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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A lot of people have their own ideas about retirement and savings. There’s also plenty of discussion whether people are saving too much or too little for the future. My mind changes almost everyday on my view on retirement. Should people spend what they have and make the best of their present lives or should people scale back and try to have fun when their old and fragile? I know so many people my age that can’t even plan for their weekends let alone plan for their retirement. Are people that worry about retirement not living their lives to the fullest potential? Maybe a little, but forward thinkers usually plan for a reason. I think retirement is just a proper risk management tactic. People invest to gain wealth so they limit their possibility of having to work till the day they die and ultimately have the financial flexibility to do what they want.

But in defense of the “present day thinkers,” they have the ability to go out one to two more times a week, have a few more drinks at the bar, buy the newest version of the iPod, and maybe order Grey Goose instead of Smirnoff. Having fun and living each day likes it’s your last is a motto most people try to live by, but saving for your retirement contradicts the very essence of the saying. If you save 15% of your paycheck, you are cutting your spending power by 15% too. For example- if you make $3000 dollars (after tax) a month, you are taking away $450 of spending power. That’s the price of two kick ass weekend with your friends. Why would anyone want to do that? Have less fun now to have more fun when you are sixty? That doesn’t sound appealing to me at all.

Is there a common ground on this discussion? Should people save more now or worry about it later? I mean we can’t really forecast the future. What if you saved up a million dollars by the time you were fifty then suddenly died? Was it a waste of money to live below your means? Would you regret living a life of frugality? These are probably some important questions that financial planners probably never talk about. What do you think?

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Now that I am finally done with school, my life has had a lot of BIG changes. Here are just a few things that I’ve experienced in the past month.

1. Graduating college. Sweet!
2. Paying for my own health insurance
3. Paying for my own car insurance
4.Purchased a car (with a loan, not with cash. I’m not that rich yet. Little joke.)
5.Invested some money. I purchased shares of Apple (Yeah, I’m jumping on the bandwagon) and Diageo.
6.And the big one. Got a new job.

The new job thing is huge. I decided to turn down some pretty good entry-level positions to try out the whole entrepreneur thing first. My father hooked me up with a local business owner to start up a few programs that I developed to increase her profitability. If the whole thing goes the way I think it will, my shares in the company will be pretty good. I finally get to have an influence (that I can actually see) on a daily basis. Every single job that I’ve held throughout my college career was pretty much pointless. I always had to listen to management even though they were completely wrong (at least that’s what most of my college textbooks said).This is the first job that I get to call the shots.I’m going to update everyone on my progress as the weeks go on.

Because I’m working for a small business (20 employees), I have to pay for my own private health insurance. I decided to go with Kaiser Permanente for low rates and the medical center is right by my house. It’s costing me $67 a month, which is a pretty reasonable rate for a man my age. It covers all the good stuff, but has a higher deductible.

Another huge financial event in my life was the purchase of my new/used car. My mother was in a small accident that ended up ruining her car for good (she wasn’t hurt). My parents and I decided that she would take my car and that I would purchase a new one. After so many hours of shopping online and visiting car dealers, I decided to buy a 2004 Honda Accord EX (IT HAS NAVIAGATION. SWEET!!) It set me back a good amount of money, but it will only cost me $300 bucks a month for five years. Hopefully, I will be able to pay it off way before the actually deadline so I won’t have to pay interest on a depreciating item.

A lot of new events will be unfolding in the next few months. When I get some time to sit back and write, I will be writing on a consistent basis. My life seems much more level now and I’ll be able to take the time and write about personal finance and politics again. I have to thank my co-writer Dave for helping me out with some wonderful political and social ranting. Thanks again for bearing with me during the past two months.

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Now that I can finally see the light, some hidden, yet necessary costs are revealing themselves. The past month, I’ve been receiving tons of mail concerning graduation announcements. They are a great way to tell people that you are graduating and they can also provide some pretty nice financial benefits. When I graduated from high school, I didn’t really know anything about graduation announcements because they aren’t really popular in Canada. But now that I know about them, I’m going to milk the cow. Just kidding! Before I send the announcements out, I need to purchase them (this can cost a pretty penny). Some packages range from $100- $250 just for the announcements. If you expect to get money or presents in return, don’t cut costs with your announcements. You got to get poor to get rich (meaning spend more money on announcements to get nicer rewards).

