While the sun is shining, plan for rain

With the state of the current economic and employment markets, many of us are uneasy at best.

Uncertainty in any form can be challenging and being faced with it on so many fronts can be debilitating. However, there are areas that you can control – one of which is keeping your financial house in order while you are gainfully employed and in a position to plan for the future.

While no one can predict job security or loss, you can and must safeguard yourself and what may be your most precious long term asset: your home. It is more critical than ever that you not live paycheck to paycheck. The time for excess and frivolity is simply not now; it is imperative that you have at least one backup plan. If you don’t have one in place, it’s time to create one.

The first step is to make sure you are living within your means. This sounds basic, but many homeowners – especially those with very low mortgage rates – have acquired additional debt, with payments that are often greater than the mortgage itself. Buy only what you can afford with cash, and question the wisdom of using your credit card for any non-emergency purchases. Making smart choices will help free extra funds that can be put away for a rainy day.  

Americans are saving more and spending less every day; make sure you are among them. Create a household budget. Revisit it frequently and actively trim excesses.

You should also ensure access to reserve funds such as a home equity line of credit or increased credit card/line limit(s). These should only be tapped in the event of emergency – job loss or otherwise – but gaining access after employment has ended will be next to impossible. The old adage is true: Get what you need when you don’t need it because you may not be able to get it if you really do need it in the future. The recent tightening of lending standards only highlights the importance of this point.

Homeowners often reap benefits renters miss out on – being able to write off mortgage interest and property taxes, enjoying the safety and security of mortgage-free homeownership at the end of your payment term and passing on invaluable assets to your heirs. Don’t jeopardize these benefits by being unprepared. Managing debt to protect your home under any and all circumstances just makes good sense. Take control of your financial future today.

Pamela Lamarre and Tracy Dearman are business partners and head California State Funding Group and HSM realty finance management, respectively. For a free consultation, CMA or more information about the mortgage market, email Lamarre at plamarre@sbcglobal.net or Dearman at tdearman@hsmsf.com. For additional information, visit www.hsmsf.com.

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