How to Cope With Uncertain Economic Times
The market’s getting hammered. Economic growth is essentially zilch. There are global concerns. Jobs are nearly impossible to come by. There’s growing talk about the possibility of a double dip recession. No wonder so many Americans are saying that the economy is making them sick.
Here’s how to alleviate some of the anxiety to better cope with uncertain times:
Protect your investments
Hitting the panic button and letting your emotions get the best of you doesn’t do anyone any good, but truth be told: in a volatile environment like this, cash is king. Considering that a new bear market – a 20 percent drop from the stock market’s previous high – is a real possibility, consider bolstering your portfolio with dividend-paying blue chip stocks.
Set up an emergency fund
A study by the National Bureau of Economic Research shows that only about one third of Americans have an emergency fund, yet half those who have these funds say they would still struggle to come up with $2,000 in the event of an unexpected emergency, such as a job loss. That’s scary, considering that the average length of unemployment is now over 40 weeks, a record high.
Prepare for possible rate hikes
The S&P downgrade is not only bad for confidence and for the psyche of the American consumer, but it could also mean higher rates for everything from mortgages to auto loans to private student loans to credit card rates.
Maintain good credit
Right now, to get the best rates on loans, research from Zillow Mortgage Marketplace shows that you need a credit score of 720 or higher. Prior to the housing collapse, a score of 620 or higher qualified you for best rates. Until recently, a score of 680 was something to be proud of. Point being, credit is tight, and it could become even tighter with the S&P downgrade so it’s more important than ever that you maintain good credit.
Looking for work? Cast a wide net
Those who are fortunate enough to find work are trying entirely new things, expanding their skill sets and reinventing themselves. They’re setting themselves apart from the competition – some 14 million Americans are currently out of work – and looking beyond the full-time positions and toward contract/project work. Freelance work, as such, is not only the name of the game, but also the wave of future. In fact, a new report from The McKinsey Global Institute finds that that in the next five years, more than half of employers expect to rely more on temporary, part-time and contract workers for a variety of duties.
Have a job? Work harder to keep it
Announced job cuts were 60% higher in July than they were in June, according to Challenger, Gray & Christmas, an outplacement firm. They’re now at a 16-month high. This not only tells us about the state of the economy, but should also serve as a reminder that if you have a job, you should work harder to keep it. Stay visible, keep your skills up to date, take on new projects, initiatives, and maintain a positive attitude.
Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at http://veragibbons.com/.