Wednesday, September 28, 2011

Full Accounting - Contingency Planning

Do you feel like your life is spinning out of control? Have you been part of one of the many recent lay-offs? Are you struggling to make ends meet? Are you looking for ways to cut back on costs?

We need to evaluate our personal situation just like companies are doing during these times:

1. Make a contingency plan.
What would I do if I was subject to a salary cut? Or lost my job? Or had a medical emergency expense? You need a contingency plan and an emergency fund.

2. Protect the core - Food, clothing, shelter, utilities and transportation.
Think of this as similar to Maslow's Hierarchy of Needs. You have to build walls of safety around you and your family so that you can focus on the other things you need to take care of. I saw someone describe this as "Fortifying Your Fortress".

3. Identify the people who matter most and keep that group strong.
Family and friends are extremely important especially when times are tough. Get to know others in your field of work so that if you are subject to a lay-off, you have a network to fall back on to help you find something new. Sites such as Linked In are great.

4. Shape up your finances.
Do you know what your monthly expenses are? Do you know where you can cut back? Do you know how much you owe on your credit cards and what the interest rates are? When was the last time you balanced your check book?

5. Involve the entire family.
Get your kids involved. They have amazing ideas. Besides, if you get buy-in from them, they'll learn and will help out more. Try low-cost, no-cost ideas. Present a united front: "We are all in this together."

6. Keep the lines of communication open.
Let friends and family know what is happening. It is so much easier for you to decline going out to restaurants with friends if they know your situation and/or goals. Stay in touch with your family. Email and social networks make this easier to accomplish than ever before.


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