#pensions #retirement #RetirementSavings
Retired Teamsters are sweating.
For those covered by the Central States Pension Fund, a multiemployer pension fund, the outlook is grim.
Central States is paying out $3.46 for every dollar it’s taking in, according to Mary Sanchez, columnist for The Kansas City Star. Her column appeared in a February 2016 edition of The Atlanta Journal-Constitution.
To avert a dissolution of the fund, Central States applied to the Treasury Department, the federal Pension Benefit Guaranty Corp., which ensures pensions against bankruptcy, and the Department of Labor for permission to cut pension payments to beneficiaries, Sanchez writes.
If the plan goes through, many beneficiaries would face cuts of up to 60 percent in the payment they had spent their lives working for, believing it was guaranteed, Sanchez writes. Until 2014, it wasn’t legal to do that. But that year, the Multiemployer Pension Reform Act was attached at the last minute to a must-pass omnibus spending bill, according to Sanchez.
On its face, it’s not fair to those retirees. It is not their fault that their pension fund is losing its economic viability.
But it’s not as if this was a surprise. We’ve been warned for years that because there are more retirees than workers to support them, a pension crisis was looming.
The Great Recession exacerbated the problem because many of the workers have lost their jobs. In the case of the Teamsters, union membership has declined. There are fewer jobs, and more of the jobs that still exist are being done by non-union labor.
In fact, many employers are not including pension benefits as part of the employment package.
If you are still working, chances are very good that you are on your own to fund your retirement.
What to do?
First, especially if you are young, dedicate a portion of what you earn toward your retirement. Put that amount from each paycheck into a fund and, with the help of a trusted adviser, invest it properly. Don’t fret the gyrations of the stock market. Time usually heals such wounds, and the market, over time, has proved to increase a person’s wealth considerably.
Another solution is to find one of the many alternative ways to earn money outside of your job, and see whether it is right for you. For one of the best, visit www.bign.com/pbilodeau. If you like what you see, and do it properly over time, you may not have to worry about your retirement.
If you are currently retired, or near retirement, such Plan B options may help you live a secure retirement.
As Sanchez points out, the solution to the pension debacle will be costly. Even the Pension Benefit Guaranty Corp. is in danger, she writes.
Though making the pensioners pay the price may be unfair, it may be unavoidable.
Even if you were promised a good, secure pension, be it from the public or private sector, don’t presume those promises will be kept forever. The option of working longer may not be available. It’s best to take such matters into your own hands. Only you can assure a comfortable, secure retirement.
Peter
Author Archives: pbilodeau01
WHOM DO YOU TRUST?
#trust #retirement #saving
America has an issue with trust, and it’s getting worse.
So said a headline in the Feb. 14, 2016, edition of The Atlanta Journal-Constitution.
The headline was over an article by Gail MarksJarvis, personal finance columnist with The Chicago Tribune, and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.”
MarksJarvis wrote about Richard Edelman, president of the Edelmen public relations firm. He spoke to a group of CEOs about trust, and why fewer and fewer people are trusting big institutions, be they government, corporations or other large entities.
“Economists have been troubled throughout the recovery (from the 2008 economic collapse) that even though incomes were slowly rising and households should have more pocket money now that gas prices are low, spending hasn’t followed the expected trend. Consumers are increasing their saving and being careful about spending,” MarksJarvis writes.
Of course, the CEOS want to know about this because they want to sell more of their products and services. They want to know how to get people to part with more of their purses’ contents.
Remember, a few years before the collapse, we were told that people weren’t saving enough? After the collapse, for many, saving became even more difficult, so we still have a real problem with people not having nearly enough put away for retirement, or even enough for emergency expenses that are crucial to life.
Now that some of those folks are “recovering,” they are beginning to save more. This has to be good for most of us, albeit not so good for businesses.
Who would have thought that the big drop in gasoline prices would have Wall Street in a tailspin? Turns out that companies who went out looking for new sources of oil, natural gas etc., borrowed lots of money to do it. Now, as oil prices have sunk, these companies are having difficulty paying their debts back. That’s having an effect throughout the economy.
