Right to the Point1/8/09

Weathering this perfect financial storm

Jan. 8, 2009

By Mike Benevento

It’s a new year and Congress continues to spend your money like a drunken sailor on shore leave. Having spent billions already, it looks to spend over a trillion more in bailouts, stimulus packages and other handouts. Experts predict the economic crisis will last at least another 18 months. So, while Washington continues to give your money away, here are some tips to help you survive the worsening financial storm.

First, don’t count on the government bailing you out. Be self-sufficient. Ironically, while the money comes from you, none of the trillions in giveaways will reach your family. (Unlike the big three automakers, you don’t employ lobbyists.) Your family is too small for government to take care of. You must do that.

Keeping your family strong is ultra-important. For it’s families that watch out for each other, raise the young and instill values. If you have school-aged children, take interest in their education. That means monitoring their homework and asking questions about their learning. It also means being involved in after-school activities like plays, dances and sports. (A hint: Most teachers can be reached via e-mail.)

Obviously, for the next 1.5 years, being frugal will be the way to go. Try to live a simpler life. You have seen inspirational quotes about living simply. The time is now to give it a shot.

A budget is a great tool for living within your means. First, track all expenses — big and small — to determine where your money is spent. Determine your short- and long-term goals. Create a budget, modifying it as needed. Do your best to live by it and you will be amazed how much easier paying the bills will be.

Depending on your financial situation, it may be time to concentrate more on life’s necessities and less on life’s desires. In order to help sort wants and needs, ask yourself a couple questions before buying relatively expensive items: 1) Is this something I need, want, or is it nice to have? 2) Since I have lived this long without it, should I buy it now — or later?

Another device to help evaluate a potential purchase is to figure out how long you have to work to pay for it. Knowing that, you can decide if the purchase is really worth it.

This method starts with determining your hourly take-home (net) pay. For example, let’s say your annual salary is $32,000. After Social Security, Medicare, Federal and state taxes, your net pay is about $24,500. For a 40-hour workweek, your take-home pay comes to $11.75 per hour. Call it $12 an hour to make calculations easier.

Now, pretend you want to watch the new Batman movie in your home. “The Dark Knight” DVD sells for $24. Thus, you must work two hours to earn the money to buy the movie. If owning The Dark Knight is worth two hours of your life, then buy the video. If not, you may choose to rent the movie — working less than a half hour ($6) to pay for the rental.

Being frugal also means paying less for leisure activities. Lake Monsters baseball, Ice Storm football, Glades hockey and Frost Heaves basketball are very inexpensive compared to watching games at Fenway Park or Giants Stadium. Other ideas may include sledding, daytrips, camping and spending time playing board games with friends and family.

Don’t overlook events in your area, such as high school musicals, band concerts and town recreation activities (like parades and Easter Egg Hunts). Even local sporting events — including Little League baseball, high school football and college basketball — are fun to watch. And, you can afford to pay the players’ salaries!

Continue to remember others, by donating to local charities and your church. Please consider volunteering your time. Numerous studies show that charitable activities release endorphins, causing a person to feel happier. Thus, besides helping less fortunate others get through hard times, you will physically feel better.

Champion what is right and good. Please make your opinion known by talking to people and writing letters to the editor. Just as importantly, write letters to legislators, senators, the governor and even the president. It is your money they are spending. Give them oversight to ensure it is appropriately spent. Don’t let them waste your hard-earned cash.

In summary, while the economic predicament will last well beyond today’s date, you are not powerless. Living simply, spending time with family and friends and helping others will better allow you to weather this perfect financial storm.

Michael Benevento is a former Air Force fighter jet weapon systems officer. He has a bachelor’s degree in Military History and a master’s in International Relations. Mike resides in Williston with his wife Kristine and their two sons, Matthew and Calvin.