Thoughts on the Financial Markets

The financial markets are hurting now due to the greed on part of Congress who failed to act on this several years ago, the executive branch of government who has failed to rein in the improper activities of the financial business sector, and the incompetent leadership at Fannie Mae and Freddie Mac. Lets not forget the mortgage companies, brokers, and brokerages whose stupidity allowed for the approving of mortgage amounts beyond what people could afford. With today’s economy being a global activity, market activity in the U.S. affects the whole world. Of course, there are also the cartels who are manipulating the markets for more profits... looks like lots of greedy and shortsighted people trying to get their way.

With the world economy in such turmoil and so much uncertainty, I wanted to share a few thoughts on how I am preparing to weather this economic storm from a personal and IT management prospective.

1. Budget and tracking all of our expenses, this enables me to know what and where we are spending our money. Knowledge is power and power enables discipline!
2. We have an objective of having six months worth of living expenses saved in liquid assets/accounts such as money market accounts. There are some financial advisers now recommending 12 months due to the increase in unemployment. For those who don't have six months of living expenses set aside, consider the following steps.
- Stop all unnecessary spending such as coffee at Starbucks, soda's from vending machines, reduce eating out, stop or reduce smoking, stop or reduce drinking alcoholic beverages out, and cancel or reduce services not being used such as cable/satellite TV/movie channels
- Reduce your shopping trips and makes lists of what you specifically need prior to entering a store, avoid impulse shopping
- Limit your shopping online and watch out for the sales and bargain advertising that temps you to make impulse purchases
- Avoid or delay getting more animals/pets
- Have a garage sale or list extra stuff for sale on http://www.craigslist.org If you haven't used things for over a year, sale it, even if it's at a dirt cheap price as it's better to sell cheap rather than letting the stuff sit on a shelf not earning any money!
- Pay your bills on time and pay down loans ASAP in priority order of the interest rates
- Buy used items at Goodwill or other thrift shops, look for sales or coupons before buying essential items
- Reduce the number of items you buy for Christmas, have friends over instead of giving gifts, do a work project for parents and other relatives who need help in maintaining their homes, look for other alternatives instead of gifts. Do not be afraid to say that you are attempting to build up your rainy day fund!
- Focus on building friendships rather than giving material items
- Learn to be content with what you already have

1 Timothy 6:6-9 (New Living Translation)

6 Yet true godliness with contentment is itself great wealth. 7 After all, we brought nothing with us when we came into the world, and we can’t take anything with us when we leave it. 8 So if we have enough food and clothing, let us be content.

9 But people who long to be rich fall into temptation and are trapped by many foolish and harmful desires that plunge them into ruin and destruction.


3. For the computer and networking geeks, look at delaying purchases, making do with what you have, or look at the used IT equipment market. Ask for additional discounts and remember if your buying it for your church or ministry, get the sales taxes waived!

Consider seeking out financial counseling from your credit union, financial planner, or other financial organization who has your interest in mind. One I use is Thrivent Financial for Lutherans: http://www.thrivent.com/

Reference: How to Prosper in a Declining Economy by Crown Financial Ministries, http://www.crown.org

Additional references:
http://www.smartmoney.com/
http://money.cnn.com/
http://www.dolans.com/
http://www.thrivent.com/