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Personal finance

Fri., Oct. 10, 2008

Wall Street has its financial rescue plan in place. The real question: Do you have a plan for unloading your toxic debt? Some strategies:

Build up your cash.

Brian Bethune, chief U.S. economist at consulting firm Global Insight in Lexington, Mass., sees the U.S. unemployment rate hitting 6.7 percent by the end of 2009 — up from 6.1 percent for September.

Do what you can to have three to six months of cash to cover bills, in case of a job loss.

“Nothing you do financially will help you sleep better at night than knowing you have money tucked away for a rainy day,” said Greg McBride, senior financial analyst at

Go for a credit freeze.

“In a bad economy, the answer really is not to find more credit to use. It’s to make sure you’re able to make your payments and find ways to cut back and live within your means,” said Eve Pidgeon, a spokeswoman for GreenPath Inc. in Farmington Hills, Mich. But don’t close all your credit cards. As credit could be harder to get, some experts say you might want to keep accounts open for true emergencies.

Do a round of layoffs.

Gail Perry-Mason, a Detroit financial author, said people need to lay off premium cable channels, extra services on cell phones, the latest video games or rounds of golf. She added parents need to set limits on how much to spend entertaining their children, as well.

“They will rob you blind.”

Track every dollar.

Gerri Detweiler, credit adviser for in San Francisco, said the best thing that consumers can do now is track their spending for 30 days.

“This will give you a clear idea of where your money is going and put you ahead if you need to seek help from a credit or mortgage counselor, or even a bankruptcy attorney,” Detweiler said. has information on improving a credit score, shopping for a credit card and paying down debt.

Take inventory.

Times might be tough, but we all have something that brings us joy. Funny friends, warm hugs, a leftover birthday gift card, two consecutive green lights, the best dog on the block.

Some of these things can matter more than ever now.

Detroit Free Press


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