As someone who works in both real estate and politics, and the daughter of someone who has worked in investment banking for 35 years, I have compiled this important message. The following is of such importance that I have emailed it to everyone in my life that I care about, and as I care about the DailyKos community, I wanted to share it with each of you. Please read this; it will help you survive the current economic crisis.
The Bush administration and McCain-Palin campaign would have you believe that this is a period of economic "adjustment", that the "fundamentals of our economy are strong," and that Wall Street is to blame. These statements are convenient only for those who deliver them, people who are seeking to avoid blame or seeking to gain power from our national misfortune.
Our economy has been in a downward spiral for sometime now. No single investment bank or Wall Street CEO is to blame. If anything, our economy has been weakened by the Bush administration's tax breaks for big oil, our nation's dependency on foreign oil (which is why oil's price fluctuates in tandem with political news, military conflict, natural disaster, etc.), the tax breaks on the wealthiest Americans, and American jobs being shipped overseas, laying off hard-working Americans with specialized skill sets, like auto workers, forcing them to start from scratch.
The following are steps that you can take to ensure that you and your family are protected from the fallout of this economic crisis.
1. If you can't pay your bills, call.
Think about the credit cards in your wallet. How many are issued by banks, such as Citi or Chase or HSBC? Like every bank on Wall Street, these banks are hurting right now. Stocks for powerhouse investment companies like Morgan Stanley and Goldman Sachs are down 75%. The banks need to collect money to pay their bills and keep operating, and in this recession, they are going to come after you for late fees, overdraft fees, etc.
Instead of ignoring the piling stack of bills and collection notices in your mail bin, pick up the phone BEFORE your payment is late and call your bank or credit card company (same thing for cable, energy, medical bills, etc.). Explain to them that you are having a difficult time right now and worry that you won't be able to make your payment on time. In good faith, offer a partial payment (say, half of the minimum owed) today, and then the other half when you get your next paycheck.
While we often assume that these people are heartless, chances are, whoever answers the phone has bills to pay too. They are much more likely to be sympathetic toward your situation if you call BEFORE you are delinquint. You will avoid late fees, and repetitive late fees and delinquint behavior can trigger higher interest rates NOT TO MENTION adversely impact your credit long-term. Coming clean and making alternative arrangements to satisfy your debt, from car or student loans to a doctor's bill, shows that you are a trustworthy borrower. You are not the only customer who won't be able to pay their bills on time this month, but you may be the only customer who calls and asks for an extension. Every single time I've tried this, it has worked in my favor.
2. If you're thinking of leaving your job, suck it up and wait it out.
Whether you work in finance or product management, this is not the time to leave your job in search for something that makes you happier. Banks like Morgan Stanley have laid off up to 10,000 employees, Lehman Brothers has tanked, Merril Lynch will be consolidated into Bank of America, and we regularly hear about auto industry workers or airline pilots getting let go en masse.
Your boss may be a jerk, your coworkers may be gossips, and you may work 80 hours a week, but if you get a paycheck, you're in a much better place than a lot of people. College students who graduated in May 2008 are still out there, ready to do your job for less the second you give your notice.
If you're currently between jobs or unemployed, offer every interviewer the chance to use your services on a freelance basis for a trial period. For instance, if you're applying to be a copywriter, offer to freelance a project or two for your potential employer. They will likely appreciate the opportunity to sample your product before sealing the deal, and they will have to compensate you for the work you do for them. This, too, has not only helped me earn more as a freelance writer, but has secured me several full-time job offers.
UPDATE: I forgot to mention exchange of services... I'm currently planning my wedding. I do freelance PR in addition to my full-time job, so I contacted an invitation designer and exchanged her free PR services for free wedding invitations. Saved me upwards of $500.
3. Trim the fat in your daily life.
In my house, my fiance and I have restricted ourselves to one dinner out per week, and one take-out order per week. The dinner out is a treat, and the take-out gives us a break on a night when we don't have the energy to cook.
When you go out to eat, choose a BYOB restaurant and bring a $10 bottle of wine instead of paying $10 per glass. If you have a favorite restaurant with gigantic portions, split an appetizer, an entree, and a dessert.
My book club has been trimming the fat as well. Instead of ordering take-out every time we meet, sometimes we cook all together, sometimes we bring pot luck items. Nights out with the girls often involve a shared cheese plate at a wine bar instead of pricey entrees for each person.
4. Be green to keep green.
If you're like most people, you probably leave for work in the morning with your home computer still on, maybe a few lights on... stop. In addition to wasting energy, you're wasting money. ComEd doesn't charge less for electricity spent when no one's at home.
I typically drive to work in downtown Chicago because the train station closest to my house is under construction and it takes an hour to get to work on the bus, whereas 20 minutes on Lake Shore Drive gets me to work in a more mellow state of mind. However, in addition to the cost of gas and upkeep for my car, I pay $14 a day for parking. That's more than $100 a week, $400 a month, $4800 a year. Sickening when you consider I could wake up an hour earlier, drive or bike to a further away train station, and spend only $960 a year on transit. So I'm going to make a renewed effort to cut that driving nonsense out. Plus, it's terrible for the environment, and people in Chicago drive like psychopaths.
If you live in a city like Chicago, you're being charged a new tax on bottled water. Rather than continue spending $1.50 for a bottle of water when you're thirsty, invest in a dishwasher-safe Nalgene bottle (to zap germs) and a Brita water filter. Tastes just as good, if not better, than some bottled water and is much cheaper. Plus, you're throwing away as much plastic.
5. It's the little things...
When I have clothes that don't fit anymore or that I just don't like, I either sell them on Ebay or have my friends come over and pick through them. Instead of just leaving crap hanging in my closet, I either make money off Ebay and use it to buy new clothes or trade outfits with a friend.
A site called BookMooch has helped me sustain my reading addiction for a fraction of the price of frequent trips to Barnes & Noble or Borders. You can list all the books you have that you're done reading, earn points for every book you list, and use those points to "order" books from other members. When someone asks for a book you've listed, you pay the cost of shipping it to them (around $3 media mail). Likewise, when you use your points to order a book from someone else, they pay the cost of shipping it to you. This has become very popular with members of my book club.
If you live in an area regularly impacted by weather, such as near a river or in hurricane or tornado country, and you don't currently have homeowners/renters insurance, get it. Things may be tough now, but imagine what the people who lost all of their valuables and possessions in storms are going through. It is one more bill to pay, but in the event of a disaster, it pays for itself in value.
These tips may not reverse the recession, but they will help you save money in your life, and that will help you stay much more financially sound regardless of the economy. And for God's sake, register to vote now, because all the financial advise in the world can't save us from another eight years of this sh*t.