The recession is reshaping our financial attitudes and behaviors, and the changes may just stick. An article in Money magazine made that assertion using both anecdotal evidence and the results from several national surveys. The story cited a recent MetLife survey in which nearly 50 percent of respondents said they "already had all the possessions they need" - up from 34 percent in 2006. One person profiled used his job loss as an incentive to start his own business and now has the flexibility to have meals at home with his family most nights. "Do I feel victimized?" he asked. "No, I think I've found my way."
Matt's View
The recession seems to be forcing us through something akin to the stages of grief - from denial and anger to acceptance. Many people have had to say goodbye to their job, home, sense of security, or way of life. But some are doing more than simply coming to terms with today's hard realities. They're entering a new stage of rethinking and redefining what matters most. And that's a stage filled with great possibility for making positive changes that will endure.
With the nation's banks now having to submit to stress tests to determine their financial health, CNN and Money magazine decided to create a free online personal financial stress test
. By working through a handful of mostly easy-to-answer questions, you can get a quick read on the strength of your household's finances.
Matt's View
While I like the premise of this tool, I disagree with several of its assumptions. For example, it says we should keep the total monthly cost of our mortgage, homeowner's insurance, and property taxes to no more than 28 percent of our gross monthly income. I recommend 25 percent. It states that there's nothing wrong with financing a car. I believe that not having a car payment is one of the most important keys to living with financial freedom. It states that three month's worth of living expenses is sufficient for an emergency fund. I believe that six months' worth is a more appropriate target. And, when assessing whether we have enough life insurance, it doesn't ask about dependents. Better to use a more comprehensive life insurance needs calculator
.
Still, for all its shortcomings, the CNN/Money financial stress test raises some key questions that everyone should consider.
Dining out is high on the list of expenses people are cutting in light of the recession. But if you know where to look, many restaurant deals are there for the taking. A recent Real Simple article reminded readers about Restaurant.com
, where $25 gift certificates for thousands of restaurants are available for $10. Get on its e-mail list and you'll be notified when discounts of up to another 80 percent become available. The article also mentioned Urbanspoon.com
, which lists restaurants by cuisine, location, and price (including a "cheap eats" section) for 70 cities. For free or discounted children's meals, the Consumerist mentioned KidsMealDeals.com
, and the Associated Press recommended MyKidsEatFree.com
.
Matt's View
One cost-effective alternative to restaurant dining is to buy meals from a so-called easy meal prep store. You can either put together the meals yourself at the store or buy them already assembled. Then they require little more than heating and serving. You get a restaurant quality meal at home and the cost per serving is surprisingly affordable. Here's a listing
of such stores by state.
The New York Attorney General's office has announced an investigation into 14 debt settlement companies across the country, which it says "often prey upon consumers who find themselves unable to keep up with credit card payments in these difficult economic times." In a recent press release
, Attorney General Andrew Cuomo described debt settlement as a "rogue industry" that charges "tremendous fees" and leaves customers in "a worse financial situation." The release stated that, based on consumer complaints, it appears that the companies under investigation may have made false promises as to how much of a person's debt could be reduced and kept fees without delivering promised services.
Matt's View
This is just the latest in a long series of cautionary tales about the debt settlement industry. If you're facing overwhelming credit card bills, call your credit card companies and ask about their hardship programs. You may be able to settle your debts for less than the full amount due without the "help" of a debt settlement company. Just be aware that you will likely owe income taxes on any amounts that are forgiven. Another good alternative is to work with a credit counseling agency affiliated with the National Foundation for Credit Counseling
.
