CR Money Special: 10 Rules for a New Economy Talking Points
Negotiate everything. One of the few advantages of a bad economy is that the buyers hold all the cards. CR’s nationally representative poll found that 83 percent of Americans negotiated better deals on hotels, 81 percent reduced cell phone bills, and 81 percent paid less for clothing after haggling.
- Be aware that your risk tolerance is probably lower than you thought. Take with a grain of salt advice that young people can afford risky “aggressive” investments because they have more time to make up losses, while older folks should stick to safe “conservative” choices. Focus instead on your time horizon, or how soon you’ll need the money. The sooner that is, the less risk you should take.
- Try to save more money than you think you’ll need. Americans have long been lousy savers, but since the financial collapse, our savings rate has notched up a respectable 5 percent or so. For now, you should make saving a part of your lifestyle, not a fad or one-time project.
- Diversify your skill portfolio, not just your stock portfolio. Build a set of transferable skills that will keep you from being tied to a specific occupation or industry in this downsize-crazy era.
- The real value of your house is that it’s your home. Real estate will always have intrinsic monetary value, but forget about borrowing against that value to sustain your lifestyle.
- Want to retire? Learn to control spending, not just saving. When you can afford to retire does not depend only on how much you saved but also on your spending habits. Reconsider how much your lifestyle requires you to spend—could you move to a smaller home, for instance?
- Educate your kids, but not at the expense of your retirement. Federal loans for college have some of the most flexible payment options of any type of debt. So instead of shouldering the whole cost or borrowing against your home equity, teach your children to dig for scholarships, grants and loans, and to manage debt wisely.
- The best investment tip of all is to invest in your health. The single most common cause of bankruptcy is getting sick. Following a healthy lifestyle will be important to your family’s finances—aside from other compelling reasons to do so.
- Forget about your “relationship” with money, it’s just a tool. If you look at money simply as a matter of dollars and cents you can be more realistic. While it’s true that money matters and losing it hurts, your relationships with other human beings matter much more.
- Move on. Consider only what you can make or lose going forward and, not how much you lost. Don’t be paralyzed by what happened or pursue the same strategies that got you in trouble in the first place.
