Hold My Feet to the Fire!

During an economic depression there is a great deal of wringing of hands, beating of breasts, and soulful lamentations.  This is cool, but it doesn’t get anything done.  That’s why I decided to title my first eHow post “How to thrive during the current economic depression.” While the article is a tongue in cheek list of three things to do to take advantage of the depression the basic point is very salient; don’t let the air of negativity and, well, depression get you off track from implementing your plan to realize your dreams.  Many great opportunities arise during a depression and, if you have an economic plan in place and are following it, you, the positive thinker, will find that silver lining.
Keep the destination in mind at all times
Lewis and Clark didn’t cross the great plains and the Rocky Mountains only to get to the Cascades and say “forget it, this is too hard, let’s just go somewhere else!”  No, their destination was the Pacific Ocean and they would cross whatever river or valley and climb whatever mountain it took to achieve that aim.  We all have obstacles thrown in our paths and are forced to rewrite plans, that’s part of the adventure of it all!  When you chart your course and set sail make sure that you stay the course.
Have a Plan
The best plans for people with goals and ambition are simple, automatic, and efficient in that they don’t distract you or take up precious time that you need to fill your dreams.  Have a job?  Simple, 10% of your wages are direct deposited into a savings account, 10% are direct deposited into your four-o-something plan where they are invested in an index or target fund, and the rest is gravy.  Want to do more and that?  My wife and I save much more but we still have the automatic plan in place.
What if you’re self-employed?  Then it truly is more difficult because many self-employed people or business owners experience huge variation in their incomes and are funding their own benefits.  Well, you could plot the standard deviation of your monthly income and then develop a cool and complex formula as far as how much cash you’ll need, or you could follow the same rule as for the wage-earners above only factor in 50 to 100% more in savings.  It’s a basic rule of finance, the higher the risk for a certain outcome than the higher the reward needs to be.  Only in this case you are offsetting your more risky income by keeping a higher cash reserve.  Also, for the love of all that is holy, please diversify!  In my job, in the current economic climate, I get so many clients that say “if I lose my business I lose everything” and, of course, by then it’s way too late.
Make like an Eagle Scout and be prepared
If your plan is in place and quietly accumulating you savings, then you are already a long way toward being prepared.  But what about being prepared in a strategic an emotional way?  If you lose your day job or your biggest client dumps you tomorrow at 8:15 do you know what you’ll be doing at 9:00?  Be prepared to make that switch; know what costs can be cut and plans that can be put on hold and what else can be done to make up for lost income.  This isn’t something to obsess over but rather more like those candles and emergency numbers you keep in a drawer, they give you peace of mind and, in the event of an emergency, sense of purpose.