Another crazy week. . .and some common sense tips

A whirlwind of activity over the last few days. I won't bore folks with the trials and tribulations of a certain bank here in Charlotte, but the global financial meltdown has accelerated. Headlines from just the last three days:

- Congressional budget estimate that $2 TRILLION dollars have been lost in retirement savings in the last 15 months

- Iceland on the verge of bankruptcy due to bank insolvency

- Central Banks cut rates globally in emergency move

And that is just the last three days! Folks, the best case scenario at this point is that the U.S. is in a deep recession, from which we may pull out by early 2010. The worst case, as Jim Cramer (CNBC) puts it, is that any money in stocks will lose value for the next 5 years. Essentially Cramer is stating that we are entering a once-in-a-lifetime Depression that will take 5 years to get out of. THIS IS A REAL POSSIBILITY AND SHOULD NOT BE TAKEN LIGHTLY.

Lot is being written about how best to prepare for this financial "Perfect Storm." I am not a financial planner, but I think most of the suggestions below are sound:
1. Clean up any outstanding short term debt now. That means stow the credit cards, pay off balances, and make sure that you only have "healthy" debt (i.e. a single mortgage, car loan, etc.)
2. Stockpile cash - now is the time to save. At a minimum have 3 months of living expenses. Ideally get 6 months if possible. Ditch the lawn service, forget about the car wash, and cut back to a single latte!
3. Think through your worst case scenario and prepare for it - in the case of job loss, think about how you would get health care, etc.
4. NETWORK - now is not the time to hunker down. Talk with people in your industry and outside it. The hidden job market still exists and is hiring, but don't expect to get a job off Monster.com. In my experience, now is a great time to get to know people because everyone is nervous and more willing to chat.
5. In terms of your retirement accounts - I cannot give any advice here but urge you to check your allocations, contact a financial planner, and try not to check the account daily. If you do, it will be a miserable experience.

If history is any guide, we will all make it through this - we may have scars from it, but we will all make it. The key is to not panic, to be aware and educated on what is going on, and to stay involved in the political process. Like it or not, it will be the federal government's actions that will ultimately determine how long this lasts. As a result, it pays to know your elected leaders and how they vote.