Recession Actions, Now!
By Cindy Morus

Recession is Coming! Recession is Here! Are we in a Recession Yet?

I’m sure you’ve seen and heard headlines just like this.

Regardless of whether the US economy is in a Recession, your family may be in one. Has your income stayed the same or even shrunk over the last year or two? And we know energy, food, housing and taxes are all increasing. This combination could mean that your family is in a Recession.

Recessions are as important to an economy as the boom times just like a controlled burn improves the health of a forest. During recessions, weaker companies are weeded out and companies who make it through are stronger for the next boom time.

Furthermore, even if the economy is booming, you can be going through a personal recession due to job or lifestyle changes such as a new career, starting a new business, leaving the workforce to take care of a family member or a medical condition.

What should you do?

On the Home Front

1. Reduce or eliminate the non-essentials. Act as if you are on a desert island. What would you really need to be there? Be brutal and leave no spending unexamined. Newspapers, groceries, telecommunication services, personal grooming, transportation – can any be postponed or eliminated?

You can start by reducing expenditures rather than completely eliminating them. For example, when I looked at my newspaper cost a couple of years ago, I decided it just wasn’t worth it but I so enjoy the Sunday paper that I kept it. Now, I’ve canceled it altogether and when I have the urge for the Sunday edition, I walk to the grocery store and pick one up.

Keep a Needs/Wishes list so your subconscious mind isn’t constantly reminding you. When you do have extra money, go for the needs and save up for the wants. This is a good habit to get kids to develop, too..

Note: you’ll want to involve your family or you’ll feel like the Enforcer if you make all the decisions. And, when offered the opportunity, kids can be very creative. Try to make it a game rather than making the kids feel like they’re in the poor house.

2. Review all insurance policies. Get appropriate insurance for the best prices. Life insurance, for example, has come down in price over the last few years so you may be able to get equal or more coverage for lower cost. Increase your deductibles if you are able to pay more out of pocket. Make sure your insurance shows that you have alarms, air bags, or a home security system.

3. Request rate reductions from on your credit cards. Yes, some credit card companies are lowering rates but they don’t do it unless you ask. If you hear NO, ask for a supervisor or ask when they would be able to do it for you. You can call in again later if you don’t get the answer you are looking for.

4. Refinance your car. Believe it or not, this is possible. One of my clients purchased a new Prius last year and the original interest rate was a whopping 12.45%. As soon as she started coaching, I suggested she refinance it and she was able to get it down to 8.45%. Just last week, she refinanced it to 6.45%!

At Work

1. Protect your current job. Find out if there’s any additional training you can participate in. Let your boss know you are ready and willing to take on new responsibilities. Look for opportunities to reduce expenses, improve customer service and offer more value to your employer. Take outside courses, read books or learn more online – keep yourself up-to-date on happenings in your field. Try copying articles to your boss that would be interesting or helpful and make a comment or two about how it relates to you.

Attend and participate in at least one professional organization. Offer to be the greeter so you can chat with everyone that attends. See how you can offer value to other members.

2. Think of yourself as a contractor. Gone are the days of lifelong employment. Your employer will keep you around as long as they get more out of you than you cost them. You should be thinking the same way; if you’re growing in your profession and earning a salary appropriate to your skills and talents, then stay with your current employer. But always be on the lookout for better opportunities. Your loyalty is to you and your family. Always keep your resume fresh and your ears to the ground. Read your company’s annual report (and others in your field) and set up a Google alert so you can be informed and watching for current news about your employer.

3. Change your income tax withholding. Did you get a refund this year? If so, you can increase your monthly take-home pay by reducing the amount taken out for taxes. The average family gets about $2000 back and that’s $166 per month (just for federal). Of course, you have to remember that you won’t get a refund next year. You should target paying exactly what you owe. Check out the IRS withholding calculator for an estimate. You can change your withholding any time you want. Note: if you are working several jobs, add all the income together and do the calculation.

4. Check your benefits. Make sure you are taking advantage of all that your employer has to offer – health care and health care savings accounts, retirement contributions (you and your employer), education assistance for you, scholarships for your kids, child care accounts, etc. If you have a health care savings account, review what is a covered expense and make sure you don’t lose anything you’ve contributed.

5. Continue funding your retirement. This should be one of the last things to go because retirement is inevitable and the longer you have your money in a retirement account, the more it grows. $10,000 in a retirement account for 10 years at 7% will be approximately $20,000 but for 20 years, it will be about $40,000 and 30 years will be $80,000 — and it will be even more if you continue to contribute. If you must stop your contributions, restart as quickly as possible.

When all else fails…

1. Contact your car loan holder or mortgagor and ask for an extension. If they say YES, they’ll extend your loan by a month and will probably ask you to cover the interest for the month. This will increase your total costs but it’s better than having your home foreclosed or your car repossessed.

2. Get counseling. Talk to Consumer Credit Counselors or a Mortgage Counselor. Watch out for scams in this area. Above all, don’t ignore your creditors – you’ve promised to pay and they expect you to do so. But they’re used to dealing with people who are struggling and most have programs that can help you out of a temporary jam.

