During this difficult economic downturn, there are several ways you can ensure your money is safe. Here are five tips you may like consider:
1. Since the FDIC has increased its insurance amount from $100,000 to $250,000, it may be a good idea to check with your bank to ensure your deposits are covered. And for those of you who have money in banks that have either merged or have been taken over by the government, note that they have specifically indicated that they will continue with the same practices and would notify you of any change.
2. Now is a good time to sit down with your family and tweak your household budget if you have one, or plan a family budget if you do not. Obviously, you will want to ensure that you do not incur additional debt, and you may therefore wish to take measures to decrease the amount of money you allocate to each specific item.
3. Begin calling your credit card companies and telephone company to reduce interest rates with the former, and decrease specific items you do not really need with the latter. This could include items such as call waiting, caller ID, unlisted numbers and so on. If you have a landline phone at home and find you are using your cell phone more often than not, you may wish to cancel your landline service - or at the very least, suspend the service for six months.
4. If you have money saved and wish to compound the interest rate, it may be a good idea to transfer monies from your savings account to a CD. Check several banks to determine how much interest rate they are offering and choose the best one. Keep in mind, your CD is also protected by the FDIC.
5. Keep contributing to your 401K plan. Even though you may have suffered a loss, the fund will continue to grow as your 401K provider will be able to purchase stocks, bonds, and mutual funds at a very low rate. This will serve you well later on when the market rebounds.
Finally, remember that everyone is affected by this economic crisis. Don’t panic! Don’t rush out to your bank and withdraw your money. And if you have stocks, now is not the time to sell. The market will get better as time goes on.
Also, in light of the increasing number of job losses, you may want to put aside enough money to cover you for the next 18 months or so. Although economists predict the stock market will be volatile for the next five quarters, it may take a while for the rescue plan to take effect as the world banks are working hard to alleviate the economic problems by infusing money into banks.
Now is the time to watch every penny spent and make necessary adjustments to your lifestyle and household budgets as well.
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Here are some of the easy savings wins I just accomplished:
Cancelled HBO, which we hardly watch anymore ($10 month / $120 year)
Switched our phone and Internet to Comcast ($40 month / $480 year!)
Reduced our childcare by 3 hours per week ($150 month / $1,800 year!)