Are you a wage earner or unemployed looking for some help coping with the recession?

Just because you may not own or run your own business, doesn’t mean you haven’t also behaved in ways that can be tolerated in good times, but which are unsustainable when times get tougher.

When times were good, in general, we didn’t shop around or compare prices. We just spent … and we spent well. We didn’t worry how we would pay for our spending. Some trading the value of their greatest wealth generating asset (their homes) for disposable assets. Some borrowed against the incomes they received from their jobs, which were perceived as ‘safe’. Additional properties were bought on low or no equity, on the history of ever increasing property prices, and on the expectation of continuing future capital gains. We accepted the level of service and costs dictated by businesses because the money was there and we weren’t that concerned about price.

Generally speaking, we spent more than we earned because we considered the value of our homes, rather than the value of our jobs and incomes, as the most important factor in our financial wellbeing.

Just like businesses, these behaviours were never sustainable and invariably the ‘piper must be paid’. Well the piper has arrived and is now asking his due. With house prices dropping, with banks no longer ‘giving money away’, and with employers considering redundancies, or worse still employers who appear financially shaky, some people could easily face the prospect of losing their home under a mortgagee sale, and/or facing bankruptcy.

Luckily, just like businesses, the possibility of a worst case scenario doesn’t just happen overnight and there are signs.

Are You At Risk?

The following questions can help highlight symptoms of problems that are, or could be, building which may lead to you becoming a recession statistics. If you require help answering any of these questions, or addressing any particular issue identified, then give us a call. We’ll be only too happy to help you.

1. Do you know how much you owe?
2. Do you know what you own and how much its worth now (not what it cost, and not what it was worth last year)?
3. Do you have any savings?
4. Are you currently using your savings or borrowing more to meet your normal monthly bills?
5. Are you juggling credit cards using one to pay the other?
6. Do you have a budget?
7. How are you tracking against your budget?
8. Do you know how much you spend and where you spend it every month?
9. Are you paying your bills on time (including the tax man and loan/hire purchase repayments)?
10. Are you spending more than you earn?
11. Are you afraid when you open mail in case its a bill or final payment notice?
12. Do you know your (your family) goals?
13. Do you know what you would do if you (and/or your partner) lost your job?
14. Was your last employee appraisal positive?
15. Are you ‘valuable’ to your employer?
16. Is your employer paying your wages on time?
17. Is your employer looking at redundancies or downsizing?
18. Are you aware of any negative rumours about your employers business?

How did you go? Did you find these questions easy to deal with or not? If you found them challenging then the chances are your success is more dependent on luck than great management.

Can You Reduce Your Risk?

In most cases, we would suggest that at the very least you should be able to reduce your risk. In some cases you'll be able to do very well. Our attached "Personal Success in Tough Times” handout summarises some ideas of things you can start doing, continue doing, stop doing, and assistance you could find to improve your own success. For the best results, you should focus on ideas that best address any issues you may have identified when working through the “Personal risk” questions we posed above.

We have a more detailed version of "Personal Success in Tough Times" which provides specific examples of ideas you can use for each item in our above summarised handout. It's available to you FREE AS WELL, but you just have to ask us for it. You can do that by emailing us using or alternatively you can refer to our 'How can I contact you' web page for other ways to contact us.

Our Number One Recommendation

Your number one priority should be to get within your means as fast as possible, so if the worst does happen and you and/or your partner loses your job, at least you might still keep your assets. If you don’t get within your means, the cost of being forced to sell your assets is too high with your equity being wiped out.

Brydon DavidsonAugust 2009