We need to change our way of thinking for the bailouts to work.

Folks are hoping they will find a way to get a personal bailout.  Don't hold your breath.  The only way you have a shot at that happening is reinvent how you and your family deals with finances.

There is not going to be a quick fix for anyone that includes the Average Joe on Main Street.  You need to let that sink in.  It took us quite awhile to mess this up.  The stock market may get happier for awhile because of the new President, but that isn't going to affect your pocketbook unless you are an investor.

What you are going to have to do is look at your financial health or the lack thereof in a totally new light.  It is not going to be easy.

Today there was an article about trying to get the credit card companies to offer credit that's palatable to customers so buying will go up again.  Buying again is a great goal, but pushing the use of credit isn't.

Headlines have shown that Federal agencies are worried about what the banks and investment companies are going to do with the money they were given.  If they do business the same old way, then it was all for naught. 

This is said realizing that a good portion of American consumers have hit bottom.  They were keeping themselves afloat with credit cards and lines of credit. Bankruptcy might be the only answer.  Credit is not being shoveled out as it was once.  If you are used to paying a certain interest rate, it could change any time.

We are on a sinking boat that was patched with cardboard. You can no longer buy things thinking you will pay for them down the road.  You have to start shopping based on what's in the checking account today.  Down the road, you may have no job and your credit cards may be gone completely.  This is a complete reversal of our previous shopping habits.

Let's get started.  If you are facing horrific credit card debt, find a debt consolidating service in your area and get to it immediately.  Tear up your credit cards.  If you were using the cards to get you to the next paycheck, you need to look at alternatives.  Have your spouse, if available, become the neighborhood Avon rep (just an example).  This allows you to decrease the amount that your employer withholds.  Being an independent contractor, no matter how part time, opens up the doors to tax deductions you didn't have previously.  If you get a big tax refund at year's end, consult a tax person and find out what you can safely do re changing your withholding.  There is no reason to give the government an interest-free loan.  I do realize that it is unlawful to not allow for enough deductions.  But if you get counsel, that wouldn't be a problem.

Do you have teenagers that are at you constantly for money?  Cut the strings and put the want ads under their nose.  There are still part time jobs available for teenagers.  Let them know that what they earn will be for their needs.  If they don't go to work, they are going to be limited to a minute amount of bucks from you.

If you have a mortgage that is doing you in, no matter how much you love your home, you need to find a way to get out from under.  Either apply to get your loan modified, ask your lender to help with a short sale, or lease it to someone until you can get a decent offer.  I know it's painful.  But it is not as painful as facing foreclosure and being afraid to wake up every morning.

Keep a diary of your weekly spending. It is the only way to see where your money is going.  Until you see that, there is no chance of getting your spending under control.

As hard as times are, don't keep them from your children.  Younger ones, of course, can't deal with such issues.  Pre-teens and older need to be informed what's happening.  You need to also tell them about your change in spending habits.  You need to get every one on board if there is a chance for you to get your life back in financial order.  In this particular instance, this horror is no respecter of incomes.  I read just the other day that Susan Lucci, queen of daytime soap opera for more than 30 years, is receiving a big cut in pay.  While this might seem ho hum to the rest of us, stars in her category usually spend most, if not all, of their income.

It's going to be awhile before things calm down.  For those who may be thinking this too shall pass and the world will go back the way it was, it's not happening.  We will be living in a slower economy.  We may even see credit card companies merge and fold.  If they are slicing customers off their books, closing doors can't be far behind.

Educate yourself and your family and make a plan.  It's the only way to stay sane during troubling times.

Laura
01-DEC-08