Looming “Fiscal Cliff” Deadline & You

Looming “Fiscal Cliff” Deadline & You

I hope you had a lovely Christmas holiday yesterday. Or, simply enjoyed a day of rest and relaxation if you don’t celebrate.

Mine was fantastic, and not too long ago, I enjoyed a late lunch of yummy left-overs.

But earlier this afternoon, I had the pleasure of appearing on HLN to share some tips on what to do if our elected leaders don’t reach agreement and we, in fact, go over the “fiscal cliff. In case you missed the segment, I thought I’d share my suggestions here, as well:

What to do & what to expect if the “fiscal cliff” happens

Tip #1 – Don’t panic

You tend not to think too clearly when you panic. Thereby increasing your chances of making reactionary choices, instead of smart, strategic ones. So don’t do anything rash. Before solidifying any action ask: “Am I doing this purely because of the fiscal cliff?” If so, think twice.

Tip #2 – Prepare for less cash

If we do go over the “cliff,” you are going to have less take-home pay. Maybe not immediately, but certainly before the end of January. If you haven’t been paying attention to what you do with your money — how much you spend and on what — now would be a good time to begin paying attention. It’s likely that you’ll need to make some adjustments and what you pay attention to will give you insight on what changes will become necessary.

Tip # 3 – Do scenario planning

Because of tip #2, now is a good time to run some numbers according to worst-case, likely, and best-case scenarios. Taking this approach will help you see all of your possibilities for managing your day-to-day cash, credit, and investment portfolio.

Tip #4 – Don’t make any investment decisions before consulting with you tax accountant

There’s a lot of talk in the news and on the interwebs with recommendations for how you should manage your investment portfolio. Be sure to check-in with your accountant and discuss any tax consequences of any moves you make. You’d hate to make a decision based on the cliff, only for the cliff to be avoided; then you may have another (and different) kind of problem on your hand.

Mike and I also talked about how the “fiscal cliff” might affect your 401(k) plan and unemployment benefits, should it happen.

Had I had more time, I would have reminded viewers (so I’m reminding you) of this…

Bonus Tip – Remember to focus on what you can control

When you and I voted on November 6th, we already did our part to weigh on the debate about taxes, spending cuts, and the debt ceiling. Now, more than ever, it’s time focus on what you can do; on what you can control. Hope the above tips help you do that, and do it well!

What does the fiscal cliff have you thinking (or worrying) about? Leave a comment and let me know.

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