Five concrete things you can do to prepare for harder times


I’m not about to add fuel to people’s fears about the economy — there are plenty of other places where you can get your daily panic on if that’s what you really want. I don’t believe in that. I like having plans ready. Come what may, if you have a plan in mind, you’ll know how to handle it.

When Jason’s son was born with health problems, it was pretty quickly obvious to me that Jason was in a very tough spot and that he might need to leave Wesabe to take care of his family. I didn’t know for sure, and I knew it would take time for Jason and his family to figure out what they needed and how best to handle it. But, I knew his departure was a possibility. Since things were up in the air, I tried to get ready for whatever might come. I had a mental image of a shelf of three-ring binders, each with a label on the spine: “Jason takes leave,” “Jason departs,” “Jason’s son recovers,” and so on. Mentally, I prepared a plan for each of those scenarios — what I would do personally to help my friend, what we would do as a company, and so on. When Jason decided what he had to do, I simply pulled down the right binder of plans, and put them into place. I think Wesabe was able to recover and grow from a very tough situation — the loss of our first CEO — as a result of us having those plans prepared. (Fortunately, Jason’s son is doing well, too.)

You can take the same approach with your household finances. Depending on your situation, the changes to the economy may have you worrying about a lot of parts of your finances. You may have no idea exactly how things will turn out — I certainly don’t have any way to predict the future of the economy. (If you do, please post the future to Groups so we can all make better plans! 🙂 Instead of worrying, plan out what steps you would take if something bad were to come about. You might have one plan for “Loss of job,” another for “5-year recovery of retirement account value,” and so on. Make a plan, do what you can do now, and plan out what you will do if the scenarios that worry you most do in fact come about.

Here are some concrete ideas for steps you can take today to prepare for some of those outcomes. I’ve tried to make this list ideas beyond the standard personal finance advice — we should all know already to have an emergency fund and pay down debt. Those are great steps, but very general; the following are more dramatic, and hopefully more helpful for today, ideas for making it through a downturn.

  1. Go through your house and sell everything you don’t need now. Don’t wait for things to get really bad before selling off belongings that are gathering dust on the shelf. For one thing, people have more money to spend on used things today, so you might get more offers. Also, selling now when you don’t yet need the money will let you be patient and wait for a better price, instead of compromising on a quick, undervalued sale. This is a great time to get comfortable with Craig’s List, eBay, and Amazon Marketplace, if you aren’t already. Of course, these are all great sites for buying cheaply, too.
  2. Delete your credit card from Amazon. Amazon (just to use them as an example) makes it very easy — as easy as they can make it — for you to order impulse items at the click of a button. Amazon is a great merchant (in my view) and offers a lot of ways to save money on things you want or need, but right now the last thing you need is impulse buys. Delete your credit cards from their records, and re-enter and re-delete them each time you buy, and that will slow you down considerably. Think of it like putting up speed bumps on your discretionary spending. (As a less drastic measure, you can also turn off one-click purchasing and resign from Amazon Prime to make it harder to spend impulsively, too.) You can always add your card back in later, when you have more to spend.
  3. If you need to buy stuff, try not to buy the stuff itself — instead, try to buy stuff to make that stuff. For instance, since I’m preparing a baby’s room, I bought some furniture, but now I’m cutting that back, and instead buying some woodworking equipment to make some furniture for us myself. (Don’t worry, I’m not trying to make a car seat out of plywood!) Buying a sewing machine, some cooking equipment, or something for your particular needs or interests can be a big help, and good cheap fun, too. An up-front investment (at a reasonable level) might make it easy for you to save a bunch of money over a period of time by joining up with the Do-It-Yourself team. (If you get really good at a DIY skill, try selling what you make on Etsy to supplement your income.)
  4. Build a list of all your subscriptions and monthly charges, and figure out how you can get rid of as many as possible. Do you really need both cable and Netflix? (Netflix is probably cheaper.) Aren’t most of those magazines available for free online, or at the library? Do you need both a landline and a cell phone? Any chance you can get WiFi at a local cafe or your work instead of at home? Did you get caught in the “free” trap? Find those monthly fees and kill them dead — you don’t need ’em. (When you’re making plans, maybe draw up two or three lists: one for subscriptions to cancel today, one for a pretty bad situation, and one for drastic measures.)
  5. Find a way to freelance your skills — online if you can. This is a great time to create a profile on a freelancing site, and start to get some ratings for cheap, great work. Try Elance or if you have skills that are easy to contract out online. If you’re a graphic designer, try Authentic Jobs. If you are willing to do phone customer service work from your home, try LiveOps. If you’re a programmer, build a free iPhone app and get some great ratings at the App Store. Whatever you do, you may be able to get contracting work, possibly online or at night or on the weekends, to supplement your income now, and sustain you through job loss if that were to befall you. (Tip: incorporate as a business to protect your personal assets from business losses when you freelance.)

Do you have suggestions for additions to this list? Add them in the comments below.

You could drive yourself crazy making too many plans for a rainy day — but then again, you could drive yourself crazy with no plans at all, either. Don’t wait for something hard to hit you before you think through how you’d get on your feet again. Choose two or three scenarios that worry you most, and build out plans for each of those. This isn’t a time to panic, but it is definitely a time to put some plans on the shelf, and take the steps you can to shore up your finances today.

2 Responses to “Five concrete things you can do to prepare for harder times”

  1. The Wallet : Loose Change: 10/13/08 Says:

    […] Personal Finance: -Five things you can do now to gear up for yuckier economic times. Removing the credit card from is especially helpful for those of us who start innocently browsing books and end up…sigh. [Wheaties for Your Wallet] -Financial crises bring out the control freak in all of us. Channel that anxiety into improving your credit score. [NY Times] -Speaking of credit scores and credit reports, you might want to spread the teachings to your kids. Youngsters are increasingly at risk for identity theft. [GenX Finance] […]

  2. Caleb Nelson Says:

    I think that your most valued suggestion is consolidating your bills. Most people don’t really understand the cost of their living or the value of a budget.


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