4 Ways to Prepare for the Next 2008
The 2008 financial crisis that gripped America and impacted the entire global marketplace may be a decade back in the memory banks, but it is far from the forefront of many minds. As the stock market surges forward from 2017 into 2018, there are those who believe another 2008 financial meltdown (or correction, in the least) is brewing on the horizon. As noted in Business Insider back in 2009, US homeowners lost a cumulative $3.3 trillion in home equity and the stock market shed $6.9 trillion in shareholder value and wealth during the first months of the meltdown. Whether a correction as severe occurs again or not, here are four ways to prepare yourself for the next 2008-like crash.
Build Emergency Savings
Bankrate points to an emergency savings as the first step that can be taken to prepare for another meltdown, the likes of which occurred in 2008. Increasing the amount of liquid assets in your savings account can dampen the impact of short-term unemployment, pad your pockets during a market sell-off, help you live through the recession and keep you afloat during a full-blown financial crisis.
Pay Down High-Interest Debt
Rather than raking up more debt or increasing your debt by taking out new loans or foregoing credit card payments, you can prepare for a meltdown by paying down your debts now. You can start by focusing on the high-interest borrowing represented by credit cards and personal loans. The more money you can keep in your own pocket, the better off you will be when the next market correction occurs.
Live within the Means of Your Paycheck
This bit of advice is great in the face of a financial meltdown, or at any point in your life. You should aim to set aside about 15% of your paycheck throughout the year. If you are spending all or most of your paycheck that you receive each month, you might not feel the pain now, but a meltdown can shine a spotlight on poor spending habits. Remember that just because you can afford something now, does not mean you need to have it immediately. Worse, the ability to afford something now does not mean you will be able to afford it in the future. Focus on spending smartly and avoid overextending your finances.
Focus on the Long Run
Financial meltdowns and crises seem overwhelming when they occur, but it is important to remember that the most dramatic of financial events are often short lived in nature. Today, the 2008 meltdown is something that many have put out of their mind as the stock market surges to new records on what seems to be a daily basis. Regardless of the circumstances, it is advisable to remain focused on the long run when you are investing.
Retirement is the end goal for all Americans. Invest for the long term with the understanding that building wealth over time requires taking some risks in the short term to grow that nest egg.
The best way to handle an economic or financial crisis is to seek assistance from a financial advisor. Call Indian River Financial Group for help.