Down and Out on Craig's List

With gas and food prices on the rise, some people who are struggling to cope have turned to selling their worldly possessions on Craig's List and eBay...including some items of sentimental value. According to this article on MSN Money, some of the ads on the free bulletin board and online auctions site have taken on a decidedly desperate tone.

One woman put her engagement ring up for sale. Another sold her grandmother's valued tea kettle on eBay for $6 because her husband was injured on the job and they needed the money.

Of course, I don't know any of these people, but will $6 really help someone in dire financial straits? Probably not. Instead, a major lifestyle change might be in order, such as downsizing the household and eliminating or reducing many monthly bills.

Years ago, I found myself unemployed, and that bout of unemployment lasted for six months. Nothing was sacred. My wife and I eliminated day care, telephone service and cable television. The only monthly bills we paid were rent, utilities and food. Did the other bill collectors howl? You bet they did, but we had to eat. I told them I was out of work, and most of them understood and gave me an extension on the payments. I received unemployment compensation, so that did help, but at that point an extra $6 from eBay would not have made a difference to us at all. These days, that won't even get you 2 gallons of gasoline.

Acting BEFORE you find yourself in a tough financial spot is the key to avoiding turning to eBay or Craig's List as a means of obtaining emergency cash. Craig's List and eBay are NOT emergency funds, and they are certainly no means of guaranteed cash. Here are a few tips from the Savvy Frugality Recession Survival Guide which may help you avoid selling off a treasured heirloom if you get into a bind:

1. The first thing you want to do is insure your most basic needs: shelter and food. Stick any extra money in a high-interest savings account to help cover rent or mortgage payments if the worst should happen. In fact, your emergency fund should have three to six months worth of living expenses in it.

2. If you have a retirement account, make sure it's diversified. Don't have everything in stocks. you should have some savings in lower-risk investments, too...such as bonds, or cash.

3. Stop spending on non-essential items. Put that money in your emergency fund.

4. A new tip I'm adding here: be fully insured. This includes short-term and long-term care insurance. If you became disabled today, how would you pay your bills? Your employer won't keep paying you, and don't depend on Social Security disability. My wife hasn't been able to work for two years due to complications of diabetes, and she has been denied disability benefits through Social Security at least three times. Bottom line: if she weren't married to someone who has a job, she would have been in big, big trouble. Also,

5. Don't depend on your job as your sold means of income. Adopt a "Kramer Philosphy" (you know, the pesky neighbor on Seinfeld)...ALWAYS be looking for some other means of earning income. That might very well include selling some items on eBay or Craig's List, but treat it like a business and sell items you don't mind parting with. Don't post items out of desperation. Buyers can sense this, and you likely won't make much money on your sales.

I have been down and out before. I know what it's like to not know where your family's next meal will come from. It is a horrible feeling. Be proactive. Take steps now to ensure that won't be you in the future.