The media seems to be telling everyone to get ready for tougher days ahead, a bunch of good will financial experts and economists predict periods of deflation to occur during the next few quarters and give the impression that businesses and the average Joe have to prepare hard for the next stage of the current global financial crisis.
So how does the average Joe get ready for a financial crisis? First, is gaining knowledge on ‘what might happen’ and what best than…from a business perspective. Most small and in-between businesses without much assistance from Government bailout or assisted lending would have to employ at least one of the following tactics.
Trimming R&D Budgets
Small scaled and even the larger businesses not in the financial industry, may find it difficult obtaining credit. This means such business must develop internal strategies to staying afloat. If they haven’t already done that, it is expected that within the next few months, a lot of consumer businesses will cut down on their research and design (R&D) budgets.
Reduced R&D’s may mean more or less innovation depending on how you want to look at it. Increased competition for fewer consumers who are not spending as much as they used to leads to added pressure on research teams to develop something out of the box which will put the competition out of business. In another sense, small funds allocated to R&D’s may mean everyone follows the pack. There’s nothing new invented and businesses try to find other ways, such as reduced prices to attract consumers and outwit the opponent.
Cutting Down Prices (Deflation)
A reduction in consumer goods and prices is imminent. Already, housing experts are predicting very low mortgage deals in the New Year and indications to back up these predictions are already coming forth. A period of deflation means prices are reduced by manufactures and retailers in a bid to win back consumer confidence. Consumers still finding it difficult paying off the mortgage could re-negotiate a better deal within the coming months. Taking the big three for example, who have promised increased fuel efficiency and ‘maybe’ lower prices to keep up with transplants and vehicles imported from overseas.
Increased worker layoffs
Worker layoffs are usually the first thing to notice in periods of recession. In the ongoing financial crisis which began in 2008, unemployment rates soared to record high’s as companies sought to stay competitive. Workers whose jobs require less technical skill are usually the first ones to go.
Advice for the Consumer
Get your finances in array.
Now’s not the time to owe credit card debt. Increased interest rates may mean if you’re carrying over balances from so many months ago, and still haven’t please in place a debt recovery strategy, bankruptcy might be the next worst thing to happen.
A debt recovery strategy should include monthly deductions from earnings to service credit cards, mortgage, and other facilities whilst trying to pay above the minimum and avoid late payment fees. A good number of debt consolidation services can help consolidate and reduce the burden of maintaining multiple facilities at once, but always get opinions from recent customers and consider their advantages or down-sides before plunging into one.
A budget should be also implemented to cut costs on daily living.
Order for all 3 credit reports.
In literal terms, a lot more people are having it hard these days. With an average of 8 million reported cases of Identity Theft in 2006 & 2007, increased cases of ID theft are a possible in the New Year. This is coming from a struggle for survival by the jobless and all others who’ll do just about anything to illegally secure a loan or credit card.
Under federal law, every U.S. resident is entitled to a free credit report from each of the 3 major credit bureaus on yearly basis. A number of states also have legislature giving residents in those states the right to order additional reports outside of those given by under federal law.
A crisis is a period when consumers should keep watchful eyes on their credit. A credit report details every account created in the consumers’ name thus allowing a victim identify fraudulent accounts in no time.