ADAPTED FROM SUZE ORMAN’S 2009 ACTION PLAN

The New Reality

Your job is at risk. Th is has nothing to do with how talented and well-respected you are, or the fact that your past three reviews have been gold star. You are at risk for reasons that have nothing to do with you. The double whammy of the credit crisis and an economic recession increases the likelihood that businesses will be forced to cut back on costs, and that could mean reducing staff .

In this environment, just hoping you will be spared is not the right action. You must take active steps today to make sure your family is safe no matter what happens job wise in 2009. That means making sure you have savings to pay the bills instead of running up credit card debt or raiding your retirement accounts. It also means having health insurance no matter what and a game plan for landing your next job.

It’s important to understand that even if the credit crisis hadn’t occurred, 2009 was shaping up to be a tough year for the economy. Our economy is cyclical in nature—there are periods of strong growth and periods of slower growth. Slowdowns are always part of the equation. There is no avoiding them altogether; rather, the goal is that when they do hit, it is with a soft punch rather than a knockout.

In an economist’s perfect world, what we experience is an orderly winding down from a period of faster growth to slower growth that soon transitions into a new period of even stronger growth. But sometimes real life is less than ideal. If instead the economy slows down with a thud—known, in fact, as a hard landing—we can fi nd ourselves in a recession: a period where the economy doesn’t just shift to slower growth, it actually contracts. When that happens, job losses can be very high as companies cut positions to reduce costs.

The continuing problems caused by the credit crisis appear to have ruined our chances of a soft landing in 2009. Unless banks start lending again, companies that were already girding for a slowdown in business are going to be in even bigger trouble. Every business, from the 10-person small company to General Electric, relies on credit.

Short-term credit helps businesses pay the bills and keeps supplies fl owing while waiting for clients to pay their bills, as well as enabling firms to finance longer-term expansion projects. Long term credit is another vital way businesses borrow to grow. If you want to build a new plant or expand your business line, you nee d money to pay for your expansion before you can expect to earn any money from that new business. When businesses can’t borrow money it greatly reduces their ability to expand.

Without short-term or long term credit, a business is going to find it doubly tough to get through the economic slowdown. I am not saying we are guarantee d to have a deep and hard landing in 2009. But it is definitely a possibility if businesses can’t get credit. And let’s face it: 2009 is not going to be a great year for consumer spending; that’s driven much of our economic growth in past years, but you and I both know that you are focusing on spending less and saving more in 2009.

What I do know for sure is that in times like these, my saying “hope for the best, prepare for the worst” could not be more apt. You can’t keep the bad times from happening, but you can keep them from decimating your financial security. There are actions you nee d to take now to make sure that no matter what happens “out there” this year, your family will be protected.

SUZE ORMAN’S 2009 ACTION PLAN