I’m not about to add fuel to people’s fears about the economy—there are plenty of other places where you can get your daily panic on if that’s what you really want. I don’t believe in that. I like having plans ready. Come what may, if you have a plan in mind, you’ll know how to handle it.
Here are some concrete ideas for steps you can take today to prepare for some of those outcomes. I’ve tried to make this list ideas beyond the standard personal finance advice—we should all know already to have an emergency fund and pay down debt. Those are great steps, but very general; the following are more dramatic, and hopefully more helpful for today, ideas for making it through a downturn.
1. Go through your house and sell everything you don’t need now.
Don’t wait for things to get really bad before selling off belongings that are gathering dust on the shelf. For one thing, people have more money to spend on used things today, so you might get more offers. Also, selling now when you don’t yet need the money will let you be patient and wait for a better price, instead of compromising on a quick, undervalued sale. This is a great time to get comfortable with Craigslist, eBay, and Amazon Marketplace, if you aren’t already. Of course, these are all great sites for buying cheaply, too.
2. Delete your credit card from Amazon.
Amazon (just to use them as an example) makes it very easy—as easy as they can make it—for you to order impulse items at the click of a button. Amazon is a great merchant (in my view) and offers a lot of ways to save money on things you want or need, but right now the last thing you need is impulse buys. Delete your credit cards from their records, and re-enter and re-delete them each time you buy, and that will slow you down considerably. Think of it like putting up speed bumps on your discretionary spending. (As a less drastic measure, you can also turn off one-click purchasing and resign from Amazon Prime to make it harder to spend impulsively, too.) You can always add your card back in later, when you have more to spend.
3. If you need to buy stuff, try not to buy the stuff itself—instead, try to buy stuff to make that stuff.
For instance, since I’m preparing a baby’s room, I bought some furniture, but now I’m cutting that back, and instead buying some woodworking equipment to make some furniture for us myself. (Don’t worry, I’m not trying to make a car seat out of plywood!) Buying a sewing machine, some cooking equipment, or something for your particular needs or interests can be a big help, and good cheap fun, too. An up-front investment (at a reasonable level) might make it easy for you to save a bunch of money over a period of time by joining up with the Do-It-Yourself team. (If you get really good at a DIY skill, try selling what you make on Etsy to supplement your income.)
4. Build a list of all your subscriptions and monthly charges, and figure out how you can get rid of as many as possible.
Do you really need both cable and Netflix? (Netflix is probably cheaper.) Aren’t most of those magazines available for free online, or at the library? Do you need both a landline and a cell phone? Any chance you can get WiFi at a local cafe or your work instead of at home? Did you get caught in the “free”creditreport.com trap? Find those monthly fees and kill them dead—you don’t need ’em. (When you’re making plans, maybe draw up two or three lists: one for subscriptions to cancel today, one for a pretty bad situation, and one for drastic measures.)
5. Find a way to freelance your skills—online if you can.
This is a great time to create a profile on a freelancing site, and start to get some ratings for cheap, great work. Try Elance or Guru if you have skills that are easy to contract out online. If you’re a graphic designer, try Authentic Jobs. If you are willing to do phone customer service work from your home, try LiveOps. If you’re a programmer, build a free iPhone app and get some great ratings at the App Store. Whatever you do, you may be able to get contracting work, possibly online or at night or on the weekends, to supplement your income now, and sustain you through job loss if that were to befall you. (Tip: incorporate as a business to protect your personal assets from business losses when you freelance.)
