Savvy Frugality: Build Your Own Bailout

It's in the news every day: the U.S. government considers bailout plans for different businesses and industries that are on the verge of collapse: stock brokerage firms, banks, auto manufacturers. You might be asking yourself, "Where is MY bailout?". After all, individual stockholders and small business owners have been hit particularly hard during the current recession.

Well, there is no need to wait until President-elect Obama is inaugurated to gain some financial relief. You can build your own bailout.

The Today Show has done a pretty good job of presenting personal finance tips lately, and they recently took a look at what the common man or women (that's us) can do to strengthen their own financial position. These tips are going to look familiar, because they are the same type of tips we have been promoting at Savvy Frugality for 18 months now. These tips aren't "sexy", but they are timely...and they work. I'm living proof of that. Six years ago, I had massive amounts of debt, no savings and I ran out of money between paychecks. Things couldn't be more different today...even with the state of the current economy.

Now, let's quickly run down the tips passed along on "Today" (with comments from Savvy Frugality):

1. Track your cash. You can't begin to dig yourself out of a hole until you know how deep it is. Start tracking your expenses so you know where the money is going.

2. Build a budget. I actually prefer the term "spending plan". You plan to spend your money. The word "budget" is like the word "diet". Everybody starts them with good intentions, but they eventually stray back to their old ways. Like losing weight, learning how to effectively spend and save is a lifestyle change.

3. Stop your spending. OK, you still need to eat, but you know what we mean. Put the credit cards away, already.

4. Save, save, save. You need to stick away a percentage of your paycheck everyday. Ten percent would be great, but if you have to start lower, go ahead. Just save SOMETHING. Try to save $500 at first, then work your way up to a month's worth of living expenses, then three months, and then six months. When you have six month's worth of living expenses in a savings account earning interest, you won't believe the weight that's been lifted off your shoulders.

5. Save for retirement, too. Your kids can borrow money for college, but you can't borrow money for retirement. If you are short-changing your retirement account, you're facing a pretty bleak future. If you're still working at 70 or 75, make sure it's because you want to, not because you have to.

These tips are discussed in more detail in the video: