Monday, September 29, 2008
Is Your Money Safe?
A lot has changed since the Great Depression. One thing that hasn't changed is that we never learned from the mistakes that caused it. We are repeating them. What does that mean for you as an individual? How do you weather the storm? Here is my take on the answers to those questions. First, put your money in a credit union. Credit Unions generally didn't get in deep with mortgage lending and usually haven't used Fannie Mae and Freddie Mac to turn loans. They also don't have investment banks as part of their business. They are non-profits that have a primary mission to serve their members, not maximize profits for stockholders. Your money is least likely to be affected by the current banking situation. Second, start living without credit and establish a crisis fund of 6 months of expenses. Keep that money in a safe place like an insured money market account for access when you need it. Use it if you lose your job, or are affected by this banking crisis in some other way that causes a financial crisis for you. Third, consider getting my audio book "How To Live Debt Free" which details how to do this and other things to break our nation's addiction to debt one person at a time. (see details in previous post)If you are debt free, you should be less affected by a "freeze" in the credit markets, and more prepared to weather it.