Through all this, it seems, Americans have become jaded and have no faith that the institutions of community are looking out for them. It’s certainly OK to be skeptical, but when skepticism turns to cynicism, everyone, eventually, gets hurt.
The lesson here is to look for people and institutions you feel you can trust, and work with them. Continue to spend carefully, and save aggressively. Also know that no matter how much money a corporation makes or saves, your job, if you have one, could still be in peril.
If you are scared, or angry, at what you see happening in the country or around the world, take a breath. Americans still have a great capacity for turning miserable circumstances into wonderful success. If you’d like to be part of that turnaround, and see yourself as success waiting to happen, visit www.bign.com/pbilodeau. You’ll find stories of people from all walks of life who have turned their difficult circumstances into powerful success.
As the title of MarksJarvis’ book suggests, you CAN save for retirement without impoverishing yourself or winning the lottery. It takes discipline and careful spending – things Americans seem to be doing.
Sometimes one has to look hard to find someone, or some institution, he or she can trust to look out for him or her. They are out there, but one has to keep looking and not get discouraged.
Peter
HOW MUCH HOUSE SHOULD YOU BUY?
#housing #RealEstate #OverHoused
Buying a house is never easy, unless you are, say, an investor paying cash.
Most homebuyers need a mortgage, and getting qualified for one is a process.
Peter Dunn, a financial planner, says many people are “over-housed.” It’s a concept of paying too much money for housing, in relation to one’s income. In some areas, housing prices are over the top, and one cannot help paying too much for a house.
But some over-housing is self-inflicted, Dunn says. He wrote about over-housing in a column in the Jan. 18, 2016, edition of USA Today.
He cites the example of Mark and Jennifer, a Midwestern couple in their mid-40s, who decided 11 years ago to build their “family home.”
Mark and Jennifer knew they were pushing the limit of what they could afford, but the bank approved them for a loan. That gave them reassurance, Dunn writes.
“Things spiraled out of control from there,” Dunn quotes Jennifer.
When housing bubbles burst, it’s the over-housed folks who get slammed first. Are you over-housed? Here are Dunn’s pitfalls: if you’ve dumped everything into a house, and have no emergency fund, you could be in trouble. There are also the realities of increased utility costs, home maintenance, homeowners insurance, property taxes etc. If you didn’t budget for those increases, you could be in trouble.
Mark and Jennifer’s home was 2,000 square feet bigger than their previous home. Their utility costs were much higher and, after two homeowners insurance claims, their premiums went through the roof, Dunn writes. Their tax assessment was based on the value of the land alone. When the structure was added, their tax bill tripled, Dunn writes.
Worse yet, the couple hasn’t saved a dime for the future, Dunn writes. If you’ve given up vacations, new clothes and dining out to live in your new home, you are probably OK, Dunn writes. If you’ve given up your current and future stability, you’re in trouble, he says.
Dunn’s rule of thumb: don’t let the bank tell you how much house you can afford. Being house-rich and cash-poor is not a good situation, especially if housing values plummet, as they did in 2008. Your house is a significant investment, but don’t rely on the equity in it to secure your future. You need to be saving and investing regularly.
The folks who have a comfortable retirement are those who lived BELOW their means, and socked money away. If you buy or build a house, make sure your mortgage payment and other expenses leave a portion of your paycheck left over to save and invest.
Taking vacations and dining out occasionally are nice, too, but saving and investing for retirement are a priority.
Of course, there are ways to earn extra money so you can live in that dream house. For one of the best, visit www.bign.com/pbilodeau. You’ll see stories of people who bought their dream home, but not until they had the money – often the cash – to do it.
Remember, too, that homeownership is not for everyone. Though the American Dream may dictate that one owns his own home, give some thought to the life you want to lead before deciding to buy or build. That house could own you, in more ways than one.
In short, do the math before buying or building a home. Make sure the house doesn’t eat too much of your net worth. If you tap out your emergency fund for that down payment, it could come back to bite you.
