In previous posts, we discussed two items that can help you avoid a personal financial crisis: establishing an emergency fund and ensuring your portfolio is well diversified.  There are several other key things you can do to protect yourself from crises like we are currently enduring as well as to strengthen your financial foundation.

 First and foremost, make every effort to eliminate all credit card debt.  If you have multiple car loans and a home equity loan, work toward eliminating them as well.

 Second, make sure you have adequate insurance policies for health, life, auto, home and disability.  Too often, our clients don’t have long-term disability policies, yet you are more likely to become disabled on a given day than you are to die!  Also consider buying a long term care policy and an umbrella liability policy.  With our highly litigious society, an inexpensive umbrella liability policy could quite possibly save you from a disastrous lawsuit. 

Once you have addressed the above basics, focus on increasing your savings.  Review your spending and cut out unnecessary or frivolous expenditures.  Make sure you are investing the maximum in your employer’s 401(K) or 403(B) plan.  Take advantage of any retirement plan matching provided by your employer.

 Finally, consider improving your marketability.  Go back to school for another degree or advanced training.  Consider positioning a hobby or a long-held dream to become a future avocation or business.  The days of thirty-year careers with one employer appear to be gone forever.  The likelihood of losing your job due to outsourcing, merger or corporate bankruptcy is greater than ever.  Even if you stay employed, preparing for a second career can position you for an early “semi-retirement” doing what you love.  More and more people are working part time in retirement.  They enjoy keeping busy pursuing their dreams while the extra income reduces the amount of retirement funds required.   Preparing for a second career provides all that and a possible fall-back position should they lose their job before retiring. 

 We will certainly see more uncertainty in the future.  It is important to position yourself to weather whatever storm comes your way.