Saturday, March 1, 2008

How to prepare for a financial downturn, by Mary Hunt

I've been a big fan of Mary Hunt and her Debt-Proof Living website for quite some time. I actually stumbled on her website when I was looking for frugal sites. She has a monthly newsletter that is very informative and interesting to read. This month it is her letter to her readers that I find particularly interesting and helpful:

The following is from Mary Hunt's letter:

How to prepare for a financial downturn:

1. Live below your means. There, I said it again, and believe me it won’t be the last time. Do not buy stuff you cannot afford. [I do this now, but I haven't always]

2. Control your spending. Stay away from malls, online shopping sites or other places that allow you to overspend with such ease. [This will be easy as I hate the mall, however it will be a little more difficult to stay off of Amazon.com :)]

3. Reduce your expenses. Everything from the water you use to the gasoline you burn. Start tracking your expenses, then employ every possible tactic imaginable to cut some from every area. [This is something that I need to spend more time on, trying to cut back on the utilities, telephone, insurance]

4. Pay off your credit cards every month. If you are carrying balances,
get those cards out of your possession so you are not tempted to use them. Once paid in full, carry only one card with you and clear it every month as if your life depended on it. It just might.
[I have not paid off all my credit cards, so I can work on the secured debt of my HEL and Mortgage]

5. Save. Save. Save. Stash. Save. It’s time to start crash saving. You need a good healthy cushion of CASH set aside that will carry you through the unknown that lies ahead. Yep, we call that a Contingency Fund around here, and it is key to your survival. Stop spending so you have money you can save. [This was written especially for me, I'm sure. No home improvements until my emergency account is in place.]

6. Pay off your home mortgage as quickly as possible. Once your unsecured debts are paid, tackle the home mortgage with a vengeance. This is your assurance of rent-free retirement. [I will do some home improvements before I pay off my home....but definitely HEL will be paid quickly]

If you do all six of these things, you will recession-proof your life. That means you will be financially fortified to survive any economic downturn.

Thanks, Mary, for a great newsletter. If you have never heard of her, please visit her website at http://www.cheapskatemonthly.com/

2 comments:

Canadian Saver said...

I thank God every day that I found that site 5.5 years ago... or I'd be in mega debt right now........... she's awesome!

RacerX said...

Perfect Recipe for success! Nice Post!