Just because you think you CAN swing it, doesn’t mean that you SHOULD.
Peter
MILLENNIALS ARE QUITTING THEIR JOBS OFTEN
“God, today we pray for all those who are looking for a job. Guide them to the company you have for them. Grant them favor with employers and fill them with patience and wisdom as they search. Provide every need as they wait on you! In Jesus’ name, Amen!
Prayer for Employment www.facebook.com/circleofprayer
#millennials #jobs #QuittingYourJob
A few years ago, if you were fortunate enough to have a job, you did what you could to hold on to it.
If you were out of a job, you pounded the pavement. Perhaps you prayed.
Today, according to a Bloomberg News article by Natalie Kitroeff, quitting is in.
More than 3 million Americans quit their job in December 2015, Kitroeff writes. That’s the highest number since 2006, Kitroeff quotes the Bureau of Labor Statistics. The quits rate, which measures how many people ended their employment out of everyone who worked in a given month, reached its highest level in seven years, Kitroeff writes.
Millennials, those between 18 and 34 years old, became the largest segment of the U.S. labor market, and that work force is expected to increase even more. They seem to be averse to spending their work lives at one desk, Kitroeff writes.
This shows that the economy is definitely improving. Workers, particularly young workers, don’t generally quit their jobs unless they have another one, or are confident they will get one fairly quickly.
Kitroeff quotes a survey by accounting giant Deloitte of 7,500 working, college-educated professionals born after 1982 in 29 countries. Sixty-six percent hoped to have a different job in five years from now, or sooner. Forty-four percent said they would quit within two years and 25 percent said they would quit this year, to either start a new job or “do something different.”
The millennials’ parents and grandparents, for the most part, craved the security of a job. They craved the benefits – health insurance, pension, vacation time etc. – as well as the steady paycheck.
Millennials seem to have a different outlook on work, the future etc. Much of the benefits their forebears craved have been significantly reduced, or have gone away entirely.
For previous generations, the benefits a job provided were both a blessing and a curse. They blessed those employees with something extra that was worth real money. They cursed them, because they kept them tied to a job, when they might have wanted to go to work elsewhere. Some have even used the term, “golden handcuffs,” to describe a benefit-laden job that a person just can’t afford to give up.
One of the benefits of the Affordable Care Act is that it allows workers to have health insurance that is not tied to a job. This could embolden them to want to leave one employment situation for another.
Are you now in a job that you hate, that doesn’t use the many skills and talents you have, or doesn’t provide you with the future you believe you deserve? If you need the steady paycheck, one solution might be to work on a Plan B outside of work. A Plan B might provide you with an income cushion so you can look for a position more to your liking. For one of the best Plan Bs, visit www.bign.com/pbilodeau.
Traditional employment is changing. Perhaps you seek the independence that a traditional job does not provide. Perhaps you want to be an entrepreneur and work for yourself. Perhaps your boss doesn’t see how valuable you really are.
Allow yourself to dream. Get a Plan B. Independence awaits those who want it, and are willing to look for it.
Peter
DIGITAL EVIDENCE AND HIRING PRACTICES
#PredictiveAnalytics #SocialMedia #jobs
We all know the job-search routine: find a job you might want, send a resume, fill out an application, sit for an interview and, assuming you decide the job is for you, get hired.
But with the advent of social media, employers not only have ways to find out things about you, they can do social media profiles, so-called predictive analytics, on you to determine whether you have the characteristics they want.
Rodd Wagner, best-selling author and confidential adviser to senior business and government leaders, discussed this in a Jan. 21, 2016, column in USA Today. Wagner’s most recent book is titled, “Widgets: The 12 New Rules for Managing Your Employees As If They’re Real People.”
Wagner’s book title is ominous, though most of us have probably had jobs in which the boss may not have looked at us as “people.” We were more like “assets,” or “human resources.”
Few people realize how much digital evidence they leave in their wake, Wagner writes. A person’s profile of the “Big Five” personality traits – openness, conscientiousness, extroversion, agreeableness and neuroticism – can be discovered through a person’s Facebook posts and likes, and machine coding of what the person has written online, Wagner writes.
