“When you ain’t got nuthin’, you got nuthin’ to lose.” ` Bob Dylan

At least, that’s what I think he said.

The Great Recession has proven that almost everyone has something to lose, even if that something is as personal as self confidence. It’s easy to sit back and opine about the heady days of 2007, when credit was generous and houses never went down in value, when unemployment was just north of four percent and taxes were low. And while some tout the last three months as the “Summer of Recovery,” our unemployed neighbors who are losing their homes would beg to differ. So would those who’s retirement portfolios have dropped over 40 percent. So would those of us re-examining our household budget.

Given that hindsight is always 20/20, we can look back and see where bubbles were and venture guesses why they grew in the first place. We can also look back and advise others about what to do and what not to do in a recession. The truth be told, the following 10 items should probably be avoided even in the best of times, but certainly in a downturn like we’re currently experiencing.

10 Things You Should Never Do In A Recession

1. DON’T take your job for granted

With real unemployment hovering above 16 percent (that’s one in SIX people), having a job right now is a blessing – even if you don’t particularly care for it. If your job is putting food on the table, allowing your to keep up with your mortgage and other financial obligations, be thankful and give it your all. Hundreds of thousands of unemployed folks would love to trade places with you.

2. DON’T take on additional consumer debt

In a recession, you should avoid consumer debt like the plague. Student loans? Maybe. Business loans? Possibly. Mortgage loans. Probably. Consumer debt and loans? Absolutely not.

3. DON’T co-sign a loan

In a depressed economy, co-signing a loan for someone is a recipe for eventual disaster. The reason someone needs a co-signer is that the lending institution believes that they won’t pay. If they don’t, the loan falls on your shoulders. Are you prepared for that?

4. DON’T get an adjustable rate mortgage

With the uncertainty surrounding everything from health care insurance premiums to how much your taxes will go up, getting an ARM loan isn’t very smart. An ARM puts the uncertainty on your back rather than the banks. Besides, with 30 year fixed rate mortgages at historic lows, it makes no sense to NOT lock in a historically low rate.

5. DON’T live beyond your means

Living within your means is THE mark of maturity. Learning to say no to today’s current desires with an eye on the future means evaluating what you think you want today with what you know you’ll really want in the future.

6. DON’T plunge into risky investments

I know all the investment gurus are fond of quoting Warren Buffett’s line – “ Be greedy when others are fearful and fearful when others are greedy” – but you and I don’t have the means to do the research he does, nor do we have the time and experience to invest like him. Go back and re-read How A Second Grader Beats Wall Street, simplify your investments and sleep better at night.

7. DON’T ignore your emergency fund

That emergency fund could very well be your lifeline should something happen with your job. Don’t ignore its importance and use the excess money from living below your means to fatten it up to about six or more months of living expenses.

8. DON’T have a single income source

In a recession, knowing how to make extra money can be the difference between thriving and barely surviving. Just a few hundred dollars extra per month can help you jettison debt, buy some groceries, meet your mortgage payment, or pay your medical bills.

9. DON’T buy a new car

If you need one, a used car is okay, but carefully evaluate your needs and do your best to remove the emotion from it. If your life was a business and you were the new CEO, would you authorize a new car? If you already jumped on a new car and you’re looking to get out of your lease, check out How To Get Out Of A Car Lease.

10. DON’T lapse your insurance

I’ve seen too many people get skewered by lapsing their insurance. It seems like some unforeseen conspiracy, but lapsing an insurance policy appears to be a sure way to guarantee a loss. Mostly I’ve seen this on car insurance, but health insurance as well as life insurance can also come into play.

What other things should someone NEVER do in a recession?

Photo by taberandrew

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What goals have you accomplished this year?

This is a wake up call.  The year is two-thirds over already.  It is hard to believe, but it is true.

Are there important targets that you have yet to hit?  If so, then it is time to get busy finishing up your goals.

What resolutions did you commit to at the beginning of the year?  Do you remember?  I’m not here to create guilt, but I do want to motivate.

The year is not over yet.  There is still time to dig out those dusty resolutions and goals that you were so passionate about just a few short months ago.  Why not review them now and make one last surge toward the finish line?

