We hear it all the time, recession this, depression that. If you are the average hard-working Joe, you don’t have too much to worry about unless you get laid off. If you do get laid off, I’ll be making a future post about what to do if you get laid off.  As long as you have enough income to cover yourself in the meantime, everything should eventually work itself out.

• What about my retirement or investment accounts? Those are at an all-time low! As long as you weren’t planning on cashing in on all your investments right now, you should be just fine. If you are investing for retirement, and you don’t plan to retire for another twenty years, you have plenty of time to let your investments recover before liquidating them.
  • What if I am about to retire? Typically you don’t empty your entire retirement account in one day. You make withdrawals from it while the balance continues to run with the market
• What if my kids are about to go to college and the fund is at an all-time low? Just like your retirement account, you won’t be liquidating your child’s entire college account at once. If you are worried that there won’t be enough to make it through the next four (or five… or six…) years, have them take out a student loan. This will help them build credit so they can qualify for a mortgage once they graduate and pay off the loan.
• My house has lost so much value that I now owe more than I own! This is called being “Upside-down” - the value of your home is less than the remaining balance of your mortgage. As long as you stay put and continue making the mortgage payments, your home value should recover and eventually you will start building equity. Here is where you could run into trouble:
  • If you need to move. – If you absolutely must sell your home to relocate for work, talk to your lender about what your options are. They may be open to negotiations. In most cases, they are only entitled to your house, so they are usually willing to talk to you so they won’t have to foreclose.
  • If you are in an adjustable-rate or negative amortization loan. If your monthly payments are set to skyrocket soon, take a look to see if you can easily afford them. If you can’t, you risk letting your house fall into foreclosure. If you know you won’t be able to make the payments, see if you can refinance or negotiate with your lender so they don’t end up foreclosing.

Just hang in there and the economy should work itself out. Unless you are an investment banker with all your money on the market, just continue working, paying the bills and things will work themselves out.