We’ve all heard creepy stories of prospective employers demanding to know one’s Facebook password, so he can delve more deeply into one’s personality. We’ve also heard stories of schoolteachers and other public figures being fired for posting a picture of himself or herself enjoying a harmless glass of wine.
Many of us don’t think that what we do online is in the public domain. We may think that only our “friends” see it. Now, Wagner asserts, an online profile of you can be created through patterns of activities on social media and elsewhere in the digital world.
Is this fair? Fairness doesn’t matter. Employers will do whatever is legal and possible to find out everything they can about you, especially if they are hiring you for a big-time or sensitive job.
Wagner writes that this process is messy. Poor decisions will be made because of that evidence. There will be abuses. There will be lawsuits, either because the computer picked someone else for a promotion, or, if predictive analysis proves far superior than human judgment, because a company relied solely on people rather than machines to make its decision.
Messiness also produces backlash, Wagner writes. There will be legislation and court rulings to redefine worker privacy and managerial discretion in the predictive analytics world. The goal is to ensure that science serves employees with a better job fit and opportunities, as much as it serves the business, Wagner writes.
The moral here is to be careful on social media. Watch out for political discussions, controversial posts etc. Read them if you must, but react to them publicly at your peril, if you ever intend to look for a job. “Like” a cute picture, but be wary of “liking” a controversial drawing or cartoon.
Most of all, take care in what you write. You can be yourself, and still be somewhat unassuming. Be careful in complaining about someone, or something. Make sure your posts are as positive as they can be.
Of course, if you’d like not to have to worry about predictive analytics, visit www.bign.com/pbilodeau. You’ll find a way to save money, make money and avoid confrontation with a prospective employer.
Your online activity can say lots about you, whether it’s correct or not. You may have a hard time correcting incorrect perceptions should you have to confront predictive analytics.
Peter
IT TAKES A LIZARD, OR JUST GOOD HUMOR
#lizards #WhatYouWereBornToDo #DoForOthers
If someone put a lizard (toy ) in your lasagna, would you: 1) go eeeuuu? 2) wonder why someone would do such a thing or, 3) just laugh?
Sam Glenn’s mother did that to him. He laughed. If it got him to laugh, his mother told him, then the idea worked.
Glenn’s story is one of creating a new life from having nothing. After having hardly a dime to his name, and feeling sorry for himself, Glenn today is a successful motivational speaker and author.
His book, as you might guess, is titled “Who Put A Lizard in My Lasagna?: Change Your Attitude, Change Your life.”
His mantra: “Talking about it never gets the job done. Doing does. Go do what your were born to do! Live the life your were born to live. Don’t look back in regret. Look back and say, ‘I’m glad I did.’ That is living.”
So it begs the question: how does one KNOW what he or she was born to do? As Glenn advises, don’t think about what you can do for YOU. Think about what you can do for others.
“I began learning long ago that those who are happiest are those who do the most for others,” Glenn quotes Booker T. Washington.
The back cover of Glenn’s book says it best: “Determine your unique gifts and then apply them to where you are right now, with a positive attitude. The result? You’ll begin to experience more of what you want in life by using the best of who you are.”
Again, how does one know what he or she was born to do?
We mostly get ideas of our talents from parents, teachers and other adult influencers as children. “You’re not good with your hands, so you need to do something with your head,” a mother might tell her son. “A woman’s job is to get married, raise a family and be supportive of her husband and children,” a mother might tell her daughter.
Then, as we grow, we get guidance on what our abilities truly are. Athletes figure out they are good athletes fairly early on. Students find out they are good students early in their education. But if you turn out to be a good athlete, or a good student, how far will that take you? In either case, it won’t take you very far if you don’t work at it.
Even if you do, you may find the competition more difficult at every level. You will reach your level of incompetence, perhaps, at a fairly young age. The few who combine ability with hard work will go furthest.
What if you are not a good athlete, or a particularly good student? How does one in that category find what he is “born to do?”
