bubble, 9/11, and job losses.
But what is a recession? What does it mean for the economy this time? How will a recession affect you and your money?
Generally, a recession is a prolonged period of time -- typically six-to-12 months -- when the economy is slowing down, or contracting. Recessions are nothing new: There have been 11 since 1945, and these are a natural part of the economic cycle.
Recessions are characterized by several trends, including a slowdown in consumer spending, a decrease in production at factories, rising unemployment, falling personal income, and a volatile and falling stock market.
Is the US economy in a recession? Well, consider this: Consumers spent less than expected during the recent hliday shopping season, recent job figures showed a rise in unemployment, person income has been diminished by higher prices of food and energy, and the U.S. stock market has fallen over 10 percent since October of last year. That’s four-out-of-five of the above trends that signal a recession is coming, if not already upon us. People need to know that a recession can affect two things - job security and interest rates -- and they need to connect the dots between this and their money.
With evidence of a slowing economy and grumblings of job cuts in the financial sector, workers need to buckle up and check the strength of their financial safety net. Here are a few financial moves to soften the blow.
Build a Cash Cushion
The average length of a job search is five months. It could take even longer if you are employed in the financial sector that’s in turmoil because you might need more time to shift your skills to a career with more opportunity. For this reason, it’s important to have at least three-to-six months of cash on hand, or more if you are the sole income earner or self-employed.
Consider these moves to increase your cash cushion:
Here’s why getting a tax refund every year is not a smart thing: When you get a large tax refund, this simply means that you are having too much in taxes deducted from your pay. Since you only settle this overpayment up with the IRS once each year, at tax time, you are letting the IRS keep this money as an interest-free loan. Would you overpay your cable bill or overpay your rent by several thousand dollars just to ask for it back a year later without any interest? Of course not!
If you could use the cash instead of giving the IRS a zero-percent interest loan, then reduce your tax withholding by increasing your withholding allowances, changing your withholding status, or both. Here is how to do this: Complete a new form W-4 and submit it with your employer’s payroll department. Do it now, so that the change will be effective for the next pay period. You can then put the additional cash you'll get in your paycheck to work increasing your savings.
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Add a Comment See all 25 Comments
- ''Comrade''??? Sheeezh, you still living in the ''Commies are coming, the Commies are coming'' big Red Scare Times, maybe?
- Reply to this comment
- Here''s another reason for Republicans to be PROUD
President Bush exempted the Navy from an environmental law so it can continue using sonar in its anti-submarine warfare training off the California coast %u2014 a practice critics say is harmful to whales and other marine mammals.
The White House announced Wednesday that Bush had signed the exemption Tuesday while traveling in the Middle East. (snip)
%u201CThe president%u2019s action is an attack on the rule of law,%u201D said Joel Reynolds, director of the Marine Mammal Protection Project at the Natural Resources Defense Council. %u201CBy exempting the Navy from basic safeguards under both federal and state law, the president is flouting the will of Congress, the decision of the California Coastal Commission and a ruling by the federal court.%u201D - Reply to this comment
- Wow - Another Republican Recession - Time for a Democratic President to fix the Republican Fu*kups in the economy AGAIN!
- Reply to this comment
- The Fed is now stating:
Retailers, home builders and many manufacturers should brace for even more rough times ahead, a somber Federal Reserve suggested Wednesday amid growing fears that the US might be sliding into recession.
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Sounds like we need another RICH Man''s Tax cut. - Reply to this comment
- The Republican Nazi Party - Criminal Corporate Nazi America
Comrade Hillary and Citizen Bill .... Are One in the Same
Lastdance
Posted by lastdance7
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Posts like this one are from uneducated - in-bread, smear spreaders - republican Shiite for Brains, Boot Licken'' Bedwtting Commies.
The try and blame others for their ignorance - they blame others for their hatred, they blame others when they fail.
Republicans are the whiners - this says it best about republicans
A whole lotta people cryin'' "Don''t blame me"
They point their crooked little fingers at everybody else
Spend all their time feelin'' sorry for themselves
Victim of this, victim of that
Your momma''s too thin; your daddy''s too fat
You drag it around like a ball and chain
You wallow in the guilt; you wallow in the pain
You wave it like a flag, you wear it like a crown
Got your mind in the gutter, bringin'' everybody down
Complain about the present and blame it on the past
Some call it sick, but I call it weak
I''d like to find your inner child and kick its little *** - Reply to this comment
- In the face of a potentially painful economic contraction, this expert is suggesting that you trust your savings with Countrywide Bank- a bank that was recently salvaged from the brink of collapse, under the weight of bad mortgage debt.
As we will recall, B of A, also suffering, just took a huge gamble in acquiring Countrywide, in spite of a grim economic future- and this expert thinks you should trust them with your savings.
I feel sorry for anyone who listens to this guy''''s advice.
Posted by FeelFree1 at 11:51 PM : Jan 16, 2008
.............
KEEP POSTING REALITY FeelFree!!!
KEEP POSTING REALITY!
Sure, idiots may call it "negative" or a "negativity trip" or whatever...
...but it''s quite clear that the ****** is hitting the economic fan, and it will cover every thing, and virtually every one.
Oh how I cringe when I hear people who try to play the "hear no evil, see no evil, speak no evil" approach to living. It is a foolhardy mindset to believe that everything is "just going to be fine" when the nose of the plane is clearly pointed toward the ground...
...and accelerating! - Reply to this comment
- FeelFree1, you are a total negativity trip. I don''t think I''ve ever seen you say a positive or nice or uplifting thing about anyone or anything. All you ever do is just rip everything apart. It''s as if the weight of the world''s problems are upon you. It must be completley miserable to be you.
