Its Wednesday morning. The latest unemployment figures are out. Evidently, April saw declines of 491,000 total jobs lost (1). While just shy of half a million, this was still better than last months total of 709,000.
Despite this improvement there is still a LOT of uncertainty in the economy. For example, recent headlines show that nearly 20% of US homeowners owe more on their mortgages then their homes are worth (1) and even some wealthy people are defaulting on their mortgages (1).
So, what should you be doing? Well, sticking to the basics could keep you on track.
1) Spend less than you earn. This is a “no brainer”. If you consistently run a budget surplus, you’ll be in much better shape then if you run a budget deficit. Learn how to live frugally, and implement frugality into your every day life. Again, spend less than you earn.
2) Educate yourself. We have a mini-library of personal finance books, reference works and textbooks so we can understand corporate balance sheets, accounting terminology, macro economics, etc. etc. A little education never hurts.
3) Build up an emergency fund. Personal finance thinking is shifting. Current advice is to be in cash or bonds and maintain a large emergency reserve due to tightened borrowing conditions.
4) Invest in ownership. Stocks are the pits, but the evidence is conclusive. Owning a business is still a good way to achieve serious substantial wealth. It is much easier to create wealth when you are owning something, anything really.
5) Pay off high interest debt. Credit cards, rent to own schemes and payday loan arrangements all can charge upwards of 100% effective interest. Avoid these like the plague. If you’ve got them, consider allocating your extra funds to paying them off.
We’ve blogged about this at length before, here, here and here. In fact, we’ve said this so many times, we’re getting the digital equivalent of blue in the face. But all of these, when prudently managed, should help improve your bottom line.