Can it get any worse? YES.
Okay, so your 401K has retired without you. You're so underwater in your house that you're thinking of turning the place into a house boat. And, hopefully, you don't get hit by the next round of layoffs.
Seriously, it has to get better. But, could it get worse? Well... yeah... if you don't watch yourself.
I don't like to be the one screaming the sky is falling. But, what I have learned is that the more I keep my predictions to myself the less chance I have of forewarning people of what I see coming straight at us, like a speeding locomotive.
At the moment, it's inflation. It's not here yet, but it's coming, I can hear it. It will be here before you know it. The fed is spending money like crazy - make the most of it and take what you can for yourself. Whether you get any benefits or not, you'll be paying it back.
So, how can you make the most of things?
---If you're lucky enough to have cash to spend, check the Stimulous package to see if you might qualify for some additional tax breaks. It just so happens I will probably need a new heating system in the next 2 years, and if I buy one this year, I get an extra tax break. I plan on taking advantage of that. It's a shame I bought all new kitchen appliances last December, but that is the way it goes. There are tax incentives for many things you do to improve the energy efficiency of your home, as well as incentives for major purchases of things like homes and cars.
---If you're thinking about buying your first home, don't put it off. The combination of low interest rates, availability, and the extra government incentives (up to $8000 in tax credits) for buying this year are incredible. So, do it, and close by 12/1/2009, so you get the tax credit.
---Many finance companies will offer you FREE "job loss protection" insurance... this applies to new homes, mortgage loans through Bank of America, and even many loans on new cars when you buy at the dealership. These programs will actually make your monthly payments for you if you do get laid off. So, sign up, but make sure you know how long it's free; most require you to cancel before a deadline or you have to pay.
---If you have a high fixed rate on your existing mortgage or are in an ARM, consider refinancing (even if you're underwater there are some options for you - Click HERE to learn more). Get yourself positioned for rising interest rates. When they start rising, it will go fast.
---Work on paying down your credit card debt or variable interest rate/revolving credit lines. Again, when interest rates are rising, you aren't going to want to pay 20-30% interest on something that used to be 8% it will eat into your paycheck.
The upside, and there always is one, is that when inflation kicks in, all interest rates will be higher - including what you are collecting at the bank. As consumers, we never quite get the same margin of profit as the banks and other professional lenders out there, but we do get benefits.
Remember, inflation IS coming. You can not stop a runaway train. All you can do it get out of it's path.