It Is Easy to Let Goals Be Forgotten

There are many ways of going forward, but only one way of standing still.
~ Franklin D. Roosevelt

Goals slip into the abyss very easily.  They slither away from us and wind up totally forgotten if we aren’t vigilant in pursuing them.

It happens to almost all of us from time-to-time.  I’ll admit that this wake-up call is as much for me as it is for you.  Someone else rang the alarm bell for me this past weekend reminding me that the year was two-thirds over. 

As a result, I stopped for a moment to think, “What are my goals for this year?”

It is always good to review your goals for the year at least monthly to make sure you are still on track and to be certain you remain mindful of what is most important to you.

Standing still is lethal in today’s world.  It makes life stale, boring and it puts you in danger of losing your job, health and prosperity.  You’ve got to keep growing to stay alive.

Get Moving Toward Your Goals

People generally fall into one of three categories when it comes to achieving goals.  Let me address each category individually with some advice for those that need it.

Here are the three categories of people relative to goals:

1.  Goal Achievers

There are those people, albeit a small few, that set goals, stay focused on them and accomplish what they’ve set forth to do.  I call these people, not surprisingly, the Goal Achievers.  If you are in this group, then I’d like to congratulate you for your discipline, perseverance and, oh yeah, your tremendous success!

This is the group we should all strive to join.  They are the truly wealthy not the ones just pretending to be rich.  They have the best jobs, nicest families and go on the most exciting adventures.  How is it that they have all the things others desire?  Because they set meaningful goals for themselves that focused their efforts.  They then worked diligently to achieve their goals.  Hopefully, you are already a member of this group, but if not, please read on.

2.  Goal Neglectors

The second group is what I call the Goal Neglectors.  This is probably where the majority of people fall.  You might even be one of them.  The Neglectors at least occasionally set goals or verbalize resolutions, but their attention and resolve soon fades.  Within a short timeframe they generally completely forget whatever it was that they wanted to do.  It could have been losing weight, paying off debt, starting to exercise or increasing their education.  Whatever it was, it is soon completely neglected and mostly forgotten.

If this is where you find yourself two-thirds of the way through the year, then don’t despair.  Feeling guilty and beating yourself up won’t accomplish anything.  Instead, I recommend following my 5 Steps for Rejuvenating Your Goals and Resolutions.  I wrote this earlier in the year, but if you missed it and find that you are neglecting your goals or resolutions, then it should help you get refocused and headed toward being a Goal Achiever.

3.  Goal Lackers

Okay, the final category is the Goal Lackers.  As you might have guessed, these are the folks that don’t really have any goals or direction set for their lives.  They are floundering in a sea of aimlessness wondering, “Why does opportunity seem to always pass me by?”  They often believe they are the unluckiest souls on Earth.  Of course, what they fail to realize is what Thomas Jefferson put so eloquently, “I’m a great believer in luck, and I find the harder I work, the more I have of it.”  Setting goals and working hard to achieve them is the best way to improve your circumstances.

I doubt many of the Lackers are reading this, but just in case you are one and want some help or maybe you know one that you want to pass this along to, I’ll offer some advice on getting started with goal setting and personal improvement.  In fact, I’ll give Goal Lackers a framework to follow to develop meaningful, personal goals.  These Five Steps to Self Improvement work every time.  How do I know?  Because I’ve used them myself to develop goals and achieve greater success.

Wake Up and Achieve Your Goals

If you want to live a happy life, tie it to a goal, not to people or things.
~ Albert Einstein

Goals are extremely important to living a happy, fulfilling life.  However, we often fall asleep to our goals.  We doze off and forget them.  With the year two-thirds of the way over, an alarm is going off.  It is time to wake up, jump up and get going!  If I could reach out and gently shake you right now to bring you back to reality, believe me I would do it.  Please let this serve as your wake-up call.  A great life is out there.  All you have to do is go get it.

Photo by koka_sexton

Related posts:

• New Year’s Resolutions: Seeking Good Advice and Ideas
• 5 Steps to Rejuvenate Your New Year’s Resolutions
• How To Keep Mindful And Committed To Goals And Resolutions

It’s easy to feel ripped off when it comes to car insurance. Different rates in different states just doesn’t seem like a credible business model to most consumers, but each state has its own laws and its own insurance commission. Still, the variation is HUGE — from over $2,500 per year to a low of $900 per year. What isn’t easily seen in the table below is the variation that can occur between companies within the same state.

