This is stupid advice. I freaked out last January and sold all the stocks in my 401k and have since kept everything in cash. My co-workers thought I was nuts. Yeah, real nuts.

The money is going from our pockets to the rich and corporations courtesy Bush tax cuts and corporate bail outs. See? That was simple.

I only WISH I had known about craigslist and buying used years ago vs. wasting so much money on a brand new couch. These items are absolutely worthless on resale value after you bring them home. And they are never new or clean again....most efforts on upkeep are futile and wastefully expensive. Plus, if you ever put them in storage or move to an apt or house with pre-existing infestation problems...your furniture will not be spared.

Buy from normal people in your neighborhood at a moving sale, or when they decide to upgrade...and get them to halve their asking price. The risk is negligible at that kind of pricing... and you're out less money even throwing it in the dumpster than what you'd lose on a new piece that just doesn't work for your space needs or gets damaged accidentally. With substantial savings and no bug issues..you simply can resell or give it away to charity any item that doesn't work out without gut-wrenching financial losses.

Haven't you ever tried to buy something at a rummage sale the owner was So attached to...simply because they had paid too much for it?

I bought a like-new, super-comfy dual-reclining loveseat this year for $85 vs the $150 asking price. I cleaned it and now it only has my own personal cooties associated with it :). It fits perfectly, works great and if I move or it needs fixing...I can sell it, toss it, or fix it for far less than the $800 it would have cost me in a store.

The beauty of re-sale is that if you get a good enough deal...you might even make a profit or break-even on the item-without ever suffering depreciation or wear and tear losses.

Plus you get to brag about what a deal you snagged.

Go to www.freecycle.com too. Normal, hygienic people move and give away extra clutter all the time.

I only WISH I had known about craigslist and buying used years ago vs. wasting so much money on a brand new couch. These items are absolutely worthless on resale value after you bring them home. And they are never new or clean again....most efforts on upkeep are futile and wastefully expensive. Plus, if you ever put them in storage or move to an apt or house with pre-existing infestation problems...your furniture will not be spared.

Buy from normal people in your neighborhood at a moving sale, or when they decide to upgrade...and get them to halve their asking price. The risk is negligible at that kind of pricing... and you're out less money even throwing it in the dumpster than what you'd lose on a new piece that just doesn't work for your space needs or gets damaged accidentally. With substantial savings and no bug issues..you simply can resell or give it away to charity any item that doesn't work out without gut-wrenching financial losses.

Haven't you ever tried to buy something at a rummage sale the owner was So attached to...simply because they had paid too much for it?

I bought a like-new, super-comfy dual-reclining loveseat this year for $85 vs the $150 asking price. I cleaned it and now it only has my own personal cooties associated with it :). It fits perfectly, works great and if I move or it needs fixing...I can sell it, toss it, or fix it for far less than the $800 it would have cost me in a store.

The beauty of re-sale is that if you get a good enough deal...you might even make a profit or break-even on the item-without ever suffering depreciation or wear and tear losses.

Plus you get to brag about what a deal you snagged.

Go to www.freecycle.com too. Normal, hygienic people move and give away extra clutter all the time.

you must be new here too.

Recessions = inflation, so the $ you give them is worth less and less."

WHAT? Cleaning up your debt is ALWAYS a good idea.
It is true that recession=inflation but I would rather pay my debt now and clear it up. It isn't a matter of how much it is worth, it is worth what it is worth now and paying down your debts now
"If you have a fixed rate loan keep it, and put extra money in cd's and such don't spend it. CC's and other variable rate debt needs to be liquidated."
My money markets are beating the hell out of CD's and I can get my $ whenever I want w/o fear of penalties.
CD= certificate of depression, courtesy of Dave Ramsey.

The times are so hard he can't afford the vowels.
Also I believe at this point we are in a depression, or at least heading into one. However all these bailout are a waste of tax money. Make the CEO give up their private jets, and ridicules bonuses and I'm sure the companies can scrape up more money then the government can give them.

My monthly student loan payments, combined, are $75 less than my rent and utilities (admittedly the latter is only half, as my fiance pays the other half).

That debt burden is killing me and increasing next year... if those loans went away I could pay for a whole wedding out of pocket, haha.