3. Consider borrowing from your 401k. You will have to pay it back over 5 years so if you’re already having trouble making your payments, this one isn’t for you. For example, if you borrow $50,000 at 4% interest, your payments will be over $900 per month after taxes so subtract $900 from your current take home pay. Can you afford that? Plus, if you are laid off or leave your job, the entire amount will be due or it will be taxable (see below).

Don’t you dare…

Raid your retirement accounts. The government heavily discourages you from doing this by tacking on any withdrawals to your income (you pay taxes on the amount and it could push you into a higher tax bracket) plus a 10% penalty. One of my clients took $40,000 out of their 401k last year and it pushed them into the 35% bracket. So out of the $40,000, they paid the IRS $14,000 in additional income tax plus $4,000 in penalties and that was before the State got them (another 9% in Oregon or $3,600). In the end, they netted $18,400! And since they didn’t have enough taxes withheld from it, they’re in hock to both the IRS and the State.

One final note…

Have you ever noticed that the more you focus on the negative things around you, the worse things seem to be?

The good news is that you can choose to do just the opposite! If you focus on all the wonderful things in your life, guess what you get more of? Exactly! Wonderful things.

So while you’re out there breathing anyway, see how many things you can find in your life today that are wonderful and focus on them. Think of family, friends, home, a job, your health and more! (This is another great thing to teach your kids).

Money Mender, Cindy Morus, is a leading authority on showing you how to achieve and enjoy financial well-being and peace of mind. Get a copy of her latest report at http://www.MendYourMoney.com

Article Source: http://EzineArticles.com/?expert=Cindy_Morus
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Why Businesses Fail

By Carolyn Clayton

There are many different reasons business fail and much of it is debatable but there are some common mistakes that are detrimental in business failure.

Some of the reason many business fail are due to the following reasons:

• Overexpansion.

Many companies over expand too soon. They look at the books and see 3 months of good sales and profit and think right let’s get more staff. Then another 6 months down the line the profits have not followed suit which leaves you in a difficult situation. You need to stick with realistic goals and allow yourself to grow as needs dictate. And old saying ‘don’t not run before you can walk’ is relevant. You need to look at the statistics and watch for trends. If sales and profits looks good now it’s doesn’t necessarily mean it will look good tomorrow.

• Overspending and lack of reserve funds.

Overspending can have detrimental affects. You should only spend on what is necessary. Be realistic, just because you have good cash flow at the minute doesn’t mean you will have in the future. Ask yourself is purchasing this item really necessary, will it make a real difference or not. Look at all the costs of the business and if some are not necessary then drop them. Having money in the bank is important to carry you through market downtrends and seasonal slowness. You should always be prepared for fluctuations in business. You should always put money away in boom times to prepare for the slow times.

• Poor management

Poor management is one of the main reasons business fail. If you haven’t got happy customers and happy stuff your business is almost curtain to fail. Poor customer service, poor accounting and overall employee incompetence can all combine to collapse a business. You need to ensure your employees realise the importance of good customer service. Establish protocols for how tasks should be accomplished and ensure they are carried out. Many companies these days have a relaxed attitude and don’t place to much importance on carrying out basic good management practice. Having meetings regularly with all staff will help your business run smoothly. If no meetings take place then resentment can set in. Everyone needs to air their opinions and explain how their job could be done more efficiently.

• Poorly treated Staff

Labour is the biggest expense for most small business so it makes sense to ensure your company employs the right amount of people and treat them correctly. Companies that invest highly in their staff by offering training and advancement will find it easier to keep their staff. Ensure you pay your staff every month on time as not to do so would be breaching your contract with them. Invest in your staff; they are your biggest asset. If they feel they cannot advance in your business they will not stay long. Listening to your staff is important. If employees are leaving you need to be asking why. Treat your staff how you would expect to be treated and you will gain respect from them and get the best of out them.

• Poor or no business plan

Having a good business plan is your key to success. A well-thought-out business plan forces you to think about the future and the challenges you’ll face. As long as your forecasts are realistic and you have done plenty of market research you should be ok. Ensure your plan has a budget and stick to it.

• Dishonesty and Greed

Being dishonest will catch up with you eventually. Remember your ethics, try to treat your customers and staff as you would be expected to be treated. Don’t charge the earth for customers just because they look like they can afford it, this is exploitation and will come back and bite you on the bum. Greed is another aspect that kills businesses. You feel like you’re on a roll and feel invincible so you over charge people and promise them the earth. When you can’t deliver you will lose customers and eventually your reputation. Always be honest and ethical and you will reap the rewards.

There are other reasons business fail and I have only touched base on some. As long as you work hard, do plenty of research, treat staff and customers with respect, keep a tight control over your accounts and leave your ego at home you should be alright. Oh and most importantly use common sense. You would be surprised at how many business owners are egotistic, arrogant with no personnel skills and very little common sense, these business are bound to fail eventually.

Carolyn is the webmaster of Angel Startups, specialists startup funding, business grants and Business Advice.

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