Jump Start Your Efficient Economy

Posted by Ben

February 5, 2009

The Money Life Network has organized another group project entitled “Jumpstart YOUR Economy: Tips for Starting The New Year Off Right,” and we have to say, that we are excited to write about it. As of late, there has been enormous amount of activity in Washington DC regarding the economy, almost too much. I can think of about 3 articles right off the top of my head that I want to write simply on the current events and the incredibly dark days ahead, but unfortunately, I also have a full time job in this field and time has been somewhat, shall we say….limited?

So we are going to try and convey a simple and important message that should compliment our compatriots’ articles (which you can find further down in this article). This is an issue that many people talk about and never seem to get right…
Its a common misconception that the economy initially dried up due to an actual lack of currency or money. In retrospect it might seem that way, but it actually started due to a lack solvency, or for lack of a better term, consumer confidence. Now that that has taken a deep hold, the secondary mechanisms are starting rear their heads, almost like clock work: recession, job loss and further plummet of the market. Welcome to 2009.

So what do we do? Some might say that its a good idea to buy American and stimulate the economy. I’ll fill you in on a secret: That’s not going to work. Under normal circumstances, maybe a little but to throw money at this problem, especially through the citizens, its just throwing good money after bad. My last count has us right about 2 trillion dollars. Sorry, that needs the respect it deserves, $2 Trillion Dollars. $2,000,000,000,000.00.

Personally, I can’t be a huge advocate of giving money back to the government at this point. I would rather save it and be exposed as little risk as possible. I think a majority of funds should not get any further than a money market, with a healthy proportion for picking up bargains on the 10 year low market. Keep in mind that the market is probably going to turn this year, are you ready? If you are on the fence about buying a house, do it. Rates are extreme and there is a saturation of available houses to look at. Stay away from short sales, the third party investor involved is not going to be nice to you. Foreclosures are a great deal if you can get one (Frank and his wife got one, as did my fiance and I), just remember this is a buyers market.

Where do you stash your cash? Money markets have the best rates while still being the safest with respect to risk, but it might pay to check and see if your bank is offering a similar product that you can get into easily. These may also be called Cash Rserve Funds.

Do you have a broker? Are your investments conservative and long term? Why do you have a broker? Ditch ‘em! With a fair amount of homework, you will probably know as much as they do in a matter of months. And you will save a bundle on management fees.

Budgeting is also a must. Spend some time living simply and get as much cash together that you can. Set aside what you will need for bills for a month and set the remainder to automatically redirect to a high yielding savings account. Set this and forget it! If you are near 30 years old, you need to be putting away at least $1,000 a month to have significant savings when you retire. Want to travel and relax later in life? Better start ramping that number up a little more because that $1,000 is only going to cover the bare minimum. With the economy the way it is, its time to be scared.

What do our other frugal friends have for us? Take a look and get them in your email daily!

Not to leave on a sour note, one positive advantage to all of this is that there can be some great bargains to be had. Just do the proper information gathering and due diligence. If you ever have a question, you know where to reach us. :) $

Related articles you might be interested in:

What the What? House Passes Bill to Give You Money For Your Gas Guzzler

Jump Start Your Savings

Money Is Pouring Out of Your Home

Tighten Your Belt Now, Feel Better Later

Grocery Store Tactics That Get Us to Spend

Budgeting, Economy, Saving

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