I am also interested in purchasing a frame for my diploma. This can set you back another $150-$250 dollars depending on the quality of the frame. I highly recommend purchasing everything from one company to get some discounts on the whole package. After totaling up all the costs, I’m looking at throwing about $300-$400 on graduation (excluding graduation festivities).

• Announcements with all the bells and whistles- $110 to $140
• Cap and gown - $50
• Frame-$150
• Mailing Fees- $25

I’m hoping this stuff will end up paying off! Feel free to send me gifts or money if you would like at JRBeaudry at eFIPO.com. Just kidding, but really feel free. A congrats will be fine too!

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Part one of the Money Quadrant Series- Are You a Debtor?

Check Casher-

Do you know people that rush to the back on payday to cash their check? Do you rush to the bank to cash your check? Well, in the banking world we call this type of person a check casher. They work hard all week to get that paycheck that seems to disappear by the next payday. There are a few that do manage to save some money before they pay their bills, but most live paycheck to paycheck. The three different kinds of check cashers that I’ve managed to differentiate are the true check cashers, filed for bankruptcy check cashers, and low income check cashers.

A true check cashier usually just likes carrying a ton of money on hand at all times. I think it gives them a sense of power (even though if they were ever robbed or misplaced their wallets they would be so screwed). I’ve seen a few that just cash checks at the bank that the check is drawn on, then bring it to their bank, but it was minimal. They are usually on a fixed budget, and don’t like to get themselves into any kind of debt (not a bad philosophy).

The filed for bankruptcy check cashier usually hates banks or any kind of financial institutions because they believe they are out to get their money. They live by the slogan “They’ve do it once. They’ll do it again.” A lot of the ones I’ve met also have managed to get the IRS on their backs because they don’t pay all their taxes. I’ve been able to discuss some form of personal finance with the ones that want to express their problems. Usually they get a credit card or checking account and overdraft their account within the first month. They’ve never learned cash management in their youth and it’s reflected by how many times they use their credit/check card. They just don’t remember how much is in their account and end up with tons of overdrafts. They are forced to close their account and they evade paying the overdraft fees by never opening up another checking account or credit card. Some that piled large amounts of credit card debt were forced into bankruptcy because they weren’t able to pay for the minimum payment.

A low income check casher is in very tight situation. Their jobs do not pay enough to make ends meat. They’re on a very tight fixed budget and can’t have many of life’s luxuries. Most of them do not have a high school education which puts a cap on their earning potential. My only advice for the low income check casher is getting a G.E.D. Education and hard work can really turn around your financial situation. You do not have to settle for a low paying job for the rest of your life.

The similarities between 97% of check cashers are:

• They don’t end up saving a dime
• Fixed budget
• They do not splurge on big purchases
• They spend every penny before their next paycheck
• A lot of wasteful spending

Solution-

When I left the bank and decided to get an easier job (the high-end liquor/wine retailer), I noticed a ton of check cashers purchasing large amounts of alcohol and cigarettes. Originally, I was kind of sad for the individuals that were stuck on a fixed budget, but this brought a new light to the situation. You cannot spend money on liquor or cigarettes when you can’t even afford car insurance! Stop smoking and drinking and make your life better. They would usually spend about $50 a week on booze and cigarettes which turns into a yearly amount of $2600. That’s a lot money that you could be putting into a retirement account… You need to find your latte factor and eliminate it from your life A.S.A.P.

You need to save all the money you would have spent on your latte and throw it into a high yield savings account. I would highly consider paying yourself first before you start spending when you’re on a fixed budget. This worked wonders for me. I could save 15% of my income then blow the rest on whatever I wanted. Once you’ve mastered this skill, you will now be considered a Super Saver.