He or she may have to look harder and longer, but even he or she will eventually find his passion.
If you are someone still looking for what you were born to do, you may have to look in places you would not think to look. For one starting place, visit www.bign.com/pbilodeau. You may not find what you were “born to do” there, but you might find something that could give you a taste of success as you look for your passion, as you help others in the process.
Sam Glenn built his success from having nothing, and looking for something. His catalyst was borrowing $200 to attend a motivational seminar, featuring Jim Rohn and Mark Victor Hansen – two of the best motivators and success builders ever.
Anyone can do what Glenn did, if he or she has the will. If you are content to have nothing and do nothing about it, you’ll reap what you sow. The road to success begins with the mindset that one can achieve what he wants. Finding what you were born to do, and doing it, can give birth to great success for anyone. As you help others succeed, success will continue to be bestowed upon you.
Peter
HOW GOOD IS YOUR BOSS: PART 2
#BadBosses #leaders #managers
Most of us who’ve had jobs have seen different styles in managers.
There are some that left us, as employees, pretty much alone to do our jobs. They interfered only when necessary and appropriate.
Others wanted to know everything, have a say in everything, be copied on everything etc. They are known as micromanagers.
Debra Auerbach, a writer for the Advice and Resources section of CareerBuilder.com, issued a few tips on dealing with micromanagers. Her article appeared in the Feb. 21, 2016, edition of The Tennessean newspaper in Nashville.
Her first tip in dealing with a micromanager is to be on top of your game. You don’t want to give that boss more reason to nitpick, she writes.
Secondly, she suggests determining whether you are a target. See whether the manager picks on others he or she supervises, as much as he or she picks on you.
Thirdly, she suggests building trust. The manager has to trust you if you have any chance of getting “more space” from that manager.
She also suggests providing frequent updates to the manager, trying your best to adapt to that management style and deciding whether working in this environment is a deal-breaker for you.
We’ve all either worked for, or have seen in action, micromanagers. As discussed previously, leaders don’t micromanage. Leaders hire the right people and provide the environment in which the employees are empowered to do their jobs the best way they know how.
Ideally, the boss is doing what he or she does best, so he or she doesn’t have the time or inclination to worry about what the employees do best. Sure, there are certain expectations. But, if the leader has done his job correctly, he or she has no worries about those expectations being met or exceeded.
What kind of environment do you work in? Do you work for a micromanager? Many of them are not necessarily hostile toward you, but they annoy you and make your job more difficult than it should be.
Most jobs have stressful components. Micromanagers add to that stress. Leaders do their best to relieve as much of the stress as possible.
Micromanagers will still be all over your case when you are shorthanded because someone is out sick or on vacation. Leaders will understand that you are working shorthanded, and pitch in to help pick up some of the workload.
A micromanager can ruin the career of a perfectly good person by nitpicking. That manager may even set out to hold his or her people back from advancement. A leader will encourage his or her people to move on, when the opportunity is better for that employee, and even help that person get what he or she wants.
If your boss is nitpicking you to death, you may have to take time outside of work to find other opportunities to earn income, so you can make such nitpicking a deal-breaker. For one of the best ways to do that, visit www.bign.com/pbilodeau. Eventually, you could be the leader that helps others advance.
Remember, some nitpicky bosses don’t mean you harm. It’s just who they are. You are who you are. If you understand them, you can better get along with them, until you are able to move on. Don’t stop looking for new places to go.
Peter
HOW GOOD IS YOUR BOSS: PART 1
#BadBosses #leaders #managers
The Peter Principle is alive and well in many companies.
In a nutshell: A person becomes very talented and skilled in a certain area. He is promoted to manage that area. He becomes a terrible boss.
Jeff Vrabel discusses this in an article about bosses in the August 2015 issue of Success magazine.
“Some people are natural-born leaders. Others are cruel, inhuman monsters,” reads a sub-headline over Vrabel’s article.
