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Economic Recovery? Not Yet, So Save Your Money

Posted By Guest Blogger--Kathryn Katz

The media and news outlets are announcing that the recession could end as early as the third quarter in 2009. Existing home sales have increased  for the second consecutive month. The Consumer Price Index increased by 0.3 percent. Many consumers are starting to see the light at the end of the tunnel, and feel that the economy is well on the way to recovery.

They’re right, the economy is starting to show signs that it’s turning around, but the economic issues plaguing Americans are not going to be fixed overnight. In May 2009, employers took 2,933 mass layoff actions that resulted in 312,880 workers in losing their jobs, and the national unemployment rate went up to 9.4 percent. Between high employment rates and large federal deficits, many economists are warning that it might be several years before U.S. economy recovers and we see full employment for Americans.

What should you do during these difficult economic times?

• You should be using a budget and saving your money. How much should you be saving? Try putting aside five to ten percent of your net income. Try to create an emergency fund. Start at a manageable goal, such as a $1,000 emergency fund. Then work your way up to an emergency fund that will cover approximately four to six months of your expenses, just in case you lose your job.
• Because many businesses are hurting during this recession, consumers are seeing great deals on housing, apparel, cars, travel, and luxury goods. However, that doesn’t mean you should go on an all out shopping spree. Select your purchases with care and look beyond the deal to see whether or not you really need this item. If purchasing a new car or home makes sense for your finances then do it. Now is a great time to buy. But if it doesn’t, then you should save your money.
• Look at your existing debt load. If you’re carrying a large amount of credit card debt, now is the time to start paying that off. Make sure to target the credit cards with the highest interest rate and pay that debt off first.
• Once you’ve taken care of your credit card debt, start paying extra on secured debts, such as your mortgage or car payment.
• If you’re struggling with making the payments on your credit card debt, contact a non-profit credit counseling agency for help before your debt problems get out of control. Some credit counseling agencies also offer housing counseling. If you’re one of the many Americans who bought during the housing bubble and are in an upside down mortgage, contact a housing counselor to see if you can get a loan modification.

Remember, it’s going to take time for the economy to recover. Now is the time to be proactive with your debt problems and save your money. If you need help, get assistance before your money issues worsen.

Category: Debt Solutions

6/30/2009

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