@ModernTenshi04: I would consider a debit card to be like cash. You have a finite amount of money in your checking account and you don't pay interest on any purchases you make because you're not adding to or creating a balance that has to be paid later. With a debit card, you're buying now and paying now, just like cash. You just have to be careful and not overdraw on your checking account. :)

@tinmanx: I bought a used car in 2003 and I found it using Vehix.com. When I had done all my research and decided I wanted to buy my car, I ran the VIN on Carfax to see if the car had been in any accidents or had any major recalls. I think it cost me $10 or $20. (They usually list the VIN number on the either the Vehix.com website or the dealer's website, or at least they did when I used it.) The car came back clean, I bought it the next week and just paid it off a year ago. It's been an excellent car and I have no complaints. Vehix.com and Carfax are wonderful resources. Good luck!

@Jthmeffy: First of all, if you're going to post something, please make it readable so it doesn't take me 5 minutes to decipher it. Does your keyboard not have vowels on it? Secondly, the economic experts say we're in a recession. Is there some expertise you possess that they don't? We have lost over 750,000 jobs in this country. More people are losing their jobs every day. Companies have lost their credit and are closing their doors. Just because the oil companies have made record profits doesn't mean everyone else has. The 3 major American auto makers just got handed a bailout because they're losing their shirts. If we're not in a recession, why did Wall Street need a $700 billion bailout to avoid a complete economic collapse? If the economic experts say we're in a recession, who am I to argue? I'm not an economist and can't offer anything to challenge their belief. Why would they say that if it weren't true?

I will buy furniture used, but never couches and never mattresses. And I'll never buy kitchen utensils, tools and electrics used. There's just something about them used that makes me think no amount of scrubbing will get them truly clean.

@HooFoot: I'm going to try to remember what you wrote whenever I waver about making my deposit to my emergency fund. I'm trying to put in $200 a month, which isn't much, but I'm up from $100 a month just a short while ago! Thanks for helping me keep up the motivation!

@Urgleglurk: I was seriously injured six months ago and have been on unpaid medical leave since then. I haven't received a paycheck since the injury, but I have been living comfortably thanks to my emergency fund.

Creating and maintaining an emergency fund should be at the top of the priority list, even before paying off debt. If you ever have a serious emergency, you will be thankful that you planned ahead.

Rcssn = Tw cnsctv qrtrs whr th GDP hs bn rdcd....

Sng hw w hvn't hd tht yt, w r NT n rcssn. SHTTY cnmc tms, lts f bd sht gng n n th wrld, bt TCHNCLLY nt rcssn...

S pls stp sng wrds y thr dn't ndrstnd r dn't cr bt thr mnng jst t hv snstnlst flr n yr pst.. Thnks

In 4 years in the military, I saved up YEARS worth.

Good thing, too, because I've been unemployed for 2 years since.

Or did you mean 3-6 months of paycheck-to-paycheck overspending? Because yeah, you're not going to be able to do that.

Yes, our economy, shining beacon of efficiency to the world, is really good at putting costs in the worst possible places.

And, no lie, one of the ways I got there was dumping in $85 from a garage sale or $100 from teaching a community rec class or $20 from taking a survey.

We also declare "frugality months" in our house where we feel like we've been spending too much the month before. Frugality months almost always result in a little extra to dump in the emergency fund.

There are lots of free Web-based applications available online these days. While your post mentions Quicken and others for desktop money management, I'd also suggest users looking to get a forward-looking glance at their money (for free) try Intuit's Quicken Online. It is especially helpful for basic personal finance tasks, and addresses a different audience need than Quicken desktop software does.

Thanks!
Chelsea, Quicken Online

@tange1: Actually, I tried Yodlee, and I love it. It's become an obsessive habit to check my finances, and I'm more in control of my assets than I've ever been.

I haven't had any major problems with passwords at all, and only site changes have made an impact on my accounts.

I love all these sorts of articles about saving money for the recession. They're tips for life. They're tips to get us out of the recession. Once it's over, I really hope the nation's credit card debt/poor sending habits go back to what got us in here in the first place.

@Erwos:

Me, me, me (or should I say us, us, us). We read Dave Ramsey's Total Money Makeover at the end uf 2006 and in 2007 we paid off $50,000+ (50% in student loan debt) in debt using the snowball and this year we fully funded our emergency fund using the same methods. We also, track all our expenses using Quicken, have a yearly spending plan and work off an allowance system. We had a lot of bad habits but in two short years we have dramatically changed the way we manage our money.

@AliyaBabasaur:

Yay for the ING CD ladder! We park about half our emergency in our CD ladder the rest hangs out in the ING savings acct.

Always a possibility these days.

To some extent, debt can also help you retain some financial flexibility. When our car bit the dust a couple months ago, we took out a loan to buy a replacement; we had the cash to pay for it, but doing so would have wiped out a significant portion of our savings. Ditto with the no-interest no-payments loan we took out to fix our circuit breaker box (which we repaid before the term was up).

