12 Ways to Thrive in This Economy

This is a guest post from J.D. Roth, who writes about smart personal finance at Get Rich Slowly.

The economy is down the tubes and things are looking bleak. The mood in the U.S. hasn't seemed this gloomy since the early 1980s. Three of my friends have been laid off recently, and several more fear for their jobs. Just yesterday my wife learned that her workplace will see layoffs, and she's worried.

Lately, conversations seem to revolve around three themes: controlling career, managing money, and selling stuff. People are getting serious about financial responsibility — but is it too late? I don't think so. Here are some effective ways to deal with each of these concerns.

Control Your Career

Your career is your greatest asset. Do what you can to protect it. If you don't have a job, you don't have income, and without income, you're fighting a losing battle. My friends — both employed and unemployed — offer the following suggestions:

• Ask for a raise (even in this economy). Good work deserves good pay. Obviously, you're not going to get very far if your company is hemorrhaging money. Timing is important. But if you're overperforming, if you're doing the work that nobody else wants to do, then it's fair to ask for more compensation. (Here's some great advice about how to demonstrate that you deserver a raise.)

• Take a second job. One of my readers recently wrote to tell me that she's thinking of taking a second job in order to increase her cash flow. She's worried about the ethics of the situation considering the economy. I don't think it's an issue. If she's qualified and the employer wants to hire her, that's great. Working a second job is a fantastic way to boost your income, allowing you to pay off debt, build savings, or meet other financial goals.

• Network. Networking gets a bad rap, and that's unfortunate. Sure, nobody likes the insincere gladhand. But legitimate networking — building business contacts for mutual benefit — can be a godsend, especially when things get rough. Don't network for the sake of networking, but absolutely strengthen the bonds you have. Just in case.

• Pursue personal development. Make yourself indispensable. Read books about your field. Take community college courses in the evenings and on weekends. Master skills that will help you further your career objectives, both now and in the (theoretically) rosy future.

Manage Your Money

When your finances are pinched, cash flow is important. If your expenses total more than you bring in every month, you simply fall further behind. But if you can find ways to free up even a little cash, it can make a huge difference to your peace of mind — and your ability to stay afloat. Here are four smart ways to manage your money during a crisis:

• Reduce recurring monthly expenses. When times are good, it's easy to make monthly commitments: deluxe cable television packages, magazine subscriptions, elaborate cell phone plans. One of the quickest ways to free up cash flow is to trim these recurring expenses. You don't necessarily have to cut them completely, but drop the level of service. (I cut from deluxe cable to basic cable, for example.)

• Get out of debt. Debt looms large, especially during a recession. It's important to focus on eliminating as much as possible, especially if you anticipate rough spots in the future. I realize that the debt snowball isn't the best mathematical choice, but if you can bump off even a couple of your smaller obligations, you an free up enough cash flow to make a difference if something bad does happen.

• Increase emergency savings. I'm shocked by how many of my friends have no emergency savings. An emergency fund can be a life-saver, especially if your job is in danger. But don't just stick your money in an account with an interest rate near zero. Many credit unions and small banks offer rewards checking accounts with rates as high as 6% — if you meet certain conditions. Otherwise, an online high-yield savings account is a great choice. Put your money to work, and hope you never need it.

• Choose the right asset allocation. I am shocked by how many people I know — many of whom should have known better — had their entire retirement savings in stock. And I'm even more shocked by how many are now moving entirely to cash. Choose an asset allocation that is appropriate for your age and circumstances, and rebalance your accounts regularly.

Sell Your Stuff

What happens if you find yourself overextended, with too much stuff and not enough money? It's time to sell some of the things you own. This is a last-ditch effort of course, but sometimes it's necessary. When I was digging my way out of $35,000 in debt, I was able to generate thousands of dollars by selling the stupid stuff I'd bought on credit.

• eBay. If you decide to sell your things, your first stop should be eBay. You can't sell everything here, but you can sell your best items, the ones that offer the largest potential return. Using eBay can generate some big cash quickly. (Here are my tips for profitable eBay auctions.)

• Amazon Marketplace. For smaller things, like books and DVDs, the Amazon Marketplace is a good outlet. I've had several readers report good results purging the stuff they no longer use. This can be a hassle at first, but once you develop a system, it's not that bad.

• Craigslist. For larger items, you'll need to use Craigslist or something similar. Craigslist allows you to connect directly with local residents interested in buying your stuff (or hiring your services). My wife and I have used Craigslist extensively to buy and sell. It's a great way to turn your junk into cash. (Here's my list of Craigslist tips.)

• Garage sales. The first three methods can yield huge results for minimal effort. Yard sales are a little different, but they have their place. We've been able to generate several hundred dollars a year by following some simple garage sale tips.

Final words

This recession is scary. Things look bleak. But if you're willing to act, you can take steps to protect yourself. There's no guarantee that you won't suffer financial hardship, of course, but remember: the best defense is a good offense. If you'd like more ideas, check out the Free Money Finance guide on how to make money and save money.

Read more from J.D. at Get Rich Slowly, or follow him on Twitter.

Comments

[Dave]

Wow. No offense but this is one of the most pollyanna blog entries I've read. Not to mention generalized and of little practical value. Here is what to do in the face of record unemployment, massive loss of wealth, and the worst economy since the Great Depression: Get a job (or 2!), pay down your debt, and sell stuff. Gee, it's so easy, why didn't I think of that?! Someone make this man Secretary of Treasury!

Reference to SNL's Weekend Update: "Fix it!"

[Angie]

If you are worried about an impending layoff shouldn't you save your money instead of paying it towards your debt?

[Scordo.com]

I think a broader tip is just to re-focus and think more deeply about your life, in general. Folks who are in good financial shape probably don't need to change much, but folks who have been "liberal" with their personal finance philosophy should aim to work on the tips in this article.

Best,
Scordo

[Trask]

Good one Dave.

I'm waiting for the standard "spend less than you earn" catch phrase this blog is famous for.... that would solve ALL of your problems right????

[TheVanMan]

Why didn't I think of simply asking for a raise? The state the economy is in I am sure to be welcomed with open arms!

[Paul Morales]

Awesome words of wisdom. I'm working on things myself in this down economy ;(

[Terry Pratt]

My 'career' is already hopelessly trashed; I officially stopped looking last week after reading a newspaper account of the owners of a new local Japanese restaurant getting ONE THOUSAND replies in 72 hours to a blind hiring ad on Craigslist.

People tell me that there really isn't much I can do at this point to get a good job.

[Willy McNoodle]

Something else to consider if you are unemployed is to MOVE. Unemployment isn't spread across the country evenly. There are parts of the country where there are opportunities and other places where there are a million applicants per job.

If you are young and mobile, perhaps finding a job in another area may be your way out.

[Terry Pratt]

Why didn't I think of simply asking for a raise? The state the economy is in I am sure to be welcomed with open arms!

"But if you ask for a rise/it's no surprise/that they're giving none away" - Pink Floyd

[Ace]

It's a great time to reevaluate your life. People tend to work best when they are at the lowest point of their lives. Thrive in this bad economy by doing what you love, even if it is outside of your field.