Start plumping up your savings (if you haven't already). You should be able to afford to pay your mortgage for 3mo even without a source of income. You're in much better financial shape if you have 3-6mo of savings.
According to the Congressional Budget Office (CBO), 2013 is going to be a terrible year…
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CBO: U.S. Is on Track for a Terrible 2013 Recession (Unless Congress Acts)
Today's report from the Congressional Budget Office is not subtle
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Ken & Kiyomi: A Boy and his Dog
Minding the Lathe of Dreams
Typhanie Sobriquet
August 23, 2012 at 3:27 pm
I like how everybody recommends that – having 3 months worth of bill money saved up in case – but that is just not possible for some of us. I think the people that will again be hardest hit by this are probably going to be the ones that can afford it the least.
Ken Foreman
August 23, 2012 at 3:29 pm
If it's not possible, then people are in over their heads. I knew my wife and I bought as much house as we could afford, and couldn't tolerate even the smallest of shocks. Now that we're both 10 years older and 10 years paid into the house, it's still expensive, but we're better paid. It's time to stop living large and to start saving.
Typhanie Sobriquet
August 23, 2012 at 3:51 pm
I can certainly see your point with buying a home. And anything else. If you can't comfortably afford it, you shouldn't be buying it. It's exactly why I don't do credit cards right now.
However, sometimes your combined bills equal or exceed the amount of money you make. That doesn't necessarily mean living beyond your means, sometimes just the basic costs of living don't match up with what you're being paid.
For instance, I don't own a home, but my expenses – which aren't really that much – pretty much eat up my check for the month. That doesn't leave much to actually save. If I wanted to save 3 months worth of bill money, I'd basically have to stop paying those bills for three months to do it. I save what I can, of course, but it takes awhile to build up that much, and that's if no emergencies eat it up. Not that I'm complaining. I don't have things bad, it's just that I find advice about saving and cutting out expenses often doesn't apply in my situation.
But the people who are surviving on barely above minimum wage? They are the ones who are really going to be suffering, I think.
Ken Foreman
August 23, 2012 at 4:04 pm
Cable TV + Internet + Cellular + Eating Out aren't essentials. I knew that when I was alone making $2,000/mo after taxes and paying for a $1,400/mo apartment. In order to save, we need to take a hard look at what we want vs what we need. Essentials are food, car, insurance, gas, utilities.
The same harsh math works in house ownership. The only essentials are: mortgage, insurance, utilities, food, gas, car. Cable, internet, cell phones are all luxuries. People don't need a landline and a cellphone, but they want both. People want cable tv and internet, but OTA television and wireless data still work when if you have a TV and a cellphone. People don't need cable internet AND wireless data, but they want both.
Most of the middle class can survive if we strip all the fluff from our lives. No movies, no eating out, no latest/greatest smartphones. Most people live with high credit and a lifestyle to match their income (me included), so an economic downturn hurts everyone except the super-wealthy. Those barely above minimum wage living with others (parents, family, friends, multiple roommates) are hurt the most.