This week, you get a chance to hear from a few other personal finance blogger friends who are eager to share their perspectives with you on various topics. Stephanie brings up a pretty scary topic for all of us and breaks down what we can do to avoid going over the cliff even if the government can’t get it together in time.
It’s a scary, it’s apocalyptic-sounding and it could be a reality at the end of the year. My fellow Americans, if you hadn’t already heard the news, there’s a chance that we are heading toward a Fiscal Cliff.
What is the Fiscal Cliff?
The term refers to more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after January 1st unless President Obama and Republicans reach a deal to reduce the deficit.
3 Steps to Save Yourself from Another Recession
The President and Congress certainly have their work cut out for them. But regardless of what happens in Washington before the end of the year, here’s what you can do now to help you survive an even worse economy if we end up careening off the fiscal cliff.
Learn a highly valuable and rare skill
Take the time and invest the money now to learn at least one tangible, relevant skill. It doesn’t have to be related to your passion, but it does have to be something that’s in-demand. Being generally good at a few will only get you so far in a bad economy. So teach yourself something specific and marketable that will distinguish yourself as a valuable employee. Teach yourself how to code websites, become a copywriting expert, dabble in graphic design – pick something you know is in demand that will boost your resume.
When it comes to making money, you are only as good as the value that you provide to others. One of the best ways to do that is to start some extra work on the side now. Test out some of the money-making ideas that have been floating around in your head. Experiment with your skills now and see if people will buy what you have to offer.
If you start trying to make money on the side now, you’ll know exactly how to market your skills in the event of unemployment.
Prepare for the worst (and rejoice when it doesn’t happen)
Think about all of the “what-if” scenarios that could happen if the economy went belly-up again. What if you lost your job? What if you lost your house? Would you be financially and emotionally prepared to handle that trauma? Planning ahead will not only help you sleep at night now but ensure you’re ready if you experienced a financial disaster.
Homeowners – Potential and Current
For those considering a short sale you may want to put that on hold until the fiscal cliff smoke clears or go through with the purchase and close before the end of the year. This way you will qualify for the mortgage tax debt forgiveness instead of being taxed on whatever the bank forgives on your loan. For homeowners who claim the mortgage interest tax deduction, if by the time you file taxes there is no resolution then start planning for next year now. Based on the dollar amount you gain when claiming the deduction, start saving for that now by putting it away the same way you would any other large once a year expense.
And the best thing about making a contingency plan and stashing away cash for a worst-case scenario? The worst usually never happens. We may not end up jumping off the proverbial Fiscal Cliff at the end of the year, but if we do, you’ll be ready.