How To Protect Yourself From The Coming Financial Crisis (continued)
Posted with permission from
http://www.saneramblings.comGeneral Motors, Ford and Chrysler are battling to survive. If one or more of these giants collapse it will bring huge job losses, imperil the retirement income and medical care of millions of retirees, risk defaults on billions of dollars in bonds and banking lines of credit and decimate shareholders, among them some of the U.S.'s largest financial institutions.
Such a collapse could set off a tidal wave of destruction to the U.S. and global economies. The U.S. taxpayer and the U.S. government's ability to borrow money is already back stopping massive real estate lenders Fannie Mae and Freddie Mac with staggering exposure. There may not be room for another grossly mismanaged falling giant, and there are plenty of them.
A case in point is large California based lender, Downey Savings which last week revealed it's near collapse. Downey loaned heavily not to sub-prime borrowers to buy homes but to prime borrowers with good credit. Now those borrowers have begun to default in huge numbers. Downey too would like a government bailout with your money.
In other news the U.S. jobless rate hit its highest level in four years. This means many people can no longer afford their house payments nor their credit card bills and other expenses, unless they can find employment soon in a sinking economy.
Many state governments also have big financial shortfalls. California, the most populated state has a $15 billion deficit and no budget for a fiscal year that began July 1st. It layed off 22,000 workers, cut the pay of some others and froze hiring. California and many other states will raise taxes or fees and slash services.
With this growing carnage confronting us all, please be very careful in your spending and put your savings in FDIC insured accounts. If you can earn extra income, save that money unless you have large credit card debts. If so use it to pay down your credit cards, for you're probably being charged in excess of 20% on the unpaid balance.
Get rid of other unnecessary financial exposure. If you have a boat, a motorcycle, an extra car or other toys not critical to your well being, especially if you have it on payments, sell it immediately before its value declines further.
Also, contact an accountant and discuss your expenses to structure as many as possible to become tax deductible. This alone could save you potentially thousands of dollars.
Think of yourself as being on a small boat about to be hit by a storm in the Pacific Ocean. As you see the waves growing bigger and hear the force of the winds already howling loudly, navigate your boat into a safe harbor ASAP.
----------------------------------------------------