What's gone wrong, what can still go wrong and what can we do about it

You'd have to be blind at the moment to not realise that our current hardships are caused by financial activities largely centred in the USA. Over a few video segments we are going to look at how this happened and what went wrong and where else is the same thing going on and why this will make things much worse.



Those same practices the turned the mortgage world sour also are used to finance pretty much everything else. So now might not be the time to buy a new car. Unless it's not hit your area yet in which case time is running out on the ability to get loans. In all honesty it has already run out.



So what can we, the guys and gals on the street, do about it?

For one we need to start living within our means again. That means that if our income over the next five years is reliably going to by at a level (let's call it x) then your expenditure when evened out over that time scale wants to be x minus a bit. However if you expenditure is a geeky y>x that is if the amount you spend is more than your income the time is going to arrive when you will need to pay that overspend and you will be lacking the funds to do it with.

I'm not saying that right now is not the time to borrow but we must borrow responsibly. That is, make short term borrowing actions and maintain a level of available funding that keeps you in personal equity against the libaility of the loan. This is easy if you have lots of assets but with just a job and the common pair of liabilities (car and house) you already need to be planning your budget of your income less the liability costs.

It's not all bad news, however.

The sudden shortage of personal liquidity is goign to cause an increase in the number of people selling cars, second homes, spare funiture, second TVs and all sorts of electrical and valuable goods. Many sales lowers the price which is good if you are buying.

Be prepared to haggle hard and ask for discounts. Ask for the biggest discount you can say without blushing. That's the price you want to be knocking them down to. Get an idea of the lowest prices in the area. Be sure to mention that you are aware of these lower prices. Push the price down as far as you can.

Now is, in short, the time to buy.

However buy carefully. There is little credit to float you should you come short of liquidity so make your investments carefully and plan them for the long ride out the other side.

Things that will lower you liabilities and help you maintain better personal liquidity are selling the car, using the bus, getting a push bike, negotiation to telecommute to work and doing everything from the home.

If you work for a company with a car pool make use of it. Better yet see if the boss can be pushed into providing a company car so the costs of the car become his and not yours. They've been doing the same externalisation fo the costs to you for years by making you pay for your travel to work anyway.

Okay time to close with an interview that I am sure will put things in perspective for you.