Plan for Economic Ups and Downs
Increase savings, lower spending and plan for harder times
SAN MATEO, Calif., May 21, 2008 - With oil prices recently hitting new record highs -- driving up the cost of everything from transportation to food -- and employment stagnant, Bills.com president Ethan Ewing reminds American consumers that they can take steps to prepare their finances to weather today's rocky economic environment.
"In addition to oil costs, health care costs continue to increase," said Ewing. "While economic stimulus checks are intended to help boost our economy, their detractors complain that government 'quick fixes' only increase national debt -- adding uncertainty about Americans' retirement and health care needs," he cautioned. "We can take heart in the fact that many economists anticipate the current economic slowdown or recession (depending on which interpretation you choose) will last less than a year. However, rising fuel and food costs are unlikely to reverse."
Ewing suggested these steps to get ready for the nation's economic bumps:
1.Go on a lifestyle diet. There's no time like the present to trim excess spending. Good habits can pay off. Try to cook one more meal a week at home -- and put the cost difference in savings. Cancel any unused services -- whether extra cable channels, a gym membership or a Netflix subscription -- and save the difference. Take walks instead of joining a club. Cut home cleaning to every two weeks instead of weekly. "Live within your means," Ewing said. "Whatever you do, do not use credit to fund your lifestyle."
2.Build a nest egg. Build an emergency fund by putting some of every paycheck into a savings account. Saving 10 percent of income is ideal, but if you cannot do that, pick a number -- even $25 or $50 helps -- and stick with it. Have the amount automatically transferred to an online savings account, just like a bill. "Save for your own retirement, rather than relying on the government or your employer," Ewing urged.
3.Pay bills on time. Be sure to pay bills on time. Good credit ratings are highly dependent on timely payments. For many, electronic bill payment can simplify life and help make sure everything is paid on time.
4.Hold off on moving.In many markets, houses are sitting on the market for longer than ever, and home prices are down. With the mortgage markets tightened, fewer people qualify to buy a home, and rental markets are becoming relatively more crowded. Try to hold off on moving unless you must do so. If you own, use this time period to perform low-cost upgrades to make your house nicer to live in and to improve your investment for the long haul.
5.Choose cars carefully. Especially for those with a long daily commute, gas prices can hurt. Someone who drives 60 miles round-trip daily might spend $388 monthly on gas for a 12-mile-per-gallon truck. But driving a 25-mile-per-gallon sedan, they could spend just $186 per month. Choose the best fuel economizer for most of your driving. If you are in the market to change vehicles, look closely at mileage before buying. Consider walking, bicycling, carpooling, public transportation or investing in a gas-sipper like a scooter.
6.Care for your health. Health care costs are climbing, and are projected to continue increasing for the foreseeable future. Evaluate insurance and do make at least major medical coverage a priority. Remember that preventive care can stave off more expensive care. Exercise moderately, quit smoking, do not drink excessively, and eat a low-fat diet, which can all extend your well-being. Take advantage of local health fairs and low-cost vaccination clinics for basic tests and blood work. To receive care not covered by insurance, visit a doctor's office or urgent care center rather than rushing to the emergency room. You will make the best use of the health care system and save money.
7.Dust off your resume. Just in case you wind up looking for a new job, be sure your resume is up to date. Do more networking than usual, and keep your ear to the ground. If you are enjoying a stable job, no need to panic, but it is always wise to maintain your network and protect your earning power.
"These steps will make you economically stronger, regardless of the state of the economy," Ewing said. "Finally, enjoy the simple things in life. Go for a walk, shoot some hoops with your kids, play board games or catch a game on TV instead of going shopping, to the movies or to the game center for fun. You will remember how enjoyable it can be to spend time with those you care about, no matter what the economy is up to."
Based in San Mateo, Calif., Bills.com (www.Bills.com) is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.
In 2008, Entrepreneur Magazine ranked Bills.com as the No. 3 fastest-growing U.S. company on its Hot 100 list. Company co-founders and co-CEOs Andrew Housser and Brad Stroh also have been named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008.