We’ve come to expect, and Vrabel’s article points out, that those employees who perform well are rewarded by moving up to management. In most organizational structures, that is the only way to move up. But a good engineer, a good technician or a good marketer doesn’t always make a good leader. Too often, the opposite is true.
It’s important here to understand the difference between a manager and a leader. Managing is learned. Leadership tends to be natural.
So what happens? The promoted employee is given a list of procedures, a system, if you will, to learn. So he learns to be a manager. And, he or she isn’t even that good at managing.
“Leadership is personal. There’s no single way of leading, no silver bullet,” Vrabel quotes Deborah Ancona, faculty director of the MIT Leadership Center. “We can’t be perfect at everything. So if you’re someone’s boss, the trick is to find out what you’re really good at and what you need to ramp up on, and getting better at both,” Vrabel quotes Ancona.
As a boss, you could be doing everything YOUR boss is telling you to do, but your staff may still hate you. It’s human nature to like some people better than others. It’s also human nature to give more positive attention to some employees, and more negative attention to others.
When you mix the two traits of human nature, it can sometimes turn toxic. You may have a good employee, but, for some reason, you may not like him or her as well as you like some others. The employee senses that, and feels as if he or she is not being treated fairly. That puts added stress on the good employee, and that could manifest into the loss of that employee, or discord within the organization.
More importantly for the employee, he or she may not advance as far as he or she would like, or is capable of. That, too, could ruin a good career.
Managers have to work at treating everyone underneath them as fairly as they can. Leaders have to lead in their own way, as Ancona put it. It’s great to have high expectations of your staff. But if they don’t see you as having those high expectations of yourself, you won’t get the production or cooperation you want.
Many organizations foster competition among employees, rather than cooperation and teamwork. A good rule of thumb: If you are after the same goals, competition wastes energy. If each person or group in the same organization has different goals, it’s a recipe for disaster.
Have you been, or are you still, being frustrated by bad bosses? Are you feeling stuck under the duress of someone who doesn’t inspire you? You may have to look at developing a way to eventually fire that bad boss. There are many such ways out there for anyone. For one of the best, visit www.bign.com/pbilodeau. Who knows? You could turn into the leader you’ve always wanted, or wanted to be.
The best players almost never make the best coaches. The best employees don’t always make the best leaders. If you run a company, look for ways to reward your good employees without taking them away from what they do best, and most love to do. If you are a good at your job, and love what you do, don’t be afraid to say NO to a job you don’t want, even if it pays more. There are many other ways to add money to your coffers.
Leaders, often quietly, make themselves apparent. For instance, beware the person who wants to take credit for everything. Look for the person who wants to always GIVE credit to someone else.
Peter
WINNING AND LOSING
#winners #losers #coaches
If you are not a winner, are you a loser?
We’ve dealt with that question many times over the years, and we’ve seen both extremes.
In one extreme, tight competition among good players yields only one winner. The rest, though very good, lost. There’s a difference, though, between losing one competition and being a “loser,” we’ve discovered.
The other extreme is a child who gets an award just for showing up, so as not to hurt his self-esteem. This milieu in which everyone “wins” tends to give participants license not to try their best, or not to understand that life is a mix of winning and losing.
Tom Baxter, political columnist for the Atlanta-based Saporta Report, discussed the zero-sum game in the context of University of Alabama’s head football coach Nick Saban’s, and Michigan State University head coach Mark Dantonio’s opposition to expanding the college football playoff system from four to eight teams.
“This would do more to damage to the traditional bowl games and create a ruthless and unfair standard for college coaches,” Baxter writes of the coaches’ argument.
With the number of conferences and teams in college football, playing at varying levels with different levels of support, it’s not easy to determine a national champion. In the past, it was strictly by polls. Now, the polls determine the top four teams, and those teams engage in a playoff, with the winners of the first two games playing in a national championship game in January.
Baxter writes that Saban and Dantonio also argue that the expanded playoff format would put extra pressure on coaches. In college football, and most other sports, coaches live and die – or keep their jobs – based not only on their team’s results, but also on the expectations of the institution, or ownership, and the fan base.
