We speak only of real estate and mortgage in our little corner of the universe, but the ugly truth is, we're merely the epicenter of a national crises. The mortgage debacle, coupled with absurdly high gas prices, has created a financial black hole that's sucking in all money matter around it.
Did you know that U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008?
Did you know that Commercial filings for the first half of 2008 are up 45 percent from last year; or that from April through June, 15,471 U.S. businesses shuttered their doors?
It was the 10th straight quarter that business bankruptcy filings have increased. Nearly 29,000 companies filed in the first half of 2008. More than 20 percent of the newly shuttered businesses were in California, which logged 3,141 bankruptcies in the second quarter.
Texas fielded the next highest number of bankruptcies with 1,168, followed by Michigan with 702 and Florida with 635. New York was next, with 618 petitions, and Colorado had 547.
Food costs went up 1.5 percent (the biggest increase since January) and even pet food jumped by 6 percent, the largest monthly increase on record, and wholesale energy prices shot up 6 percent. The price of unleaded regular gas surged 9 percent in June on top of a comparable increase in May. Home heating oil, natural gas and liquefied petroleum gas also took big jumps.
If you glance back at history you'll see that an average of more than 500,000 businesses failed in the United States during each of the 10 recessions that have occurred since the end of World War II, and there's little doubt at this point that we face a full blown recession.
SMALL CHANGE'S CAN KEEP US OUT OF THE HOLE
Be Aware of how much money you spend
Many shopaholics live in denial about how much they spend. If you realize how much you spend on various items, this may help reduce your spending. With disposable income slipping, spending frugally is important. Discount stores such as Marshalls and other surplus outlets and have seen increased business as people look for bargains.
Don't spend money to kill time
Don't spend every lunch break wandering around your favorite shops, go to a park or place where there is little temptation to pull that wallet out. If you do go shopping have a clear objective of what you need to buy. This means that you will buy things because you need them, rather than want them.
Avoid Spending by Habit
Quite often a lot of our spending is a daily habit. For example, if you hit Starbucks everyday, why not invest in a coffee machine? Just because you spend $10 a day on lunch doesn't mean this habit has to continue forever. Try taking your own lunch.
Give Items Objective ratings
Guy's, do you really need another $100 silk tie, or that new boat? Ladies, Is that $2,000 Louis Vuitton purse really necessary (you're just as beautiful without it)? I know that Burberry coat is lovely, but your paying a bundle for that snappy plaid collar and cuffs.
Instead of trading that luxury ride in, why not pay it off and live car payment free for a couple of years? We all tend to have a desire to live a bit larger than we can afford, its human nature, but now is not the time.
Even if you seem to be rolling in cash today, you don't know what tomorrow will bring. Even Starbucks is closing stores down for the first time.
Remember money isn't everything
Don't feel that financial well being is the only thing that matters. Even in difficult times, don't lose perspective and allow yourself to be depressed. With the right attitude a frugal lifestyle can have its own pleasures. I'll bet there's a park you drive by all the time and have never been to, or a hiking trail you pretend not to see.
Take the time, save the money, and avoid the hole.