Everyone should prepare to withstand imminent economic turbulence in 2008.
Without being an economist, I feel confident in making this assertion just by looking at very simple, but huge indicators that anyone can witness and evaluate.
Our country is involved in an expensive war in the Middle East that costs billions of dollars. Our current administration is looking to expand the war. The invoice for the war will certainly be presented to the nation soon, which means the burden to fund war operations rests exclusively with taxpayers.
The size of government is growing, and elected officials are legislating guaranteed pay raises and benefits every single year for themselves and bureaucrats. Government employee salaries alone are increasing by a rate of at least 3% each year.
Those increases are being subsidized innocuously through, for example, the imposition of higher licensing fees, cigarette taxes and other creative taxing methods that fly under the radar of most taxpayers.
Small business retailers are finding it difficult to make ends meet. Next time, as you drive down Main Street in your community, take note of the number of retail vacancies that are slowly beginning to pop-up in shopping centers and strip malls.
Gasoline prices fluctuate every week by a margin of 10 to 15 cents per gallon. And, in case you haven’t noticed, utility companies are requesting and obtaining rate increases from your local public service commissions.
Housing values are slowly, but surely declining, meaning that your nest egg- the equity you’ve accumulated in your home- is beginning to disappear right before your very eyes.
What does this all mean?
Your margin of discretionary income is beginning to narrow exponentially, and you will be required to make up the difference by tapping into your savings and emergency funds.
Once those funds are tapped out, financial trouble begins.
Take the time to review and adjust your spending habits and the reliability of your source of income. Pay attention to your what your local and state representatives are doing to increase government spending.
Be cognizant of the fact that, as you’re taking steps to reduce your financial burden, others are taking steps to increase it.