Coaches with good overall records get fired based because of those expectations. Baxter used the example of University of Georgia head coach Mark Richt, who was fired before the 2015 season officially ended for his team, after 15 years of a good record. But the university and their fans had higher expectations, i.e. at least one national championship. If more teams got into the playoff format, that would put more pressure on coaches, Baxter writes of Saban and Dantonio’s argument.
Baxter uses the football analogy in reference to national politics, but let’s look at it in terms of everyday life.
Of course, everyone wants to win. But not everyone can win. There is a limited number of winning positions, at least in theory, and fair competition – or, in some cases, unfair competition – to determine who gets those winning slots.
Sometimes, showing up makes one a winner. Showing up can mean giving it a shot, which is more than some would do.
There are many who see themselves as winners, but are unsure at which endeavor they want to be winners. If you are one of those, visit www.bign.com/pbilodeau. You might find just the things to get your winning juices flowing.
So decide at which game/occupation/skill in which you want to be a winner. Then, go for it. You probably won’t win everything, every time, but keep at it. As for expectations, expect more from yourself than others expect from you. If you achieve your own expectations, you’ll always be considered a winner.
Peter
WILL A FINANCIAL EMERGENCY KILL YOU?
#FinancialEmergency #savings #spending
Fewer than 38 percent of Americans have at least $1,000 in savings.
Say what?
Peter Dunn quotes that statistic in a column he wrote for USA Today, published Jan. 26, 2016.
A car repair, a refrigerator breakdown etc., can drain that $1,000 just like that. When you need a car to get to work, or a refrigerator to keep your food from spoiling, one, more or less, has to find the money to take care of these.
Dunn suggests making a plan. First, determine whether immediate spending changes or income changes will take care of your financial emergency. Second, grab the money from savings, if available. Third, borrow the money for the emergency, while concurrently creating a plan t pay off the debt in a specific period. Fourth, pay off the debt in that time.
“If you don’t leverage your emergency to create stability, you’re going to find yourself in deeper and deeper trouble,” Dunn writes.
Let’s get to basics. If you really only have $1,000 in savings, there are much bigger issues here, especially if you are older than, say, 18. You have to start planning not just for emergencies, but for your retirement years.
You don’t make that much money, you say? Well, then, start with looking at what you are spending, and whether your spending is necessary. Buying a cup of coffee on your way to work? Buying lunch at work? It might be better to make your own coffee and buy an insulated container to take it to work. It might be better to make your lunch at home and bring it to work.
You don’t have the extra time in your day to do that, you say? Then, look at how you spend your time. Perhaps getting up 15 minutes earlier in the morning to make your coffee, or making your lunch the night before as you sit in front of the TV may leverage your time better.
Look at other spending habits. For example, how much do you spend on “entertainment?” That can include dining out, movies, even digital services. As a start, look at your cell phone, television and Internet packages. Are there ways to trim back those costs in a way you can live with? Maybe get rid of your premium TV package.
Want a pet? Remember, pets are expensive. They need food, perhaps medicine, as well as your time and attention. Time is money. Are you prepared for that?
You should be able to save a portion of every paycheck, no matter how small. Regular savings, multiplied by time, augmented by wise investment, equals financial security in your later years. If you start saving $5 every week at age 20, and never touch that money, it will amaze you how much you would have at age 40. Then, at 40, check out the amount you’ve saved and continue not to touch it until, say, age 60, all the while continuing to put a regular amount from every paycheck into that fund.
Of course, getting back to Dunn’s point, you also need money for financial emergencies. Remember, if you are young, that you can’t lean on your parents or other family members forever.
Perhaps you might look at ways to earn extra income in a way that doesn’t interfere with what you are doing now. There are many such vehicles out there. For one of the best, visit www.bign.com/pbilodeau. You may get a two-fer: a lesson on saving money and a way to earn more money.
Most of all, you need to make saving an absolute priority. What you sacrifice today will pay off tomorrow. One never knows what tomorrow brings. One never knows when you might be forced to retire, or forced to look elsewhere for a job. What you save today may save your life later.
Peter