Tuesday, October 14, 2008

The Economy Needs a Hug

Seriously, the economy needs a big ol' hug and a band-aid right now!

In other news... hi everyone...yikes, I've been gone for a while!

But I'm back for now with some financial tips.

The economy has taken a beating in the past few months. My friends and I have been watching our 401ks go UP and DOWN and UP and DOWN... not fun and very confusing.

So I decided to go out and educate myself. I started reading financial blogs, magazines, and websites. I started speaking to financial advisors (off the record of course) and money market brainiacs. And of course, I broke out my Suze Orman guide... just to see what she thinks about stuff like this!

All in all, my sense of the economy is still up in the air ... but I feel a lot more knowledgeable about my situation.

*disclaimer: please take this with a grain of salt. Do your own research and speak with your own advisors. As my lawyer says - I am not responsible for any of the decisions you make (smile)!*

One of my favorite blogs right now is Bargaineering. It's a "average joe" website for your average spender/budget. It's a great place to discuss "discuss matters of shopping, insurance, investing, retirement, loans, credit cards, mortgages, bargain hunting and other issues related to personal finance." Check out the articles section which is chock full of great discussions.

Another piece of simple advice - make sure all of your funds are FDIC-insured and under the cap ($100,000 or less, wow!). Unfortunately, stocks are not FDIC-insured... but certificate of deposits (cds) are!

Well what else have I done to pad myself for the economy? A while ago, I opened an ING-Direct orange savings account... and invited my friends to do the same. For every friend that signed up, I received $10 and they received $25. Pretty cool huh? But more important - the ING-Direct orange savings has automatic deductions and is FDIC-insured. I call that account my "rainy day" fund and the interest rate of return is great.

Sometimes I'm tempted to take out the money... but then I remember that this is a long term process... and that I need to be patient. FYI - ING CDs are at a 4.25% annual percentage yield if you deposit for 24 months or 60 months... which means if you deposit $1000 in a 24 month CD, you'll earn $42.50 per year just for leaving it alone!

So what else?

The common sense approach is my favorite - cut back on spending. Take a good hard look at your day-to-day expenses. A financial advisor friend recommended that I keep a financial diary - either a written account or an excel document that tracks spending. Am I spending too much on takeout food? Too much on shopping? Too much on travel and gas? Figure it out and cut back!

So keep smiling my bougie ballers... times may be hard but we will make it through... and learn a lot in the process!


PS - If you really feel the need to invest right now... Bargaineering has some great starter codes... some as high as $50!


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