Are You Prepared for the Worst?

Hank Paulson the Treasury Secretary, and the government are working on a plan today to set up a government facility to take on bad debts from financial institutions to prevent the global credit crisis from worsening. They say that the problem is that companies who borrow to keep their businesses running cannot get credit. There are questions as to how fast the government can actually implement such a plan. Some say it could take weeks. I don’t know what the repercussions of a move like this would be other than we the American taxpayers would be taking on more debt.

White House spokeswoman Dana Perino questioned whether doing something in the middle of a market correction was wise and acknowledged it could be difficult to approve something quickly.

The government says that the facility would be similar to the Resolution Trust Corporation which was set up on 1989 to take on all the failed thrift assets during the savings and loan crisis.

Even if the government’s plan works, there will be some fallout. Between Lehman Brothers and bank failures, many people have already lost their jobs. Edward Liddy who took over as chairman and chief executive of AIG said that his intention is not to liquidate the company. However, as part of the federal bailout, AIG will have to repay monies borrowed from the government by selling assets or units. Since the economy is in such a mess right now, I wanted to give you some tips on things you can do now to prepare in case things get worse.

Your Job

Worrying about your job won’t help. The only thing you can control is your attitude and your actions. What you should do instead is be proactive.

Corporate layoffs happen when the overall job market is in decline. So stay alert. Listen for rumors because there is almost always some grain of truth behind them. You can use Google Reader to stay updated to news releases about the company that you work for. Other signs that layoffs are coming are when job perks are reduced.

Be visible and visibly working hard. Be at work before your boss gets there and don’t leave until after your boss leaves. You want to be seen in the office as much as possible. So if you planned a vacation that you can cancel, do so. You could let the boss know that you want to stick around and help support the company since things are tough right now.

Above all, stay positive and don’t gripe. You don’t want to be seen as part of the low morale in the office.

Your Money

You should be actively building your emergency fund. Cut down on discretionary spending and save more.

Lower your credit card debt as much as possible.

If you have more than $100,000 in one bank, be sure to read the blog post by Chris Rowe of The Tycoon Report, How To Fully Insure Your Deposits.

Your Future

You should always have an up-to-date resume. If you haven’t updated yours recently, it’s time to update it. Add any new accomplishments with a bent toward the job you want in the future.

Network and stay connected with people. Social networking sites like LinkedIn and Plaxo are good ways to make business contacts. Have lunch or coffee with your network. You may need to help someone in your network, and in turn when you need help they may be there for you.

If you do end up being laid off, make sure that your health insurance is continued through COBRA. If you are in the first round of layoffs when the company still has the most money, negotiate a severence package immediately.

One last thought - I received a zero percent interest credit card offer from Washington Mutual yesterday. I figured if they are that desperate for new customers, maybe I should take it. (I wouldn’t put money in their bank right now.) I changed my mind though because I figured if they get bought out or taken over by someone else that they would jack up the rate. Besides, if I go through all the trouble to fill out the form and mail it in, they may not exist by the time it gets there. What do you think?