The Savvy Frugality Economic Meltdown Survival Guide

Banks are closing or being taken over by the U.S. government, brokerages are getting massive multi-billion loans, insurers are going belly-up and the Dow Jones has been on quite a roller coaster ride lately. Images of soup kitchens, massive unemployment and doom and gloom come to mind as some wonder aloud if the U.S. is headed for another Great Depression. Yes, I've actually heard economists on TV use those words. Well, I don't think the U.S. is headed for another Great Depression. The conditions which plunged the U.S. headlong into the Great Depression in 1929 simply don't exist today. That's not to say the economy hasn't tanked in the U.S. It sure has. It was exactly a year ago that I expressed my opinion that the U.S. might be headed for recession...many economists just aren't willing to label it as such.

Even so, some people aren't worried. They aren't even nervous. I happen to be one of those people. If you took steps a year ago, or even six months ago, to get your financial house in order, you'll weather the storm just fine. You could even start sorting out your finances now, and you'll still be fine. It just takes calm, cool reasoning...and a game plan. With that in mind, I present The Savvy Frugality Economic Meltown Survival Guide:

1. As always, establish your emergency fund. Start with $500 and then work your way up to $1,000. After you eliminate the majority of your debt you can concern yourself with saving three to six months worth of living expenses.

2. Check your savings and checking accounts and make sure they are FDIC insured. If your bank does go under, your funds are covered as long as your accounts don't exceed $100,000. If you have your funds in an account not FDIC insured, you'll want to shift some funds to an insured account ASAP.

3. Review the Savvy Frugality Recession Survival Guide. I wrote this 9 months ago, and it still holds up today. The only thing I would change in the post today is I think now is a good time to snatch up stocks at low prices, which I have been doing.

4. If you have your emergency fund and have more than enough to pay your monthly bills, start eliminating your debt. Really hack away at those expenses that are dragging down your finances. There is nothing worse for your personal finances than bad debt, and almost all debt is bad (exeptions: debt that will make you money down the road, i.e. your home, education, investing in a business). Some people say you should start with your smallest bill first and work your way up. I prefer to eliminate the highest-interest debts first, such as high-rate credit cards, and get rid of those ASAP. You don't want the clock ticking on your high interest rate debts. Get rid of them. The people who are riding out the current situation just fine are those who are debt free.

5. Avoid debt. Right now probably isn't the time you want to be taking out any large loans. If you have a sterling credit rating, can get a decent interest rate on a house and you're in the market, then you could probably swing it. If you're scratching and scrimping and squirreling away every spare dollar with hopes of buying a house, a car or some other big-ticket expense, you're probably better off hoarding that money in your emergency fund. Just keep it in an account that you can access easily, and again...make sure it's FDIC insured.

6. Fine-tune your resume. Nobody likes to think about losing their job, but it can happen. If it does, you'll be ready. Also, take this time to keep in touch with people in your network...you know, people that might be able to steer you toward a new gig if your job disappears.

7. Don't panic. It's when people panic and start doing silly things like closing their bank accounts or cashing in their 401k that they get into trouble. TV news programs are doing a great job at scaring the heck out of people lately, but if you have planned ahead, or are currently working your game plan to keep your finances solid, you'll have less reason to be worried.