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First Quadrant- Debtor

Whether you’re in college borrowing student loans, or you’re in the workforce with a ton of credit cards, you will be regarded as a debtor to all bankers. Why do some people fall in a hole of debt, while others manage to rise above it all? Sometimes you can’t really stop it. You were born into a lower income family and you’ve had to pay your way through life. I call these debtors the diamonds in the rough. These types of people have the ability to transform their debt to knowledge later on in their lives. They know the true value of a dollar and they usually try their best not to blow their money on random things.

On the other hand, you have this type of debtor that ends up blowing even more money on stupid things because they don’t know any different. They will spend all their money on a depreciating asset¹ and then use their credit cards and loans to make it “pimped out”. “Pimped out”is just another word for stupid spending. Usually, these types of people are very generous to their friends at a young age. They usually pay for drinks at the bar, fast-food for friends after the bar, and have massive parties at their place when the bar is closed. I call these types of people the live-in-the-now debtors. They don’t think of the long term liability they are getting themselves into. I worry a lot about the live-in-the-now debtors. Unfortunately, they are usually the ones that file for bankruptcy before their 26^th birthday.

Similarities between most debtors

• Look at their minimum payment as their actual payment.
• Spend 15-20% more than what they make.
• Eat out more than they eat in.
• Present thinkers instead of long term thinkers
• Postpone paying off their credit cards and keep more cash on hand.
• Have trouble sleeping at night because they worry about paying credit card bills
• They have addictive personalities i.e. drinking, gambling, and so on

Solution

The first step to reach the Check Casher quadrant is regulating your spending habits. Stop using credit cards to pay for things. Go on a cash only budget. If you need help if your budget, please take a look at this post. When you’re on a cash only budget, once you run out of money, you run out of money! You can’t rely on credit cards to bail you out this time. A cash only budget teaches self-discipline and can cure your debtor type of personality. Your big bills need to be paid before you start paying for the small stuff. Your rent or mortgage, food and necessary bills come first! Here’s a rough budget for reference purposes.

Slowly pay for your credit cards till they reach $0 balance. This might take three months or even three years depending on your debt level. After you reach the $0 balance, you can jump to the Super-Savers quadrant. Give yourself a high five! Now you have to learn how to become an Intelligent Investor.

*eFIPO’s Rule* When you’re a debtor, do not buy any thing you don’t absolutely need!

¹ Cars, TV’s, stereo systems

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In the personal finance world, people are either classified as rich or poor. You’re either rich enough to buy expansive things, or you don’t have the money to purchase fine luxuries.  At eFIPO, I always encourage people to invest as much money as you can. But what about all the other people that are too far into debt or that live paycheck to paycheck to invest? This week, I will be discussing the ways to jump from the poorer side of the quadrants to the richer side. This will not be an immediate process for everyone. Every person’s financial life is unique, but there are core similarities that can be found if you dig deep enough.

Why should you take my advice when I am just a twenty three year old soon to be college student? First, I’ve been in three of the four quadrants and I am planning on moving to the fourth quadrant very soon. Secondly, I could throw in about fifty people in each quadrant and tell you their unique stories, but this will be more about the similarities that every group posses; which will paint a much more vivid picture.

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After reading a great article in Business Week yesterday, I decided to write a quick article on how you can apply it to your personal life. The article was referencing the changes McDonald’s has made to maximize their daily earning potential by staying open 24/7, changing their restaurant image and broadening their menu. McDonald’s is currently in their maturity/stability stage in their corporate life. In this stage, the key issue for the company is no longer survival; rather, it needs steady, profitable growth. Now you might be asking yourself, “How does this story relate to my financial life?” Well, you need to take what you have and maximize your potential.

