Here are some essential financial strategies to consider before and after we potentially hit the fiscal cliff. Given the political uncertainty and the lack of consensus on tax policies, it’s wise to be prepared.
Before the Fiscal Cliff:
1. Consider Market Positions: With the possibility of a fiscal cliff increasing, consider balancing your investment portfolio. You might want to think about short selling or looking into gold as these could potentially hold or increase in value if the market dips.
2. Delay Refinancing: It might sound odd, but holding off on refinancing could be beneficial. If the crisis worsens, we could see a drop in mortgage rates as a reaction to a move towards safer investments like U.S. Treasuries.
3. Secure Mortgage Rates: If you’re worried about the economy’s trajectory, locking in a mortgage rate now could protect you against future unpredictability in the lending market.
4. Collect Debts: If you have outstanding personal debts owed to you, try to collect them now. People might be less likely to pay you back in a tougher economic climate.
5. Organize Your Finances: Make sure you know where your money is going and how your assets and liabilities are arranged. Ignorance isn’t bliss when facing economic uncertainty.
After the Fiscal Cliff:
1. Tighten Your Belt: If the fiscal cliff leads to economic hardship, reducing your caloric intake and overall spending can help stretch your resources.
2. Stop Spending Unnecessarily: In uncertain times, cutting non-essential expenses is crucial. This helps you prepare for potential income reductions and economic slowdown.
3. Develop New Income Streams: If your job is at risk, or you foresee pay cuts, starting a side hustle or finding alternative income sources can provide financial cushioning.
4. Consider Major Life Decisions: If you’re thinking about marriage or other big commitments, assess the financial implications in this new economic reality.
5. Re-evaluate Your Political Stance: Reflect on how governmental decisions affect your financial situation. Consider whether your current political support aligns with your economic interests and well-being.
General Preparedness:
– Be Proactive with Your Finances: Utilize tools like Personal Capital to keep track of your finances, analyze potential fees, and plan for retirement.
– Stay Informed and Ready: The political and economic landscape can change rapidly. Stay informed and ready to adapt to new circumstances.
Understanding and preparing for these financial moves can help you navigate through uncertain times more effectively. Whether or not we go over the fiscal cliff, being financially prudent is key.