The fact is, each company has its own actuaries and statisticians and though state insurance commissions set maximums on what insurers can charge, markets are still allowed (for now) to determine how low the companies can go before they cry “Uncle!” It’s up to you and me to make certain we’re getting the lowest rate from the best insurance company we can find.

Where does your state rank?

Annual Car Insurance Rates by State

After you see what your neighbors are paying, make sure you’re getting your best insurance rate by getting a free quote from reputable companies like:

• Insureme.com
• NetQuote.com
• Esurance
• AARP Insurance (The Hartford)
• Allstate

Links to products or services may be affiliate links. See my disclosure policy in the footer of the site or on my About page.

Welcome to the first installment of the Married Money Management series here at Engaged Marriage where we will be looking at the keys to financial success for married couples.  Please be sure to subscribe by email or RSS so you don’t miss out on the tips, strategies and personal experiences that will be shared over the next nine (or more) weeks.

The first and most important step to achieving financial success in your marriage is to make a budget.  Put simply, a budget allows you to tell your money where to go instead of wondering where it went.

Some couples are reluctant to create a budget for their household finances because they think it’s too difficult, too confining or they honestly just don’t want to know how poorly they’ve been handling their money.  While I can definitely relate to these feelings, the fact remains that creating a budget and living with a plan are absolutely essential.

Our First Big Mistake!

In the first few years of our marriage, we thought we could live just fine without a budget.  Believe it or not, I actually read Dave Ramsey’s Financial Peace right after we got married when a co-worker suggested I give it a look.

Well, I loved the book and thought Dave’s advice was excellent.  We decided we’d try some of his strategies…but we thought we could do it without bothering with a budget.

We’ll get much deeper into our own story as this series progresses, but suffice it to say that doing things our way resulted in the accumulation of more than $54,000 in debt and years of unnecessary financial stress.  Knowing what we know now, this is really frustrating.

In hindsight, it’s very easy to see where we went astray.  We skipped the most critical step in the journey to financial peace. We were too stupid and stubborn to create a budget for our household.

Please don’t repeat our mistake.  If you desire more financial success, you must have a budget!

Budgeting Basics

Based on the reactions I’ve heard from both close friends and Engaged Marriage readers, I know that some couples are intimidated by the idea of a budget and feel that it’s too complicated or cumbersome for them to take on.  Please know that a budget can be as thorough or basic as you decide to make it.

Basically, a budget is a summary of your financial “ins and outs” during a given month.  You just write down all of your income for the month and all of your expenses and you have a record for that month.  When you use that information to plan ahead for the next month, you’ve got yourself a budget!

This can literally be as simple as writing down your income and expenses on a sheet of paper.  The key is to track your expenses for a few months so that you can accurately project your needs for the next month.

The most basic way to do this is to keep receipts for all of your expenses for two months.  You can then use this information to establish a baseline in your spending habits.  Take a look at these habits and decide if and where you need to make cuts to meet your goals or if you need more income.  Put the revised spending and/or earning amounts down on paper to plan for the next month, and your budget is all set.

A budget does not have to be complicated or overly detailed.  It must account for every dollar you earn and spend, and it must be agreed upon as a couple.  Aside from those two basic rules, it can take any form that you desire.  And please note that it will likely take several months of trial and error before you zero in on an accurate budget.

Bethany and I used homemade Excel budget spreadsheets and manual tracking of our receipts for several years.  It worked just fine, and it provided the information and motivation that we needed to attack our debt and live within our means.

We have since “graduated” from those manual efforts and realized the power and (awesome) simplicity of using budgeting software.   I’m now convinced that this is the best solution for most couples, but I also can’t discount the progress we made with our more intensive, handmade methods of budgeting.

Budgeting Tools Are Your Friend

There came a time after we became debt-free that we found ourselves slipping back into old habits and getting sloppy with our budget. It was then that I decided it was time to look into options beyond our Excel spreadsheet and keeping a receipt for every purchase we made to track our spending.

Frankly, we had become so busy and bored with this approach that we would sometimes get a month or two behind in tallying up our spending and fail to even plan ahead, which defeats much of the purpose of budgeting.

