Friday, November 26, 2010

Lessons Learnt during Unemployment

The most important lesson learnt during my bout with unemployment is that you should always have savings on hand for at least six months ( and in this economy at least one year) and it should include your mortgage payments, your car payments (if any) and your living expenses like groceries, utilities etc. Apart from this you should have at least six months of family health insurance expense at the market rate so that you don’t have to spend too much of your savings. Second thing I have learned is that does not just live on your paycheck but do something beside it to supplement your income. That you can do it by selling stuff on auction sites or some other consulting work during the weekends or after your regular day job so that you are not caught surprised if and when you get laid off.

This supplemental income can make you save the above mentioned emergency fund while your current salary can pay for your ongoing expenses. It is really imperative that you should not rely on your day job alone to meet your expenses (unless you are really making well into six figures). These two lessons are the most important one I have learnt. Besides these the next important one is that you should not rely on anyone for your job search since they are in the same boat as you when it comes to job searches. Do your own search and create your own network and do something rather than just sending out résumés alone since it is just a waste of your time and it just creates more disappointment and resentment against your fellow employed people.

Thursday, November 25, 2010

Family support is crucial

During my months of employment, the only thing that kept me going in my search for a job (besides money considerations) was my family support (both from my parents side and my in laws side). I don’t know about you but the prayers and good will that they generated and the support they extend was very crucial. And my wife was working during all this time and understood what the job situation was outside but when I found a job she was relieved that the burden of making a living will be shifted to me.

You always read and hear about how the family support was crucial in a person’s critical time and this was no different in my case. This is the most important thing that I learnt while I was unemployed that your family is the one who is there for you always and their support is crucially important in making your life a little easier in search for your job. So if you are in a critical phase of your life (and not necessarily unemployed) you should count on your family always to support you to get you through.

The Housing markets go around

Every time there is an upswing in market, the experts cheer it as a sign of economic rebound and if there is a downswing, there is all talk of gloom and doom. This housing market will remain such as long as there is a shortage of jobs and people are not confident about investing a huge chunk of money into their biggest investment of their lives. So it is useless to lose your sleep on the monthly ups and downs of the housing statistics (like new housing starts, existing home sales etc), although if you are working in that field, you do ponder over it very closely.

Although many people will disagree with me regarding whether to put their money in the housing market for the near future, but I still believe that the real estate market is the best long term investment you can make. Although you have to be careful not to overpay for a house, but still there is land and farms to invest and if you want income from your house, you can rent it out since renting is now the new form of investing without getting yourself emotionally or financially tied to your home. If I had or have some extra money, I would rather buy a land or a farm or both with houses or without houses on it and watch them appreciate in price overtime. So my advice to you is that housing market will not improve overnight and there are places where it will take more years to sort out the foreclosure mess and job markets but when its done, you will see growth in that markets which will real and sustainable over a period of time.

Back to work

Finally after a futile search of eight months, I was finally confronted with the prospect of two different jobs, and after a long discussion of the pros and cons of each job with my family and myself, I was able to decide on the best of the two and now I am a gainfully employed person and out of the statistics of the unemployed. It was nice getting back employed and a huge burden on my shoulders and my family has been lifted. And now I still hear people complaining about their job and how much they don’t like it or they are stressed to the max. But if you ask me, there is no more stress than being on the unemployment line and not knowing when you are going to get another one especially in this economy.

To people who are employed, they don’t realize how tough of a market it is out there for the unemployed. I have been there and I know the situation and if you have a family then your worrying become manifold. You have to pay your bills and then there is the huge burden of not having your health insurance and then the mortgage. All of this cannot be continued on your unemployment insurance (if you have one). Then sometimes in search of a job, you become frustrated when after sending so many resumes, there is no reply and you sometimes get discouraged. All in all I can say is that it is great to be back to work and if don’t like your work, contact me and I will let you know the other side of it.

Friday, November 19, 2010

Managing Debt while unemployed

There are so many shows to tell you how to manage your debt when you have a job, but I really see any shows which says that if you are unemployed how to deal with your debt. The unemployed are not the U.S. government that they can borrow easily or just print money and then go about their lives. They need real help in dealing with their debt since their debts goes up considerably without a corresponding decrease in their liability. They have to juggle about their daily necessities and try to manage which bills are going to be paid first.

The only thing on the unemployed person’s mind is how to put food on the table and roof over their head while searching for a job. The debt is the last thing on their mind and managing debt the lesser of it too. But all the financial advisers tell you is to pay your higher interest debt first. But my question is with what the person should pay it for with. Whatever money they receive through unemployment benefits goes straight to providing necessities and not reduces debt. It would be interesting if the experts would find a way to help the unemployed manage debt with non traditional methods than with the routine that they keep on saying day in and day out.

When will the stimulus end?

The Fed is at it again, purchasing almost 600 billion dollars in debt to push the long term rates lower. I have no idea what the Fed is thinking but enough of this stimulus. It has been going for too long and the Fed and the government is getting impatient with the slow pace of job creation and economic growth. By throwing more money to the same problem, would they be able to create the conditions for faster growth and job creation. Here I will differ (as did many countries and central banks around the world).

The public has lost appetite regarding more stimuli since the last one did not achieve the desired result of reducing unemployment (although it averted the banking crisis-which is still being debated). I now believe that the Fed should leave the markets alone and let the free market do its work since we are in awash in so much money that we don’t need more help. Let the government devise sound economic policies and let the free market take care of the rest, since the government has already put too much money into the system, the job creation and economic growth will take some time since this economic mess was not created overnight so the solution or the resolution of this mess will not happen for some few years (baring any more unexpected events).