If your life is stable and you don’t see any huge growth spurts happening anytime soon, you need to find ways to get more for your money. In your stock portfolio, find stocks that have had a constant above-average return. Here are some stocks that I recommend for people that aren’t huge risk takers, but still want to get some good money.GOOG - Google
DPZ - Domino’s Pizza
PWE -Penn West Energy Trust
IACI -IAC/Interactive Corp. Owner’s of Ask.com, Lending Tree, Ticket Master
ADBE -Adobe
BBY - Best Buy
LTD -Limited BrandsThese companies are leaders in their industry and have provided above average returns (Higher than S&P 500). Instead of sticking with your “white bread” mutual fund, upgrade and create your own mutual fund. You can eliminate tons of fees and receive higher returns than most traditional mutual funds. I understand that most writers on other blogs want you to become a conservative investor, but I want you to be a wealthy investor. Another way to maximize your earning potential is to spend less on items that you buy. Don’t let big purchases kill your back account! When you regulate your spending, you will have more income that you can dump into your savings, investment, business or real estate account. So many people think starting your own business or investing in real estate is scary, but there are ways to limit your risk.*eFIPO’s Rule* Vitaliy Katsenelson: It is not the cards you are dealt, but is how you play them. Make the best with what God gave you, and play hard!

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(MC Hammer went bankrupt. Big money mistake!)

Now that you’re finally forgetting your New Years resolutions, what financial mistakes have you done in 2007? My resolution for 2007 was to stop buying crap. My first approach to accomplish my resolution was to regulate my purchases at restaurants so I can settle my credit debt before buying another house in June. Today, I decided to check out my credit card statement and noticed a decrease of about 10%. Not so good. I wanted to hack it down some more so I can start investing and saving more money. I am currently trying to get a new job so I can pump up my savings and pay off all my debt by July.

The one pattern that I’ve been able to develop is that I am on the road a lot more taking away the time that I could be spending in the kitchen preparing myself meals. Because of the sudden change in lifestyle, I’ve had to resort to purchasing meals on the road. In reaction to this new finding, I’ve decided to take a proactive approach to my current situation. I need to cook meals that allow me to have the same flexibility in my schedule that are still healthy and promote a balanced lifestyle.

The other thing that I’ve noticed is that because of the move and the chaotic life I’ve been living for the past two months, I haven’t been working out like I always do. Avoiding regular scheduled work-outs are theoretically supposed to increase your spending habits, because you have more down time. I need to motivate myself to work-out even though I’m living such an unstructured life.

*eFIPO’s Rule* There’s nothing better than getting a better body and saving money!

It’s amazing how much minor changes in your life can either help or hurt your financial situation. Hopefully I can stay on track so I can ultimately pay off my debt once and for all.

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I realize that most of the population are debtors and not asset builders. The first thing we need to do is describe the difference between both kinds of money handlers. In economics a debtor (or a borrower) owes money to a creditor. An Investor thinks investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. I really like how Wikipedia defines an investor specifically “deferring consumption.”Now that we have the definitions down, how can you turn yourself from being a debtor to an investor?

Think outside the box. You must train yourself to think of an investment as a tangible item. Buying stock should be considered consumption. When you purchase more “food/stock” to feed your investment portfolio, he grows and gets stronger every day.

Food and shelter are extremely important parts of life, but the same is true for your investment portfolio. You need to care and feed your portfolio till he gets big and strong. After many years of providing “food and shelter” to your portfolio he will be self sustainable. And in the future, he will be taking really good care of you.

Think of ways to turn every dollar spent to a profit generating system. The first thing that comes to mind is purchasing stock into companies that already have your business. Instead of always being a customer, be an owner. Whenever I purchase a cheeseburger at Wendy’s¹, I always think that I am reinvesting myself in a company that I share profits with.

Now let’s look at the “think of an investment as tangible item” topic again from a different angle. Everyone usually has an imaginary budget in their heads before they start spending. For example: If you make less money one month, you spend less. Add investing to your imaginary budget every single month. Whether investing is purchasing stock, adding money to your online savings account, or paying down extra debt, it needs to have special place in your budget. Always add at least 35% of what you spend into your investment account. If you spend $400 a month on food and entertainment, you need to stash away $140. If you can’t invest that much money, cut your spending habits.

*eFIPO’s Rule* Investing and saving is just looking at debt from a different angle. If you think of investing as purchasing an actual product, you will be a very wealthy person later on.

*Do you need a concrete budgeting system? Check it out here!*

¹ Because I own stock in the company

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