Few can escape the effects of the downturn, but Caroline Maddenand Laura Slatteryhave advice that can help you get through the hard times
IT’S A STRANGE world when banks seem to be suffering from the same “insufficient funds” problem as their customers, and recession-scarred shopkeepers are practically paying us to take their dusty, crumpled stock off their hands so they can get on with the business of vacating their premises by the weekend.
But while it might be tempting to shrug and say that all of this faintly unbelievable economic drama can’t really touch you – you’ve got no savings, no pension worth a damn and no job so fabulous that losing it wouldn’t be a mixed blessing – there are hundreds of ways in which the sickened state of the global economy can influence your day-to-day financial decisions. Here are seven steps to surviving the slump:
1. Buy now . . . um, pay now
After the credit binge comes the debt hangover. Those 15 per cent off sales signs should make you feel queasy at the thought of more shopping, not ready to mutate into full bargain-hunter mode – especially if you’re already paying that much in interest to your credit card provider. It’s time to give your cards a cathartic chop. Just remember to avoid the temptation to slot the fragments together again for some last-hurrah online purchases.
2. Renew your passport
There was a time when heading for the airport check-in desk was the start of another dream holiday. Now there’s a new reason to get packing: with the labour market seizing up at home, job hunters may be lured overseas. But one thing has changed since the forced economic migration of the 1980s: in today’s globalised economy, things are tough everywhere. But if you have to be stuck in a greasy kitchen washing dishes for a meagre wage, having New York instead of Navan outside the window might just take the edge off it.
3. Keep your retirement date flexible
Have you ever blinked incomprehendingly at the “expected retirement date” on your annual pension scheme update and felt a bit eerie about thinking that far ahead? The latest financial melodrama has made such long-term planning futile as well as scary. Blame it on Anglo Irish Bank, blame it on Lehman Brothers, blame it on George Bush (it’s probably his fault), but the credit crunch has wiped out around a third of the money in the average Irish pension fund, so you’re probably not going to be in a rush to retire any time soon. On the other hand, your “rightsizing” employer may have other ideas.
4. Don’t sign any property deeds just yet
If you’re currently sitting comfortably in flatland watching mortgage-saddled workers sweat with the fear of being laid off, “Dead money” rent will start to seem more like “smart money”. Who cares about falling interest rates? No amount of rate cuts will help you repay your loan if you lose your job. Take the time instead to scrimp together a deposit for whenever (if ever) job security improves.
5. Keep your friends close and your solvent partners closer
You might be too busy in the throes of heartbreak, anger and regret to care about such prosaic matters, but sooner or later you will start to wonder exactly who is going to clear the overdraft on your joint current account or the negative equity on your co-owned house. However, if your boss hands you a P45, having a salary-earning partner by your side will be a practical as well as emotional comfort, beating any income protection policy.
6. Avoid shoeboxes, mattresses and people called Madoff
If you tend to immediately panic whenever someone says “don’t panic”, then you’ve probably already withdrawn your nest egg/ rainy day kitty/slush fund and stuck it in an impromptu safe at the back of your wardrobe regardless of State guarantees. So you wouldn’t trust a senior banker to take care of your kid’s pocket money? That doesn’t make the shoebox approach any less silly.
7. Throw a “recession session”
You know the drill by now: zoom up the N1 to Newry, stock up on sterling-priced crates of cheap booze and arrange lovingly in a bath full of ice or on your kitchen table. Invite everyone you know who has been made redundant, had their wages cut, had their wages frozen, can’t find a buyer for their house or is just a bit broke and ply them with alcohol to wash away their downturn pain. Alternatively, save on the medical bills for future liver cirrhosis by hibernating fully sober with several DVD box sets for the duration.
The Money Book: Everything you ever wanted to know about your finances (but were afraid to ask)by Caroline Madden and Laura Slattery, Blackhall Publishing, €15