Even though we used these manual methods of budgeting to get out of debt and meet other financial goals, we decided it was time to use technology to our advantage and make our efforts more sustainable.  I tried out most of the popular options for budgeting software and wrote a review based our experiences.  I encourage you to read my budgeting software reviews and see which option fits your family’s needs.  Any of these options (free or premium) make it so much easier and less time consuming to get your budget working versus doing it on your own.

After a lot of research and trials, we found that the best budgeting tool for our family is a software called You Need A Budget.  I can’t say enough good things about YNAB, and they now have an iPhone App available and an Android App under development to make it even easier to track and plan.  If you think that budget software would be helpful in your situation, please take a moment to read my full review of You Need A Budget based on our experiences.

If you decide to give YNAB a try, you’ll be able to get started on your budget today by importing your electronic transactions from the past two months to know where you’ve been with your spending.  As a couple, you can then decide what needs to change, quickly set up a plan for next month and then start following it.

You could literally have your budget ready to go in a matter of a few hours using this technology.  While premium software like this is not free, we’ve found that it’s money well spent.  In most cases, you’ll save much more than the software cost simply by getting started and tracking your spending, earning and saving habits.

Budgeting Benefits for Your Marriage

The benefits of budgeting within marriage actually go way beyond laying the foundation for financial success.  Budgeting your money can actually be an awesome way to enhance the communication and trust in your relationship.

Build Communication

If you are married, both spouses should have input in the budgeting process.   This is really a critical component of any budget that is actually going to work, which means that it is respected and followed by the entire family.

After all, why would you follow a plan that you may not agree with or that you feel has been forced upon you?  This is why communication is key to the budgeting process.  You and your spouse need to sit down together and discuss your financial goals and decide in advance how you want to use your money.

This doesn’t mean that you have to combine all areas of your financial life or change the way you spend money.  While there may certainly be value in doing so, you can build your budget to accommodate joint or separate bank accounts, cash or credit card spending, and frugal or extravagant spending habits.

After all, this is your budget designed for your particular family’s situation.  You are in control…together.

It’s also totally fine if the “nerdier” spouse wants to create the draft budget and then get input from the other.  But there must be input and “buy-in” from both husband and wife that the final budget is a spending plan that they agree to stick to.

Again, this could be a plan to spend beyond your means and rack up crazy amounts of debt.  I hope it’s not, and most couples don’t plan to go deeply in debt, but the point is that you will communicate about your goals and decide together how to use your family’s financial resources.

That is the real beauty of building a budget for your own family and your own situation.

Build Trust

After you’ve sat down together and figured out your spending plan for the coming month, it’s time to put your money where your mouth was and spend as you have both agreed.  When a budget is in place, you can feel good about spending as you have planned.  However, you’ll have accountability to deal with when you are tempted to go astray.

Think back to the last time you spent a lot of money on something impulsively without talking to your spouse first. Was it part of your overall financial plan?  Did you have a bit of buyer’s remorse afterward?  How did your spouse react when they found out about your big purchase?

You and your spouse create the budget and you control what it says.  However, once you agree to it and you commit to each other that you’ll stick with the spending plan, you have an ongoing promise to your spouse to uphold.

That doesn’t mean that you can’t buy something that’s not part of the budget.  However, it does mean that you need to give your husband or wife a call to make sure they agree there’s good reason to change your mutual financial plan to accommodate it.  And the two of you can decide on the limit where the other needs to be consulted when a “spending audible” gets called.

Simply put, it means that you must trust your spouse to be financially responsible, and you must hold up your end of the agreement to them as well.

Communication builds a budget and trust makes it work.

Go Take The First Step Today: Build a Budget!

Regardless of whether you decide to start with a pen and paper or a software tool, the most important takeaway from this post is that you must have a budget.  It’s vital for your financial success, and it’s a valuable marriage-building practice as well.

If you already have a budget, that’s fantastic.  Take some time to review it together and decide whether it still meets your needs and financial goals.  If you don’t have a budget yet, please do your marriage a favor and go get one!

After all, it’s the first step to effective Married Money Management.