It's important, I think, to make sure you have some liquid funds available, and if that means taking out a loan, well, hold your nose and try to make extra payments when you can.

Of course, with the government pumping money into this, that, and the other chances are good that there is some inflation in our future.

I agree with you that fixed rate debt is not as much of a problem as variable rate, though. I'm not in a big hurry to pay off my student loan.

BTW, while recessions normally do equal inflation, this one so far seems to be showing signs of being *deflationary*. I don't think that will last, but it's pretty interesting.

I guess I'll look for signs around the area, that's how I sold my other car.

Recessions = inflation, so the $ you give them is worth less and less.

If you have a fixed rate loan keep it, and put extra money in cd's and such don't spend it. CC's and other variable rate debt needs to be liquidated.

It is always about living within your means, not if you have debt. Debt is a commodity just like eggs, it isn't good or bad. It is just the improper use of debt that is bad.

I struggled to save up an emergency fund for years. Finally about two years ago I set up an automatic transfer from checking into a savings account at the start of each month. I could make it 8 months on that without too many problems. And I could probably stretch it out longer than that if I got serious about cutting expenses.

Credit Cards are the devil.

"For many of us, this is the first recession where we are responsible for our own financial well-being."

I always thought we're all responsible for our own financial well-being. Maybe the editor was trying to imply that people are just now waking up to their own responsibilities?

Anyway, I think the first advice is the best... Don't panic! There's a lot of shit going on, but you'll be more prone to making foolish decisions if you react emotionally.

I think that "Eliminate Waste", "Buy Smart", and "Buy Used" can be combined and augmented with Ramit's "Only buy new things when replacing something old". I feel dumb for not having considered that sort of thing before. It definitely makes me second-guess myself when I'm tempted to buy something. When I see some clothes or computer upgrades, I contemplate whether I will be willing to sacrifice anything I currently have to acquire it. Essentially, for every shirt you buy, you have to give one away. It makes you think twice about the perceived necessity of purchases. It's put a huge dent in my spending.

Or you can keep it all in an INSURED (FDIC) online savings account. Usually with the same if not higher interest rate than short term CDs.

CDs≠insured

@tange1: I tried Yodlee. It failed, daily, to connect to most of my accounts, for no reason. In fact, it failed SO MANY TIMES that it actually caused me to have to reset passwords on more than half of my online-banking accounts! It was miserable. I dropped it and never looked back.

"You should have an emergency fund, with 3-6 months of living expenses in a savings account."

Nice sentiment. Sounds wonderful. I'd like to have that, too.

I've been hearing this advice since the 1970's and I don't know anyone that has been able to do it. Besides, if you're already in the hole with credit cards and loans, you won't have enough money to even start doing this. Great advice if you're just getting started and have no significant debt.

I just wanted to share something that I learned from a financial advisor about emergency funds. Say you've saved $9000 (good for you!), what do you do then? He suggested putting $3000 in savings, $3000 in a 6 month CD and the last $3000 in a 12 month CD so that you always have access to some cash. I thought it was great advice. Now, if only I had all that money, lol. Actually, you don't have to wait until you saved that much, a lower amount would do just as well.

@Jthmeffy:

In all fairness, we already know GDP is sharply negative for Q4, and market conditions across the board have badly deteriorated. It seems a little PollyAnnaish/obsessive to declare this economic environment anything but recessionary. Focusing on one "rule of thumb" definition seems like missing the forest for the trees.

Also - if you're worried about bedbugs, there is still dining room sets/tables/chairs used that have no upholstery to stress about. If nobody bought that stuff used there'd be no antique market...

I've been lucky, I guess. I've bought a used table and chairs, bookcases, etc (but not a couch or bed) and I haven't gotten any bugs.

As far as the hints, Buy Used is my favorite one. I love the flea market and go there all the time. If I need household or Christmas stuff, that's the first place I go.

@Jthmeffy: Haven't you heard? Accurate statistics, economic laws, and objective truths are no longer en vogue.

These days, the media runs politics and behaviors.

[www.frbsf.org]

Did you miss that news story a few weeks ago?

I've used these concepts in the past to leverage lower monthly payments for cable TV, internet, satellite radio, and my landline phones. If these companies are smart, they realize they're the first on the chopping block when things get tough.

And the above is also a good reason to stay out of long-term contracts.

Yodlee never gets any love when it comes to online spending tracking tools. I dont know why - I much prefer it.

Otherwise I'm pretty much set. As long as my company doesn't go under!