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Old 03-06-2009, 09:13 PM   #1
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Default How to Handle Your Job and Finances If There's a (Yikes!) Depression

Brace yourself, America. What if the already terrible economy gets even worse? And not just a little bit worse, but a lot worse? Look at it this way: If you put a group of brainiac economists together in a room and told them to create a computer model of a Great Depression 2.0, the key ingredients would probably be a) plunging stock prices, b) collapsing home values, c) soaring unemployment, and d) a banking system on the verge of complete implosion.

And do we have all those terrible factors in play today? Check, check, check and check. But there are also some big positives to counterbalance those huge negatives, such as a Federal Reserve that is lowering interest rates and printing money, as well as trillion-dollar government plans to stimulate the economy and keep people in their homes.

But things can get a lot nastier without reaching a total Great Depression scenario where the economy shrinks by 25 percent and unemployment soars by 25 percent. So just how bad might the economy get? And if there is a mini-depression, what should you do about it? Your questions, our answers.

Give it to me straight — where's this economy heading? There are some positive signs out there. Really. A highly respected economic model from the Federal Reserve Bank of New York predicts the recession, already 16 months old, will end this year. And White House economists are predicting a strong rebound over the next three years. But many private forecasters are far gloomier, predicting tepid growth going forward for several years and unemployment rising to at least 10 percent next year and staying elevated. This is the "long recession" scenario, similar to what happened in Japan after its real estate and banking crisis in the 1990s. Certainly, the battered stock market is giving few signs that investors see brighter days ahead. Research by Harvard University economist Robert Barro has found that big market drops raise the probability of an outright depression, defined as a GDP drop of 10 percent or more. As Barro concludes: "The stock-market crashes of 2008-09 in the United States and other countries provide ample reason for concern about depression."

How can I keep my job? Workers are spending an average of 2.8 hours each day worrying about job security, according to a recent survey. Here's a tip: worrying about it won't save it. This downturn is your cue is to stick your head out and become a somebody: lead a project, suggest an overhaul, work overtime, and develop relationships at work. If you're stuck in a job with little upward mobility, the best career move may be to head back to school while the opportunity cost is smallest. "It's time to take that hit," says Peter Morici, an economist at the University of Maryland. Just get a degree with obvious payback at a good institution: "Go to a school with brand loyalty among employers in the region where you want to find a job," Morici says. If you're out of work but not interested in going back to school, you may best survive the recession by taking a job at a lower pay grade. While on the hunt, consider offering to work part-time for free in an industry you're hoping to learn, suggests Katy Piotrowski, author of The Career Coward's Guide to Career Advancement. Free work is a boon to a struggling company, and you'll only add to your skills, your resume, and your contacts.

My home has already lost a lot of value. Can it really fall much further? Home prices at the national level have already plunged nearly 27 percent from their 2006 peaks, and Richard Moody, the chief economist of Mission Residential, expects values to drop another 10 to 15 percent before bottoming out in the middle of 2010. Although he's not predicting it, if the ongoing recession evolves into a full-blown depression, home prices could fall an additional 25 to 30 percent on top of that, Moody says. That's because a sharply higher unemployment rate would pull many would-be buyers out of the market. At the same time, the dysfunctional credit markets associated with a depression scenario could prevent many buyers with sufficient incomes and solid payment histories from obtaining mortgage financing. The result: "more significant drops in sales, prices and construction," Moody says. If so, more folks will be checking out the government's new foreclosure prevention plan, especially if your debt-to-income ratio is above 31 percent, and your mortgage is more than your home is worth.

What is someone in their 30s or 40s to do now that their 401(k) is a 201(k)? The good news is that you still have decades of compounding growth ahead of you. The bad news is that a 20 percent or 30 percent blow to your portfolio means postponing nearer-term financial goals like buying a house or taking that around-the-world trip. Assuming you have a stocked emergency fund, keep funneling money into your 401(k). If you can, kick those contributions up a notch to take advantage of the market's fire-sale prices, says Russell Fox of Apex Wealth Management Group: "Generally someone who's 40 doesn't have the largest nest egg they'll ever have, so they're not in a situation where preservation is the top priority."

It's also soul-searching time. Find out why you set up your portfolio the way you did, taking into account risk and time horizon. Then, with Terminator-like resolve, stick to your guns (allocations). "Nervous investors should at least continue building the bond portion of their portfolio, then tiptoe back into equities," says Ronald Rogé, CEO of advisory firm R. W. Rogé & Co.

And what if you're in the retirement "red zone" and don't have decades to rebuild your portfolio? The idea of working during the traditional retirement years isn't much fun, but it is practical. One of the best ways to give your retirement accounts a boost is to work another year or two. It will take the typical employee with 20 or more years on the job an extra 1.8 years working to recover recent market losses, according to calculations by Jack VanDerhei, research director of the Employee Benefit Research Institute. Delaying claiming Social Security also produces higher payouts. Benefit checks increase by approximately 7 to 8 percent for each year you delay claiming between age 62 and 70. And because Social Security is calculated based on your 35 highest earning years, each year you work in your 60s (assuming you earn more now than you did in your 20s) will further boost your checks in retirement. If you have already retired, it is more difficult to recoup market losses. But at least seniors over age 70 1/2 will not be required to take distributions from IRAs, 401(k)s, and 403(b)s in 2009, which will allow retirees who don't need to tap their nest eggs an opportunity to avoid selling low.

