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

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Lately I have been speaking to many perspective clients who aren’t having their best year this year. As I’m listening to them, I’m wondering why don’t we have our best year every year? What I’m hearing leaders and business owners say is that the economy is bad, we’re in a recession, gas prices are too high, my company is restructuring and the list goes on. For many of us life is punctuated by difficult events that we believe we can do little about. Many of us and our teams are left feeling hopeless and out of control.

Just last week I met with a company who wanted some time management and effective meeting training. They had brought me in because employees were feeling overwhelmed by the number of meetings they were attending and in turn they believed they did not have time to do their ‘real’ jobs. The more I spoke with different members of the organization, I realized that this company had a belief that was holding the entire organization back and causing stress and burnout throughout all levels. This belief was “drop everything for our most important clients because we are dependent on them.” Now when this organization first started 5 years ago, that belief was perhaps valid and it got them through some hard times. But today, as they are continuing to grow and build their client base, that belief is causing problems.

So what CAN we do? While there are forces outside of our control, sometimes I think it is easier to blame those forces than to look inside ourselves, our teams and our companies and reflect on what stops us from having our best year yet DESPITE those events that we can truly do little about. But there are things that we CAN control – it’s just that we don’t always take the time to get a grip on them.

So here are five things you and/or your team CAN do that, when done with consistency, will transform your results:

1. Learn the lessons that life offers you: I speak often about the Cycle of Productivity which explains how something goes from creation/idea stage to completion. The 4th stage of the Cycle of Productivity, and I believe the most important, is the 4^th stage in the cycle – Acknowledge. Acknowledge means to take a step back and review what has happened in the past, both the successes and the disappointments. When an individual or a team takes the time do this, what they find in the process are those lessons, that when applied to new situations will transform the result. Maybe the lesson learned is to trust your instincts. Maybe the lesson is to never let the customer down. Maybe the lesson is to focus on relationships. Whatever it is, take the time to learn the lesson and review them on a regular basis to ensure the lesson isn’t lost.

2. Deal with the things that hold you back once and for all: Sometimes the things that hold you back are tangible like poor computer systems, high turnover rates, and bad accounting systems. But more likely, what is really holding you back are the beliefs that are running your company culture or in the case of an individual, your mind. How do people think in your organization? As an individual, what thoughts run through your mind on a daily basis? Do you have beliefs that stop you from getting the results you need? Maybe there are beliefs that you don’t share information. Maybe it’s normal in your team to criticize those in another team. Have you noticed that it’s ‘okay’ not to perform up to expectations. Do poor performers get rewarded? Do you think you don’t have the time? Often our beliefs are not readily apparent to us – hey, we live them every day. But taking a step back and becoming aware of the thoughts and beliefs that are ingrained in your culture or your own head and then dealing with those that don’t help you get results, will go a long way to ensuring your success.

3. Live your values. This is the principle that most people would say is common sense, but what I know is that it isn’t common practice. So many individuals and organizations state their values – Customer Service is number one, live in integrity, honesty is the best policy – but their ACTIONS go against those values. Why is living your values so important to transforming results? Our values are the standard by which we make decisions and take action – they reflect what is most important to us. Defining strong values and living them allows us to evaluate our actions to make better decisions – those decisions that are important to us. To live your values you need to review them regularly, tell the truth about what must happen to improve the alignment between what you are doing and what you believe. When you do this, you deliver on your promise.

4. Focus on what is really important: The demands and complexities of the real world pull you in many directions. By gaining clarity and focusing on what is really important – the vital few goals that you need to achieve no matter what – you will be guided to make the best choices about how you spend your time and energy. How do you determine what is really important? First look to your values. Then take time to determine what will really engage you and your team, what will move you closer to your overall vision and mission, which would the rest of the organization or our customers care most about, which offer the best return on your investment of time, money and energy. What will make the greatest difference?

5. Adopt a process for accountability. When I work with clients, we have something called a say/do ratio. In other words, what is it that you say you are going to do and what actually gets done. My clients strive for at least an 80% say/do ratio. In order to do this, you need a system or process to ensure that people take personal responsibility and are accountable for their results. A Harvard Business Review article titled “Turning Strategy into Great Performance” states almost 15% of the total average performance loss is due to poor accountability systems. Issues such as actions needed to execute are not clearly defined, there are unclear accountabilities for execution of strategy, inadequate performance monitoring and inadequate consequences or rewards for failure or success are cited as reasons for the loss. What can an individual or company do to help? First of all, create plans that are clearly defined and ensure there is alignment on your values and your mission. Ensure the plan is communicated to everyone. But the most important discipline is to review the plan on a routine basis – at least monthly. Review goals and track your say/do ratio. Review the lessons you have learned and make sure that actions being taken are in line with your values and your focus on what is most important.

By consistently applying these five principles above, you CAN do something about your results despite everything else that is happening around you and your team.

Kimberly Kniveton is founder of Ascent Coaching & Consulting (www.ascentcoach.com). With 14 years of organizational development, training and coaching experience, Kim supports others on gaining focus, clarity and most of all, results in what matters most. Her clients comment that her fun, positive and engaging personality all contribute to helping individuals and organizations achieve success year after year. Kim has a BA in psychology and communications, obtained Her MBA in 2000 and received her coach specific training from CoachU. She is an ACC certified coach with the International Coach Federation, a certified member of the 6 Seconds Emotional Intelligence Network, qualified to various assessment tools, and is licensed to run both team and professional Producing Results programs with Best Year Yet. Kim is on the adjunct staff at the University of Utah Professional Development Center and sits on various board positions including the local chapter of the ASTD and the Utah chapter of the International Coach Federation. Kim’s passion is supporting changes that make a difference!

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