The French Pension protests

Despite all the protests by the French regarding the pension reforms, increasing the retirement age and the years the collection of the benefits, the French government has finally passed the reform package. I believe it is the right thing, although most of the French would feel a sense of loss regarding their entitlement, but judging by the calmness now in the streets of France, People are coming to terms with the new reality. It was just a matter of time, when the reforms would have taken place since most of the developed world is in a big financial crunch; this recession has just created the right atmosphere to implement quickly this reform lest the people start to protest more loudly once the economic situation improves.

But even if the economic situation improves, does any modern industrial nation have the capacity to keep on providing benefits without additional sacrifices from the recipients, I don’t believe that. Unless you keep on borrowing to pay for the additional services (since the current revenue is only useful for day to day governmental operations) and burdening the coming future generations, this model of providing benefits from yesteryears will have to be adjusted to the new economic realities, and the French decision is in the right direction.

Sunday, November 14, 2010

The British budget cuts

The British has started to take bold steps to cut their budget deficit. Although people not used to it are protesting and I sympathize with that but it is not about the immediate problems but for the future of that country. The increasing debts that the developed world is taking to provide for their citizens can no longer be sustainable until the people also start to sacrifice and make do with less or even pay for the services that they were used to not paying for it. The new government in Britain have realized that without massive cuts in spending, the investors and the financial markets would not keeping on buying government or buy it at a premium and also the reality is that the spending has been outstripping the revenues too much.

I can understand that governments have an obligation to provide their citizens a decent social coverage but what is the limit of the decent coverage and where does it end. The more you give to the people, the more they will come to expect of it. In the good old times, it can be provided, but those times are long gone and probably would never come back given the massive amounts of debt that have been accumulated in yesteryears. For the sake of their kids and grand kids and the generations to come, the British( along with the western world) would have to start reining in spending or they will not be able to even get loans without massive interest hikes and diminished access to financial markets.

More Federal Deficit and Debt

We are now in an era of having trillion dollar deficits as opposed to hundreds of billions of dollars and the effect of these big zeros have started to make us numb. It has been constantly two years in a row that we are in the trillion dollar zone and I don’t know how many years we will be in that territory. We have been accumulating debt at a faster rate than anytime in our history and this is because of this recession. But in order to ride out our recession, we are essentially spending our way out of it which I believe is not the answer. The economists who are saying that we should be spending more right now and when the economy booms we can pay out our debt are at a loss to how are we going to reduce our current debt and can we able to sustain consistently high levels of debt.

We are just paying hundreds of billions of dollars in interest alone on our more than 13 trillion dollars of debt without even putting a dent into the principal we owe. It is like the household budget that we keep on accumulating debt and interest without paying off any principal. In the government’s case, although it can print money and issue debt but how long are the investors going to keep on buying it without thinking that maybe the debt is never going to get repaid (which sure seems like that). Although technically and theoretically the U.S. government cannot or will not declare itself insolvent but the specter of not paying our debt or even rescheduling it will completely wreck the world economy, not to mention the financial markets of the U.S. and the investors. Stay tuned for more on this.

Privacy Concerns and Reality

Lots of things have been said about privacy and how it is affecting our lives, but there is no escaping the fact that we are also to blame our selves for exposing ourselves so duly on the internet. First of all the things that are not in our control, like when we give our social security numbers and our credit card numbers on line to purchase something or to apply for a loan. The technology is so advanced right now that almost all of things are being done online in order to save money or to have our convenience but this saving money and convenience have a price. And this price we have been paying lately through breach of our information and identity theft online.

I have also been a victim of this online theft, but apart from this, we have also started to give more of our information in the form of social networks and our resumes being online. When we shop, we use our credit cards to make purchases and thus give our address and credit card numbers and when we apply for a car or house loan or anything to do with our social security, we willing or unwillingly have to give our numbers on line and also with this abundance of social networks, we constantly update our status or where we are and we are doing at a particular time so that we invite unscrupulous elements to tap into our information. The reality is that with all this hue and cry about privacy and identity theft, we are still putting more and more of information on line and then try to surprise ourselves when we fall victim to it.

Being a Celebrity

As the title suggests, being a celebrity has its perks and privileges, but sometimes it is shadowed by the publicity or invasion of privacy that some celebrities crave. I for one would not want to one of those celebrities, where even your sneeze or some little accident becomes front page news on tabloid magazines or even if it is not true becomes a gossip columnist’s paycheck for a while. Then you start to refute that gossip and it becomes a snowball of more gossip or truth and lies that you can’t control. It is a whole industry out there where the hungry entertainment media wants to dwell on the success and the miseries of the stars.

But I also believe that it is not a fault of theirs alone, as some of the same stars when they are not that famous try to have every opportunity to be in the news and when they become one crave for the private lives they once had. And in all this the normal folks sometimes crave or sometimes even enjoy the success and the miseries of these stars. They become jealous because of the stars immense status and success but they also enjoy in their miseries. These stars have the advantage of being invited into exclusive parties but they are also scrutinized intensely even for little mishaps or happenings. This is the biggest disgusting thing that I believe which makes me really cringe for the privacy that I so much cherish. Being famous would be fun but to be constant under radar for little things and invasion of privacy into your family lives and beyond is where I draw the line and then I need my obscurity and anonymous but it is hard to have both I guess.