OK, I'm going to totally hunker down and save like crazy. Any suggestions? Consider extreme saving. Buying in bulk, making your own coffee, and freezing leftovers are all ways to cut your grocery bill down to under $7 a day. But by taking saving to the next level, only buying sale items, staying away from brand loyalty, and using coupons for most purchases, you can actually save up to $1,500 a month. Ashley Nuzzo, creator of the Frugal Coupon Mom website, uses a three-ring binder to keep track of her coupons, and typically cuts her shopping bill by more than half. In December, for example, she spent $711 and brought home $2,200 worth of food — much of which she ended up donating.

Reading about a depression is depressing. What can I do about that? Hey, don't worry. Be happy. It's hard to be grateful for what you have when your 401(k) lost most of its value and you have no savings, but it's probably the best thing you can do for your mental health. Sonja Lyubomirsky, professor of psychology at the University of California-Riverside and author of The How of Happiness: A Scientific Approach to Getting the Life You Want, suggests cultivating a sense of appreciation through something like a gratitude journal, where you write down three to five things for which you are thankful. If you lost your job, think of other dreams that have come true, such as living in the city you want or marrying the right partner. "It's not trivializing what's happening, but trying not to focus on it all the time," says Lyubomirsky.

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Old 03-07-2009, 03:50 PM   #2
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Default Re: How to Handle Your Job and Finances If There's a (Yikes!) Depression

In case it hasn't already become painfully obvious, the traitorous majority members of our U.S. Congress are not beholden to the voters any longer. And now, they are not even trying to hide that fact. They are fully in the pockets of the domestic and global corporate interests who donate huge sums of money to their re-election campaigns. They constantly only listen to the corporately-funded lobbists who sell the agendas of the various corporations.

This is called "corporatism". The other terms for this form of government are "fascism" and "communitarianism" (aka "communism"). This is the form of government that now rules the former U.S.A. The members of Congress and the administration in Washington D.C. have not yet admitted to the American public that this change has actually happened, of course. They will continue to pretend that nothing has changed. They will continue to tell everyone that just a few more trillion dollars spent on various programs will return us all to the "good times".


Reality Check!!! This country has ALREADY entered a depression. We are just at the beginning stages. It will probably take 2 to 3 years before this situation becomes dangerous. But, don't worry! The government has apparently been planning on this for many years. They somehow knew all this would happen, so they began planning ahead.

Oh... you aren't hearing anything about a depression on the evening news?

Hmm, well it's important to remember that the same corporate masters own the 5 major media companies who run the news corporations. Handy arrangement, eh? It's basically "Corporate Propaganda, Inc." You see, all this talk about the government nationalizing the banks and corporations is just a smoke screen. What's REALLY happening is that the global corporate elite are corporatizing the government. That's why we are seeing incredibly massive government bailouts. They are passing the incredible losses of the criminally mismanaged corporations directly onto the backs of the middle class (who actually pay the taxes!)

And, while all of this was being planned, the elite funneled trillions of dollars (both pseudo-legal and flagrantly illegal) into building massive underground bases the size of small cities. There are now hundreds of these bases across the U.S. And that's not to mention all the ones built in other countries. Gosh, they must have gotten the same word somehow!

Then, the elite quietly began building huge detention camps around the country. At the time that these became known by a few whistleblowers, no one could even imagine what they would be used for. It just seemed to fantastic to contemplate! But, now as the economy deteriorates rapidly, the reason for all these camps suddenly becomes painfully obvious.

Massive numbers of Americans are quickly losing everything they ever worked for.. even everything their parents ever worked for and passed down to their children for their children. What do you think all those people will do when they awaken to the fact that their life savings, homes, retirements, health benefits, and even their measly Social Security checks have evaporated in a massive depression? A depression planned and managed by the global corporate elite, no less.

I'm sure you can imagine what will happen. And, if not then you'll soon see it all happen before your eyes. But, don't worry! Our benevolent governing officials have planned for that, too. They have already ordered U.S. Army battalions to be stationed inside the U.S. (in direct violation of the Constitution) for "domestic" reasons. It doesn't take a rocket scientist to connect those dots, does it?

The majority of Americans apparently (or so we have been told) voted for "Change!" Well, unfortunately the powers-that-be weren't quite honest with all of us about just what kind of change they had in mind.

Ready or not... here it comes!

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Old 03-07-2009, 08:31 PM   #3
Jacqui D
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Default Re: How to Handle Your Job and Finances If There's a (Yikes!) Depression

Spot on seekntruth, and when the USA goes down the Uk will be following you down that dark tunnel, we are not far behind you now, we are watching and waiting we feel your plight because we know we are next!
With unemployment now reaching 2,000000 more like 4,000000 in truth and homes being repossessed at an astonishing rate, our towns are becoming ghost towns because shops are closing daily, crime has risen to an astonishing rate among the young kids, well they can't get their fix or drink no more because money has become so tight.

Last edited by Kathleen; 03-07-2009 at 09:18 PM. Reason: entire post was copied, can be viewed on this page
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Old 03-07-2009, 11:59 PM   #4
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Default Re: How to Handle Your Job and Finances If There's a (Yikes!) Depression

If your currency collaspes then it will be pointless saving money.
You're better off buying food now, before its X1,000,000 for a loaf of bread
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