Wednesday, February 18, 2009


In the wake of a financial meltdown, five oaths for staying afloat.

As the new year begins with the world in recession, raise your right hand and solemnly swear to:

Oath #1. SPEND ONLY ON ESSENTIALS --------> for the next three to six months, forego all luxuries. if not having something wont physically kill you, you can live without it. Make a detailed monthly spending forecast for the year and see which expenses can be deferred, eliminated, or submitted with something cheaper. build up your emergency fund in your company decides to cut jobs due to the economic slowdown.

Oath #2 PRE-TERMINATE DEBT---------> with capital markets still wobly, it may be better to use your extra cash (exceding your emerncy fund) to reduce debt instead of staying invested. as long as your debt was used to purchase something that appereciates in value-such as highly marketable real estate bought at a low price - pre-paying debt in not money out the window but actually a good investment. you'll save on interest payments, and the value of the cash your property's market value goes up.

Oath #3 PICK UP INVESTMENT BARGAINS -----> if you are cash-rich abd debt-free. dont waste this once in-a-lifetime opportunity to invest in good mutual funds and stoscks at prices that have been artificially driven down by the contagion. quality cars, condos, art, and jewelry are also being sold fire sale prices in the secondary market, so now is an excellent time to go into acquisition mode if your cash hoard can withstand they cyclical dips of the economy.

Oath #4 PRUNE YOUR PORTFOLIO -------> Accepting defeat is never easy, especially where life savings are concerned. anyone who invested in anything more than time deposits most likely lost some money in the carnage that began in October. should you cut your losses or hand on the hope of recovery? the answer depends on what your alternatives are. is there debt you can pay down with whats left of your funds? are there safer in investments you can switch to that generate reasonable yields? if recovery takes a long time can you afford to wait? bear in mind that once the value of your investment has slipped significaly below acquisition cost, its an uphill climb from there - unless recovery is really dramatic, any gains you realize in the future will simply bring you back to where you started.

Oath #5 NEVER TRADE PEACE OF MIND FOR MONEY -------> one good thing that can come our for the economic crisis is the chance to regain a more balanced attitude towards money. with credit taps tigher and "easy" investment gains more unpredictable, it is easier to appreciate the basics. the high-flying life may be gone for a while, but peace of mind is still life's greatest luxury and that is something you can always have for free.

from this moment,i will appy this into my spending habbit. hahahaha

No comments: