No matter how you look at things, the

Wall Street maestro Jim Melcher told the New York Sun that he is “worried about a recession. Not a normal one, but a very bad one. The worst since the 1930’s. I expect we’ll see clear signs of it in six months with a dramatic slowdown in the gross domestic product.”

Enough with the negativity! We all know what is coming for us and now, it’s time for everyone to sort out their game plan and try to weather the storm. Below, I give you five tips to help you survive the impending recession:

Don’t Panic! – Ah, it’s easier said than done, isn’t it? However, it is crucial that you think with a clear head when dealing with money. Don’t let your emotions get the best of you, lest you pass up some great money opportunities out of fear. Remember, the market will fluctuate and you may kick yourself later if you rashly pull out of some lucrative, long-term deals.

Diversify Your Investments – Hopefully, you have heeded the most basic personal finance advice and already have a diverse portfolio. If not, now is the time to start making safer bets until things stabilize. This will minimize your losses during the recession.

Update Your Resume – No, you won’t be jinxing yourself by preparing for the worst. Think of it as staying one step ahead of your competitors if it comes down to job loss. Professional traders are especially nervous in a bear market and for good reason. Keep your resume updated and handy, then tell yourself that there are plenty of opportunities for you, should your job security be threatened.

Start Saving – If you aren’t a frugal person; it’s time to tighten your belt and learn to be one. Start setting aside a bit of cash each month, even if it’s only a little. Cut out unnecessary spending, clip coupons, whatever it takes to make yourself more liquid.

Live in a Home You Can Afford – In other words, avoid foreclosure! If things are getting a bit tight with mortgage payments, consider other options before you become another statistic in this housing crisis. Selling a home isn’t easy right now, so if you have to downsize, you could even consider renting out your home.

It’s always best to think ahead when a storm is brewing. If you are an amateur investor, now is the time to have a meeting with a trusted advisor. Weigh your options, err on the side of caution, and remember not to panic. Good times will come around again and those of us who are prepared won’t suffer in the coming months.

By-line:

Heather Johnson is a freelance writer as well as a regular feature contributor for Reward Programs, a website which specializes in helping consumers select among the numerous AMEX rewards programs. Heather invites your writing job inquiries as well as comments and questions at her email address: heatherjohnson2323@gmail.com

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Isn’t being young a fun time in your life? There are numerous reasons why people always say “Man, if I was only young again I would do this “thing” or go to that “place,” but now that I’m too old I can’t do it anymore.” Whenever someone that is older than you says that statement, you should write it down and see if you should go out there and do it. Experiencing things and going to new places is a great way to develop your mind, body and soul. Remember that having a “NO” attitude will end up making you a person that will have numerous regrets in the future. And how can you directly link this perception on life into your finances? Take risks that older people do not have the ability to take. I’ve spoken to numerous twenty year olds about finance and they sound more conservative than fifty year olds that read AARP magazines.

One thing that did please me is the fact that some twenty year olds really do have some financial sense, but are taking the extremely slow and steady approach to money. With interest rates getting cut on a near monthly basis, that savings account and CD won’t look so attractive pretty soon. Are there still conservative investment vehicles out there that won’t open you to a mound of risk? Sure there are, but you still have to do your homework to find them. What’s a few hours of homework if you can retire 10-20 years earlier? If someone told you to do a certain activity every week and that you would retire earlier with a lot more money, wouldn’t you want to know what it is? Well, it’s not a secret and people have been doing it for a very long time. Invest now, let your money compound, and spend it later.

I had a conversation with a particular friend that has accumulated a small fortune for a 25 year old guy. He has about $60,000 in a CD yielding about 4.5% which will be available for withdrawal in a few months. Here’s some more background about my friend: He is looking to purchase a home and a new car in the next year or two and wants to put a nice down payment on both items. What do you think he should be doing with this money? I told him that he is investing like a 50 year old about to purchase their second home. He is a smart individual with a great education (he has an MBA from a great university) and is currently making a big move in his career. With all these tangible and intangible assets he posses, he should be a bigger risk taker.

First, let’s tackle him wanting to purchase a house in the next couple of years. He says he wants to put down a sizable down payment because that’s what his parents told him to do. Well times have certainly changed. In those times, people lived in their first house for more than ten years. That’s incredibly hard to do with the ever changing job market forcing you to relocate on a drop of a dime (especially in your early career). I told him to put less money down and try to find a mortgage that will suit his needs for the next seven to ten years. Why so long if they won’t be living in that house for an extended period of time? Because padding your risk with a few more years will be more beneficial in long run.  Heck, I would tell him to only get 30 year fixed rate mortgages for the rest of his if he wants to be extremely conservative. This will allow him to put less money down and keep money in his pocket to invest in different things. He can also put the money that he saved on his house into purchasing his new car.

His $60,000 has a lot of potential if he used the money in a correct way. I actually told him he has too much savings! You don’t run into an individual like this every day. His money is tied up in savings and not in a retirement account. All the interest he receives is still being taxed. I told him to open a Roth IRA and immediately max it out. What type of investments should be in his Roth? I told him that index funds are his best bet. If it was me, I would find five to six companies that pay a good dividend and let it ride. I always love going to my investment account statements and seeing a nice fat dividend that will be reinvested. It’s a beautiful thing.

No matter what your financial position might be. Always remember that you are only young once and that you should live for the present and invest for the future. Do not limit your present day fun for the dreams of doing it in the future. Because in the future do you want to be the person that says “God, I wish I could be young again so I could have done that” or do you want to be the person that traveled around the world? Be Christopher Columbus he was a bad a$$.

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The Federal Reserve and the condition of the market have combined to make the home mortgage industry revert to much more traditional lines. This has had several effects on both lenders and consumers. For consumers, the situation is a two edged sword, though lenders stand to gain as much as ever, albeit at a slower pace.

For consumers, this means that credit ratings are no longer the yardstick by which your loan paying abilities will be measured. While for some this may be a bad thing, for others it can definitely help out. These consumers are those with good income but who have a less than stellar credit rating due to past indiscretions and poor financial management.

Since credit scores no longer have so much emphasis placed on them, a borrower’s income will be used to judge whether or not a loan should be extended to them. This is actually a much wiser way of doing business than by simply extending a loan to any consumer that has a good credit rating. That way of doing business is partly responsible for the housing market crisis now enveloping the nation.

Lenders stand to gain simply because their loans are much more likely to be paid in a timely manner. By only extending finance options to consumers with a proven income sufficient to make the payments, lenders can begin to rebuild their industry with a much more sound financial footing.

So, while the new lending procedures may seem out of place, they actually stand to benefit both lenders and consumers through better loans, better payment ratios and a better economic position for both parties. While it may take more time than some would like, this promises to be the best way to rebuild the housing industry and the home mortgage loan industry.

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Tonight I had the opportunity to watch the State of the Union; which outlines Bush’s final plans for America in the coming year. As the President’s final months come to pass, he is also trying to set some of his legislation chiseled in stone. Of course I am referring to his tax cuts that he introduced in 2001 and 2003. Here is just someone’s opinion on what the tax cuts could do if they are implemented in the tax code for good.

“If Congress makes the tax cuts permanent, the major economic benefits begin in 2011. For example,

Total employment will rise by 1,087,000 jobs per year, on average;
Annual GDP will be over $111 billion higher, after inflation;
Personal savings will grow by $163 billion per year, on average, after inflation; and
After-tax household income will grow by an annual average of $274 billion per year, after inflation.”

Am I true believer of the tax cuts that the Bush administration has put into place over the past eight years? Take a wild guess? No, of course I don’t. Do I believe in lowering taxes? Hell yes I do, but the administration is still going about it the wrong way. I’ve said this over and over now, but the mainstream media still won’t cover the real long-term damages that these tax cuts will have on America without cutting spending. How does the government really expect to purchase all this fancy military equipment without increasing taxes? I am not in favor in cutting military budgets, by any means. I would love to see an increase in domestic military spending and a large decrease in international spending though. It’s like the game of ‘Risk.” It’s much easier defending your boarders than to have your armies spread out all over the map. The Bush administration needs to cut their credit card in half and burn it.

People need to understand that I am not in favor of increasing taxes. I truly believe that raising them will inevitably throw us into a depression, but we must lower our spending habits to save our nation’s future. My first idea that the government could implement that could save them a lot of money, while also cutting taxes for all Americans, is lowering government spending in the private sector.

There are many government programs that tax every single business, but only benefit a few. Here is just an example that helps one industry, but damages another. If the government gives a 10 billion dollar grant to an oil company for global expansion, this will inevitably hurt the alternative oil industry. What happened to the invincible hand of economics that we’ve preached about in econ classes for so many years? Here’s a quick definition - “Smith claims that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. He argued that each individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.”

The other factor here is that every single business will have to pay for some of this “free” grant money. A small business owner in Georgia that makes doo-dads will not see a return in this situation. All they will see is a tax hike in their quarterly payment. Imagine this scenario but a 100 times larger. Government spending has corrupted our nation and truly damaged our economic future. We need to let business fuel themselves and add the real sense of an American meritocracy. In a perfect environment a large business would loan a company the 10 billion dollars and expect some kind of return. That is the true sense of American investing. Business investing in business for the betterment of both parties.

Can we really get out of this hole we’ve dug by implementing tax cuts and still allow rampid spending? Something needs to change… What do you think? What do other people think?

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With recent months as economically challenging as they have been for the mortgage and lending industries and the housing market, it should come as no surprise that expert economists and financial thinkers are keeping a close watch on the credit card debt situation. Many are concerned that credit card debt could experience a similar bubble burst type of disaster, meaning even more losses for financially struggling lending institutions.

According to a widely published January 23, 2007, Associated Press report, Capital One experienced significant fourth quarter profit loss. One of the nation’s leading credit card companies, Capital One saw a 42 percent reduction in profit as compared to the previous year’s fourth quarter earnings. American Express also, according to recent reports, experienced fourth quarter losses of just under 10 percent. Some fear that this could be a part of a trend, as financially strapped consumers struggle to make ends meet.

The New York Times recently reported that “credit card debt is growing at the fastest rate in years,” pointing out that the rate of growth “may signal coming trouble for the banks that issue them.” According to MarketWatch.com, this increase in debt seems to be because “consumers loaded up on credit-card debt to make up for a loss in the purchasing power they once wielded by refinancing mortgages during the real-estate boom.” Delinquencies in credit card debt payments are starting to edge up, and not only among those with bad credit.

Lenders and investors throughout the word are still staggering from the blows they took during the bursting of the housing bubble and the mortgage and lending meltdown, and most economists agree that neither of those situations have reached bottom yet. With the potential financial danger involved with a similar crisis happening in the credit card market, there will be many eyes – those in America and beyond – watching those numbers during the next few months.

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Are we really in a recession or has the dream bubble burst? Did we really expect the housing market to always go up with no top on the horizon? Come on now… When I was working at the bank and I was supposed to sell home equity lines and loans to clients that had about 30% debt to income ratio, I knew something was going to happen. Our software actually promoted the idea to sell loans to people that were in the 30-40% debt to income range. I was a simple “banker” (really just a fancy word for salesman of financial products) and I could see what was going to happen four years ago. It just amazes me that financial institutions were so leveraged to the mortgage business even though a high school student with one semester of forecasting could predict it blowing up.

This situation does not have to get you down though. This market had a self-destruct button and it was hit a long time ago. Companies did this to themselves and the ones that can’t take the heat are going to be burnt. Badly burnt. But as you know, there are plenty of companies that are just getting brought down by the huge sell off that’s been going on for a while now. Some companies that seemed too expensive just a few months ago are now extremely cheap. It’s going to me hard making a positive return in this market, but you can certainly build a nice position while the market is low. Dividends are a huge key to be successful in this market, but there are plenty of other ways to get a pay off. Diversification could be a winner here if you choose the right fund. Fidelity reopened the Magellan fund; which brought some nice returns even in a pretty crappy market in the 80’s and 90’s. Fidelity is opening up the flood gates for new investors and maybe you should be part of the rush.

I know it seems depressing when you turn on the TV and all you see is the Dow sinking even further. I wouldn’t recommend putting all your money in one stock or purchasing a ton of stocks at one time. You need to purchase slowly and keep buying even if the market keeps sinking. The best idea is just let an index fund do everything for you. Just keep on dumping $300 dollars a month (if you can) in an index fund that is spread over the S&P 500, raw materials, minerals, and petroleum. The stock market will go up and you just need to buy it as the market goes down. There will be a U-turn at some point and investors will be happy that they bought when everyone was selling.

I also think that boom markets will be produced from this mortgage disaster. There’s still a lot of older people out there that are about to retire. This situation alone will send up certain sectors to new highs. Medical and anything influenced by an aging population will send stocks soaring. And because the whole market is hitting new two year lows, this offers the opportunity to own lots of stocks for real cheap. Happy investing and I would love to hear some new investing ideas you might have.   

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Could there actually be a positive side to the market’s recent implosion? It’s hard to look at the sunny side when it seems like a dark cloud is always hovering around. But I still think that you could eventually make some good money while the market corrects itself. This is a perfect opportunity for younger investors to purchase stocks of great companies at their lows. For the young investor it’s much more important to create a position and let it ride back to the top.

Great companies are still paying out healthy dividends which will be reinvested at their low share price. You can establish a small position and let it grow for the long term. It’s like growing a tree. First, you plant the seed (purchasing shares). Second you take care of your plant by watering it and providing shelter (reinvest the dividends and keep on purchasing shares). Eventually, you will end up having a big ol’ tree (a nice position in a good company).

The market has so much opportunity right now that it’s craving for some buyers. You can try to play it smart by purchasing and investing for the long-term or you can try to be a market timer and probably lose. No one ever got rich by purchasing shares at their highs and selling them at their lows. So please take advantage of the huge “fire sale” the market is giving us and buy some shares of some good companies.

The financial sector got killed this year, so their might be some good buying opportunities with good conservative banks. SunTrust for instance, got knocked down with their peers even though they still have a pretty clean balance sheet. They are paying a 4.9% dividend and are at a three year low. It’s still a great bank with excellent fundamentals.

Of course there are many other companies that I would buy if I had the money to invest. My personal favorites are still companies that are paying dividends because they offer long-term position growth. Right now, I would rather buy Microsoft than Apple because they pay out a dividend. It’s much easier to build a position when the company offers the investor an incentive to be a shareholder.

The other company I like, while their share price is getting beat up, is PWE. They pay out that nice dividend which will help the investor build a position very quickly. Remember to reinvest the dividend for maximum growth potential. The company also pays out their dividend monthly which is an added bonus. There are plenty of other Canadian oil trusts for the picking, but I still think there is more upside with this company.

The market is offering investors long-term buying potential. Young investors have the ability to make a lot of money in this market. If you have the ability to invest, invest in companies that are getting knocked around, but still offer a bright future.

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Should you really shy away from a big night or take financial hit for a good time? Most savvy spenders will say “you can have a great time and still be on a budget.” While this is true, I still think that splurging once in a while for a good night is definitely worth it. For New Years, I attended an all-inclusive party which had a pretty nice price tag before you were allowed in the hotel. The tickets were on pre-sale for $170.00 before December 15^th and $205 after the 16^th. Fortunately, I searched on Craigslist and found a ticket for $140. It never hurts to make sure you are getting the best price possible. But this was just one of many purchases I would make that day.

Because I traveled back up to Atlanta for the holidays, I didn’t have access to nice clothing. I had to purchase some black shoes, and pants for the party so I didn’t look like a scrub. I was also in a time crunch so I had to purchase the “nice” clothing at Wal-Mart. Yes, Wal-Mart. I was pleasantly surprised that they had some nice clothing for under fifty bucks. Now my price tag is almost two hundred dollars for one night of fun and I haven’t even showered yet. Was it worth all the hassle and money? Of course it was. I realize that I won’t be doing this every night, so I decided that it was a great opportunity and I shouldn’t be worried about the price tag.

A lot of people get so consumed with money that they forget that having fun sometimes comes at a price. Money doesn’t always buy happiness, but it sure does help. I could’ve found a house party which doesn’t really cost much at all, but I’ve done that so much in the past. This year I am trying out new things that I’ve never experienced before and I have to say that it’s going really well. This lifestyle is a little more lavish than my life in 2007, but it is fun and interesting. I am not going to jump in a mound of debt because of the new lifestyle, but I realize that I won’t be saving as much as I used to. Sometimes you got to take one for the team though. I have all my life to save and make money, but I am only young once.

My New Years resolution isn’t saving money, increasing my income, or trying to pay down some of my debts. It is on the other hand, trying to have as much fun and excitement within my means. I know my views on life and finances are changing a lot right now, but my life changed a lot in the last quarter of 2007. Maybe later on this year I will be able to have as much fun as possible and save money (which would be totally awesome). Remember that life comes at you fast and if you don’t try to make the best out of every moment, you might miss out on something huge. Have a great New Year and let’s make 2008 even better than last year.

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Are you in debt or have some other type of financial burden you just want to hide in the closet? Trust me on this. You are not alone. When you finally accept that you are in a financial bind, the faster you can work at removing it from your life. Before I moved to Orlando, I had to pump in $8,000 into fixing up my rental property after my previous tenants did some pretty big damages to the house. This situation evaporated all my savings and I started to live on credit. To make things even worse, a business I was partnering with ended up terminating our agreement and totally removed any type of monthly cash flow. I can honestly admit that this was one of the hardest times of my life. I didn’t know what to do, which led me to a small type of depression.

I took even more struggle for me to actually realize what I had to do to get the ball rolling in the right direction. Being in debt, spending over 40 hours a week repairing my rental house, and having no income really threw a wrench in my plan on being financially independent. My sister-in-law said to me that “There’s a big difference between successful and unsuccessful entrepreneurs. Successful entrepreneurs find any way possible [legal of course] to get out of a situation on top. Unsuccessful entrepreneurs give up and cry about their situations.” I was acting like an unsuccessful entrepreneur. Having a negative outlook on the scenario will always bring a negative outcome. Think positive and ask for guidance from people that have gone through a similar situation. Remember the first step to any problem is admitting it’s a problem.

I needed to think of ways to get out of my mess and come out on top. Originally, I tried to handle everything at the same time. I needed to get new tenants, create a case on my previous tenants, find a job, get money, repair my house, and at the time, keep my girlfriend happy. As all of you know, I didn’t resolve this situation without lots of bangs and bruises. I am still in debt from all the house repairs, I didn’t end up getting any money from the old tenants, and I lost my girl. Was I successful in the overall situation? I think so. I currently have incredible tenants, I have a new job in Orlando, and I am paying off my debt slowly but surely. I learned that you need to handle everything like an individual project. Complete one thing at a time and then move on. In my situation, I needed to get new tenants, but first I needed to repair my house so I could get people in there. So repairing my house was the number one priority. After that, things started to fall in place.

Now that that part of my life is complete, I can reflect on the decisions I’ve made and understand my mistakes. After analyzing the past year, I realized that this was all spun from a poor decision I made last year. Renting out my house without doing proper due diligence really smacked me in the face. If I tried to find better tenants, I wouldn’t have had to throw in all the money and go through all the stress that came from it. With every huge financial decision you need to take your time and reflect. It would have been better for me to pay one more month of the mortgage and try to find better tenants; instead of renting it to bad tenants.

Just remember to face your fears before 2008 and handle them accordingly. Don’t be afraid to ask questions to people that know and always learn from your mistakes.

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With all the news circulating about the Fed’s decision on cutting rates for the third time in a row, is the economy really based on the Federal Reserve or companies blowing away earnings estimates provided by analysts? Right now it seems like it’s heavily dependent on the Fed. The complete lack of confidence in the market is creating a lot more controversy than the whole mortgage mess. I think that there’s about 600-800 points of pure speculation embedded in the Dow right now. Usually when people think of the American stock market and economy, they think of the purest form of separation of government and business.

But does this situation erase the line in the sand and mix the two together? I am starting to think that it is. It feels like a complete bail out of companies that really don’t deserve to still be around. The major companies that have suffered were in the business to make money out of thin air. Did they really think they would make money off of a consumer that can’t even pay for the minimum payments on their credit cards? Come on now! And those are the idiots the Fed is trying to save…

I am sure our country would be perfectly fine with the total disappearance of some of these companies. When you play with fire, your ass will get burned most of the time. The companies playing around with crappy mortgage portfolios deserve what they got. If I went to a casino and bet all my money on red and the ball lands on black, am I allowed to complain and try to get my money back? I could, but the manager would tell me it was my fault for gambling.

Where should we invest our money to get ahead of the game? I think we should play the market in a 10-12 stock portfolio. You need to have some consistent growers like (Kroger, (KR), Coke (KO), Costco (COST), and some that will deliver constant dividends Pengrowth (PGH), Bank of America (BAC), Unilever (UN). After the portfolio has a strong foundation, you can pick some good performers over the long-haul. I like Wainwright Bank (WAIN), Adobe (ADBE), Honda (HMC) and Hologic (HOLX). Those stocks have some varied fluctuation, but have a strong long-term performance. Your portfolio is almost complete, but it’s still missing a few more stocks to really make it happen. I am still on the E*Trade (ETFC) bandwagon even after all the news. Does this make me a hypocrite because of what I said before? Maybe a little, but their main business is still very strong and their cash infusion will certainly help. Here are some picks of my favorite movers and shakers: Nintendo (NTDOY.PK), Suncor Energy (SU), and ValueClick (VCLK).

No matter how you end up playing this wild market, keep your eye on the long-term and remember that the stuff in between is almost like an illusion. The next year might be scary, but I think that this market will end up producing a lot of rich people. Do you want to be part of the pack or sit on the sidelines with your best friend Mr. Mutual Fund?

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