(photo source)

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Related posts:

1. Marriage And Money: How To Improve Communication And Minimize Money Fights
2. Holy Crap! I Eat Out A Lot!
3. Budget Software Reviews: Choose Your Tool for Successful Money Management

The recent downturn in the economy has had an effect on more than just consumers. Governments are desperately seeking money for their spendthrift ways and one way to insure they get it is to regulate cash transactions. It appears that governments would like to do away with cash altogether, making hard currency something only seen in museums. Certainly, the death of cash as we know it would make tracking transactions a lot easier for governmental agencies.

In the United States, large cash transactions aren’t banned yet, but there are severe penalties (read: significant jail time) for failing to report a large cash transaction. For example, your bank is required to file a currency transaction report with the federal government for every deposit, withdrawal, or exchange over $10,000 in cash. Some banks voluntarily lower that amount – some are as low as $3,000, presumably to stay on the good side of the IRS. Basically, if you sell your car for $10,001 in cash and then try to deposit it, the bank has to turn you in to the government; sell it for only $3,001 and they voluntarily turn you in. “Have a nice day!”

Additionally, if a bank “knows, suspects, or has reason to suspect” that a cash transaction over $5,000 is “suspicious”, then a suspicious activity report must be filed with the government. I guess the bank has to act as FBI agents as well as snitches.

But the reporting requirement goes beyond just banks. Small businesses have to report  those same cash transactions as well, and thanks to the “health care bill” recently passed, those reporting requirements extend all the way down to $600. As Jeff Schnepper explained in an article for MSN Money, if you are in business and receive in excess of $10,000 cash in a single transaction, you must report it to the IRS or you will go to prison. According to Schnepper, cash used to be king but now it’s evidence.

If you’re in a business and receive more than $10,000 in cash from a single transaction, or from related transactions within a 12-month period, you have to file Form 8300 and report the buyer to the IRS. Don’t file, and you go to jail.

The IRS isn’t kidding. I had a client who was a dealer in Corvette sports cars. He told me he didn’t have time to file the forms. I told him several times to file. He thought he knew better. He went to jail. So did his children who were involved in the business.

US gold transactions must also be reported

ABC News has reported that ANY gold transaction in excess of a paltry $600 must now be reported to the IRS. That $600 figure doesn’t just apply to gold either. All businesses, large and small, are now responsible to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals. That tracking has an expense and it will be born, not by the business, but by the consumer, as all business expenses ultimately are.

Large cash transactions in some countries are banned

Yep, believe it or not, more and more countries are orchestrating how almost all business is transacted by making large cash transactions illegal.

Italy

As part of Italy’s new “austerity measures”, all cash transactions over 5,000 euros (approx $6,400 USD) will be banned.  Passed in the name of cracking down on tax evasion, this seems quite severe to me when you consider that it also applies to cashier’s checks.

Mexico

A bill before the Mexican legislature would completely ban the purchase of real estate in cash. In addition, the new law would ban anyone from spending more than MXN 100,000 (about $7,659) in cash on vehicles, boats, airplanes and luxury goods. $7,659 isn’t a whole lot of money when it comes to those types of items. Don’t think you can just ignore this law if it is enacted.  Violators will face up to 15 years in prison.

Currently, 75% of all transactions in Mexico are completed in cash.

Europe

In Europe, many of the “austerity packages” being introduced include severe restrictions on the use of cash. For example, in Greece, all cash transactions above 1,500 euros ($1,923 USD) are effectively banned starting in 2011.  According to Greek Finance Minister George Papaconstantinou as reported by Reuters:

“From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards.”

With Visa and MasterCard getting a cut of every card transaction, think of the money they will make in Greece alone.

Cash is ABNORMAL

Anyone using cash, especially large amounts of cash, is looked upon as abnormal and suspicious. We’ve been taught for three decades that anyone spending a large amount of cold hard cash is trying to hide something and is probably a criminal or tax cheat.

Certainly, a lot of criminals do use cash exclusively, but millions upon millions of normal, law-abiding citizens simply prefer to use cash as well.  Should we take the freedom to use cash away from the rest of us just because a small minority abuses it?

Unfortunately, the freedom to use cash is being slowly stripped away from citizens in an increasingly large number of countries, not just to clamp down on the criminal element, but to pad the coffers of inefficient and spendthrift governments.

Photo by net_efekt

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