- Reply to this comment
Re: "With a little research, you can find yields on FDIC-insured one-year certificates of deposit of more than four percent at places such as:
"Countrywide Bank, FSB: 5.10 percent"
In the face of a potentially painful economic contraction, this expert is suggesting that you trust your savings with Countrywide Bank- a bank that was recently salvaged from the brink of collapse, under the weight of bad mortgage debt.
As we will recall, B of A, also suffering, just took a huge gamble in acquiring Countrywide, in spite of a grim economic future- and this expert thinks you should trust them with your savings.
I feel sorry for anyone who listens to this guy''s advice.- Reply to this comment
- Bush has put us into a recession, thanks to all the moron idiots who voted for him....TWICE.
- Reply to this comment
- Oh, come on, folks, you had have to have seen this cooming? You really didn''t think this wasn''t going to happen, did you?
All the leftie magazines have been warning about this for over a year now, especially the housing market problem.
The national media, which by the way, is NOT liberal, but corporate owned and run, sure was not going to say anything and panic folks into not running up that plastic.
We are past the Recession and into the Depression, though no one is brave enough to use the dreaded D word.........probably when a couple big Banks stick all fours in the air, the D word will be whispered by someone :-)
In the meantime, get a good grip, this is going to be a nasty ride.
rosemari2 - Reply to this comment
- where did you diploma from, nancey_naive?
- Reply to this comment
- 1) DON''''T PANIC!
2) HOLD ON TO YOUR TOWEL
3) The big ones all saw drops of ~20 from peak to trough on the Dow (this is an index and components change so tough to compare)
4) We''''re are more than 1/2 way there.
5) Most recessions have seen the market recover in 1 to 2 years max.
6) Re-invest when it drops. You don''''t have to find the bottom. It''''ll find you.
Posted by Nancy_Naive
You must be Naive, look at the prospects:
- The government has a 10 trillion debt (France is tired of this continual debt).
- Natural resources are running thin (including water).
- The climate change promises more instability.
- U.S. Government and its law enforcement agencies are saturated in corruption.
- Triple digit roller coaster ride on Wall Street.
- Corporate corruption.
and the Bushwacker is on his knees to the Arabs to bring down oil prices. And the war . . . the middle east conflict will extend into Iran.
Will did you get your diploma from, used koltex box? - Reply to this comment
- These points of financial advice is bascially what you would do for a depression. They left out changing your portfolio to a bear market environment. So, in a nutshell.
- Bear Market investments (include precious metals)
- GET OUT OF DEBT NOW (Sell it; if you cannot buyout)
- Shore-up of liquid assets
- Cut all luxuries (cable television, YMCA fees, etc.)
- Find cheaper options for all you necessarities:
(1) Food
(2) Shelder
(3) Power
(4) Entertainment (not a necessarty if you are unemployed). - Reply to this comment
- Just do what you did during Clinton''s recession.
- Reply to this comment
- Or you could get a large $4000-$5000 IRS "refund" check in the mail even though you have''nt worked and paid any taxes at all, and you receive SSA & get food stamps each month along with free medical & dental services, after you pay your "rent" of $25.00 a month. And with any luck you could get SSA for the "spouse" who''s "legally blind" that you''re not married to, and even more SSA for care of your "grandchildren". Then if you do any work at all for cash you could get away with not paying any taxes on that too. Thanks tax paying suckers! Se habla espanol?
- Reply to this comment
- Make Your Money Recession-Resistant
1 Eliminate all unnecessary payroll deductions - STOP PAYING TAXES - THEY ARE ILLEGAL ANYWAY. The Rich don''t pay - why should you?
2 Shoot all Oilmen executive that you can find - the price of oil will fall then
3 Start riding Horses again - there "*****" is good for the Environment - it helps feed republicans - they are full of it.
4 Don''t buy petrol for a day - send a message to the government that you are fed up.
5 Send an envelope full of ***** to the White House - to let Bush and Cheney know they stink like it.
6 Cut the military budget - they work for us!
7 Make all National Secret Public - lets find out what THEY ARE HIDING!
8 Start hanging politicians for lying - I bet it will stop then.
9 Stop advertising that lies to you - hang all lying advertisers - then watch a the burger ads change - truth in advertising.
10 Hang any politician that does not keep an election promise. This is the ONLY way to Change America!
They work for US - Make them DO IT! - Reply to this comment
- Who voted for Bush or a GOP candidate?
Anything else you want to screw up for the rest of the country? - Reply to this comment
- Ray,
Yours is a smart suggestion to replace employer-provided insurance coverage with a policy you retain, regardless of your employment.
Do note that the same low-prices available on the internet are also available locally through an independent insurance agent who has the time, knowledge and experience to help with determining your needs. There is no "internet discount", if you will.
Also, buy purchasing locally you''re keeping keeping jobs in your community, which helps everyone.
Thank you. - Reply to this comment
- Make my money recession resistant:
Invest in Euros, Yen, Pesos, whatever.
Bush-"This economy''s strong"
Ya, and Iraq had WMD''s and Iran''s got nukes. - Reply to this comment
- Ray,
Yours is a smart suggestion to replace employer-provided insurance coverage with a policy you retain, regardless of your employment.
Do note that the same low-prices available on the internet are also available locally through an independent insurance agent who has the time, knowledge and experience to help with determining your needs. There is no "internet discount", if you will.
Also, buy purchasing locally you''re keeping keeping jobs in your community, which helps everyone.
Thank you. - Reply to this comment
Mike Huckabee on GOP "rock stars," 2012, health care reform and more.
