VOL. 127 | NO. 199 | Thursday, October 11, 2012
Rays of Wisdom
Dana and Ray Brandon
Are You Recession Proof?
RAY and DANA BRANDON
Ray’s Take People make all kinds of predictions about the economy and someone is bound to be right, for good or for bad. If those predicting another recession actually get it right, are you prepared to ride it out?
An important part of financial planning is preparing for potential setbacks like a pay cut, job loss or health setbacks. Making lifestyle changes now to better secure your future is the best course to follow. Even if another recession doesn’t come around, you’ll still be more prepared for any other curve balls life might throw at you.
If yours is a two-income family, that gives you an advantage: if one of you is laid off, there’s still a paycheck coming in. However, you can also use that advantage right now. Try to live as much as possible on one salary and save the other to build up an emergency fund capable of covering all your expenses for 12 months. These funds should be easy to access and in addition to your regular retirement savings.
If you have any debt, pay it off. The last thing you need when tough times come is pre-existing debt weighing you down. Along these same lines, put off any major expenditures – like a car or big vacation – you might finance. Save for them, you’ll enjoy them much more if they’re pre-funded.
This might also be a good time to examine your spending patterns and see where you can cut back. From eating more home-cooked food to axing premium cable channels to eliminating morning coffee stops, there are probably some fairly painless ways to stretch your budget.
If you prepare and this possible recession does not happen, you’ve just made important strides toward your future economic independence; and that’s always a good thing.
One last thing – recessions are part of the deal. You don’t have capitalism and get equity returns without them and no one has repealed the business cycle. Prepare for them, deal with them and be grateful for the benefits that the system as a whole provides.
Dana’s Take Too many recent college grads are folding shirts in department stores. In a recession it’s more important than ever to invest in an education that will equate with earnings in the workplace. That’s why I applaud the Tennessee Higher Education Commission (THEC) for publishing data comparing first year earnings for graduates of different degree programs and schools in the state. Anyone considering paying for – or borrowing for – higher education would benefit from visiting www.collegemeasures.org.
This eye-popping data spell out earnings for graduates of each branch of the University of Tennessee, University of Memphis and community colleges. Fields of study appear to have the biggest impact on earnings, with engineering, technology and health care hitting the jackpot.
Using resources wisely is the best way to survive a recession. Education, when carefully chosen, can be a useful tool for getting ahead in a floundering economy.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.