I got a haircut the other day. My typical "wait time" used to be two weeks or more. When I called to schedule an appointment, I was pleasantly surprised when my cutter said she could get me in the next day. After I got off the phone, I realized the same thing happened the last time I called. I got in right away.
When I went in, I asked her how things were going. She said business is down. Customers are stretching their appointments. Some of her clients are letting their hair grow out so they're just coming in for a trim or shape-up. The customers she has who color their hair are booking appointments every 12-14 weeks instead of the usual 6-8 weeks for touch-ups so, naturally colored roots that are growing in are more noticeable. Look around. You may have noticed a shift in hairstyles -- a little longer and change in color (or lack of it). To her dismay, some have taken to "do-it-yourself" coloring. Manicure and pedicure appointments are few and far between.
As a result, she's had to adjust too. She's thinking about using her daycare service on an "as-needed" basis instead of pre-paying a month at a time. This year, she won't be shopping for lots of new school clothes for her son. She plans to get him a new pair of sneakers and a couple of new shirts. He has clothes he can still wear -- until he hits another growth spurt. School supplies -- she'll get just what's necessary.
Their family insurance is through her husband's employer. They're nervous about changes that may happen to the health plan next year. She has some health problems and requires certain medicines. If her doctor changes her prescriptions, her concern is that the new health plan may not cover the medicines she needs.
The shift in her business has been slow but heading in the wrong way. Her income has taken a hit. Instead of talking about when the situation will improve -- now her concern is if it will improve -- and that's different.
There's also been a shift in the calls that come into The Lawyer Referral Service. In the last six months, the three most requested kinds of attorneys were for: employment law situations, family law matters, and consumer law situations.
Remember we wrote about keeping abreast of current events and reading articles written by knowledgeable people so that you and your family can plan ahead?
On July 27, 2010, Bob Herbert, in The New York Times, wrote an article about a report published by The Rockefeller Foundation called, Economic Security Risk.
The Rockefeller Foundation report points to three major risks to economic well-being: a change or loss in income, a serious medical occurence, and no nest egg built up to weather a financial crisis.
The report also reveals that at least half of all Americans do not have at least three months' worth of income set aside in order to deal with a loss in income or a serious medical situation. The report determined it takes people between six and eight years to recover to their previous level of income.
Of course, loss of income or serious out-of-pocket medical expenses -- are difficult to predict. Those two events are most threatening to one's sense of well-being and they lurk in the background. According to the report, one in five Americans indicated they would face financial hardship if they were forced to go for as little as two weeks without their current income.
Now -- the good news. More and more people have been encouraged to pay off their debts and save money -- and they are. On July 31, 2010, the Associated Press reported Americans saved 6.2% of their disposable income in the 2nd quarter -- the highest share in a year.
Having a nest egg is the first step to improving your ability to get through tough times. If you don't have one -- creating a nest egg might be a good idea. It's bound to improve your sense of well-being. The second step is to begin the process. It may take you a long time, but there's no better time than here and now.
Need some ways to save money? Maybe you have to trick yourself into it and think about it a little differently. Here are a few methods you can try.
If you have a decent checkbook balance -- subtract $500 or $1,000 from your balance right now. Most of us have a tendency to look at the balance line in our check registers. If you don't "see" the money there on your balance line -- you don't spend it. You can circle the amount to remind yourself it went into your "savings" (even though you did nothing but subtracted the amount). You can always figure out what you've saved and what your balance really is. That's the "out of sight - out of mind" method.
If your paycheck is deposited directly into your checking account -- when you know it's there, then physically go to the bank. Write a check for cash. Take out an amount you feel you can manage. Get $100 bills. Put the cash in a safe place in your house. This will require you to make an effort to get the cash and because of the large denomination, you may think twice before cashing a $100 bill. This is the "think before you spend" method.
If you have a checking account at one bank, open another account at a different bank for your savings. Go to a bank that is a little out of your way. Literally keeping your money in a different bank might work for you. You can use online banking to withdraw money and deposit it into the other account. Cut up the ATM card you'll get from the new bank. That way, you can get your savings only by physically going to the bank -- and the "delay" method might be enough to postpone dipping into your new savings account.
Creating a nest egg can be a challenge -- but if you do nothing -- the chances are it will be worse for you later. Your goal is to have three months' worth of income built up into a nest egg. If you lose your job, or you're faced with unforeseen medical expenses, you can offset that feeling of immediate panic.
If you think it's bad now -- wait another six months. The economy doesn't seem to be improving. It seems to be getting worse. Expect the best and prepare for the worst. If you aren't prepared, you may face total devastation down the road. No one is going to rescue you.
