Plan B. Why we should always have one handy.

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“When life hands you lemons, make lemonade.”

Of course, in reality it’s not always that simple.

When we shrug our shoulders and “let the chips fall where they may” – without any forethought or plan – we can’t really control the consequences. This is reactive thinking. And, nine out of ten times, we always regret not having planned ahead.

We are human. We make mistakes. We play the odds and miscalculate the results. Sometimes, our innate optimism clouds our thinking and we realize it only too late. And then the unimaginable suddenly becomes very imaginable, very real.

This happened to many middle-class men and women who were unprepared for such a severe and prolonged economic downturn. Jobs were downsized or eliminated. Savings dwindled. Credit card debt soared. Health insurance policies were suspended. Homes foreclosed. Food became a luxury.

In hindsight, what could we have done to prevent this from happening?

None of us expected this economic crisis to last so long, but it did.  That was out of our control.

We did, however, have control over how much we spent, how much we consumed, and whether or not we chose to live within our means. Many of us who were not proactive are now chanting “mea culpa, mea culpa.”

Let’s look at each of the problem areas:

(1) Jobs.  No job (full-time, part-time, or consultant) is secure. Even a loyal employee, working 25 years in the same company, can get a pink slip…. just like that. It’s important to keep skills honed, stay educated, and cultivate multiple optional career paths/opportunities. When we have back-up options, we are able to counteract the fallout from job loss.

(2) Savings. We must try not to succumb to the mentality of “immediate gratification.” This is a common problem in today’s society. The generation of men and women who lived through the Great Depression would probably be rolling their eyes and shaking their heads at us. We should take our cue from them and exercise a little frugality and self-discipline. Save a portion of each check and don’t touch it unless absolutely necessary. Make sound investments. “Get Rich Quick” schemes are just that: schemes. As my mother used to tell me, “If it sounds too good to be true, it probably is.”

(3) Credit Cards.  Ideally, we should only use debit cards. Credit cards should be used only on the condition that we pay them off (in full) each month. If we can’t do that, we are buying trouble by digging ourselves into debt. Stay in the black, not the red.

(4) A Roof Over Our Head. Here’s the unsettling reality: if we have a mortgage, we don’t own our home.  The bank does. If we can’t pay the mortgage, the bank will take “our home” away from us. We own our home only when we’ve paid the entire loan off.  This usually tales years, even decades. The good news is that eventually, we do own our home outright… if we play our cards right. Here’s the caveat: if we choose to get a second mortgage or an equity loan because we want to add a room or renovate a kitchen, then we drive ourselves deeper into debt… making that dream of full home ownership a more distant reality.

(5) Food. Eat wisely. Don’t waste.  Be sustainable. Buy fruit trees and grow vegetables… then there will always be food – even when money is scarce. 

Remember the adage: “Hope for the best, but plan for the worst.” 

If we follow this simple advice, we may not overcome all of our problems, but we will definitely be on a stronger footing.

HFH2

From Aug 14-Sept 7, purchase a copy of  Casualties of the (Recession) Depression, and for every $20 book purchased directly from me, through my website, I will be donating $5 from the proceeds of each book sale to either: Feeding America (US), Action Against Hunger (Canada), or The World Food Programme (Global). The purchaser chooses one of the three. As I’ve stated before and clearly state on my website, this promotion does not apply to books purchased from third party distributors, such as Amazon or Barnes & Noble.

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