The Recession Survival Guide: pt 2/4

So, you've read the first two points in my recession survival guide, and you're back for more? well, never fear... I promised more and I, the socuse economist am a man of my word... Here it is then, part two of the recession survival guide.


Three: Smoking, Drinking and Gambling. Quit it!
Three of the most expensive habits known to man might be best left alone during a recession. Thousands of pounds a year is spent on each habit by each and every person who indulges in them. A thousand pounds can go a hell of a long way towards keeping a family afloat in a recession. Maybe it’s time to quit?

Please note, that I have never referred to any of these pursuits as ‘dirty’ or ‘dangerous’. I enjoy one or two of them myself once in a while and understand that it can be hard to quit. Smoking, drinking and gambling are no more dangerous than eating at McDonalds, and far less dangerous than driving to work everyday. In fact, given the correct application of willpower, these habits can be enjoyed perfectly safely, despite what the government says… whoops, off topic again!

Anyway, consider cutting down or quitting an expensive pursuit completely. You will feel the benefit once the withdrawal symptoms stop… twitch.

Four: Throw away the microwave.
Yes, you read correctly… the microwave is a sinful and evil mechanism… except for when it’s not.
Microwave meals are too expensive! It is well and truly possible to cook for yourself and eat well for a pound a day. I should know, I’ve been doing it for two months now. Curries, stir fries and pasta dishes will become your best friends, as you cook simple and cost-effective meals for 50p per person! (The extended version of this article has a brief example menu in it.*)

OK, so it won’t be ready in three minutes flat, (between 15-30 minutes, depending on the dish) and it’s not lavish, but can you afford to be?


*Please note: links to all extended articles will be added once they are operational.

The Scouse Economist's Recession Survival Guide, pt. 1/4

In these times of economic woe, some of us might need a helping hand in order to keep our heads above the water, so to speak. For this very reason I, the Scouse Economist have come up with a set of 10 helpful tips that if followed properly might actually leave you better off after the recession has passed.

May I introduce, the recession survival guide…

One: Pay by cash, not by card

It is fairly well documented that people can often lose their heads whilst shopping with their ‘magical cards that bring them money’. Not that I imply that these people are idiots, for anybody can fall under the bank’s seductive spell.

Now, let’s not get in to the politics of the matter (I’m saving that for the extended version of this article). For the moment, let us explain the principle of this point.

When you have money in your hand, you can count it to the penny and you have only that much to spend. With a card, it is all too easy to overspend, going overdrawn, in to an expensive overdraft or fall foul to the ‘credit-card-crunch’.

Here is my advice. Every time you buy something, take the time to visit a cash machine and take enough money out. Each time you take money out, print off a balance slip and keep hold of it. These balance slips are a great way to keep an eye on how much you’re spending. You will soon notice if you’re spending too much.

This will keep you out of trouble with the bank, and will also put a stop to those impulse buys that we all feel guilty about later. Well… sometimes.

Two: Stay in the black

As was suggested before, running out of cash and going in to the red is really something that most people want to avoid, if at all possible. This is not always so, and almost always hard to achieve.

Here is my suggested method. Yes, it does involve that dreaded word… ‘Budget!’.

Each month spend a single night with all of your records, statements and bills, along with a calculator and do the following:

- Work out all of your income and costs for the coming month, to the best of your knowledge. (Bills and payment sonly. Don’t count food budget and other constant costs at this point). There will always be a nasty surprise to bite you, but fear not, this is dealt with

- Assuming that once you do this there is a positive number (if not, skip to the last point), halve that number. The idea is to put half of your disposable income towards your living costs, and the other half in to some kind of saving scheme, just in case. (This need not be half and half. In fact, it is likely that half of your disposable income is not a liveable sum. If so, it is fine to use more money on living costs. Just try to put something away.)

- If you find that your disposable income is actually a negative number, you have a serious cash flow problem. Either you are making too many payments that you cannot afford, or you’re boss is screwing you out of money. Either way, this is the only circumstance where I will suggest that a person goes to a ‘Debt Consolidation Firm’. Usually, I hate the things… you end up paying more than double what you originally owed, but if you are running further and further in to the red, this may be the only option for you… but please, do not take this decision lightly. Before signing anything, seek professional advice.

Too big to fail? Too big to succeed: Citigroup

Citigroup, yet another big American (failed) bank, recently applied for and were approved for emergency funding by the federal reserve. I am getting rather bored of typing that opening sentence in my articles, and I'm sure that this will not be the last time I need to do so, but since it's the first time I'm doing so in my blog, I'll let it go... just this once.

The reason that the fed has given us in order to justify this decision is the constantly recycled phrase, "too big to fail". I agree... It is far to big to let it fall, but is that a good thing? People look to these companies, banks and organisations and ask them, 'why are you failing?'

I have the answer, and any activist-capitalists amongst you will not like it. These failing banks are too big. The federal reserve and the bank of england (amongst others) have given large business a little too much slack, in my opinion. This worked great during times of prosperous economic strengh, but now that the global economyis turning, this business model is not proving to be quite so weathered as it was thought to be.

Large banks have been allowed to do whatever they please, moving away from their 'core competance' of lending money and breaking legs when people can't pay it back. Banks now provide insurance, mortgages and manufacture lollipops! It has gone beyond a joke.

Banks are now suffering from what can only be described as 'taking their eyes off the ball'. Problems are occuring all over the banking industry in all sectors and the bigger banks are finding it hard to handle all of them at once. Banks, who have little or no experience in the feilds of insurance, investment and others are now suffering from a little thing that I like to call 'incompetance'. No organisation can successfully navigate such turbulant waters, no matter how large or competant they are. Because the war is being fought on so many fronts, these large bastions of capitalism are going to fall and bring our economies down with it.

A bank that is simply a bank will do as well as it can be expected to do. In fairness, all banks, mortgage lenders, investment banks and building societies are struggling. Dispite this, they are not likely to fail, whereas the larger 'all-in-one' banks are being barraged by a number of problems, and are evidently failing under all of this weight.

It truily is a shame that the banking system has been allowed to get to this stage. The big banks are, indeed, to big to be allowed to fail, but they now bring the rest of the banking system down with them. The banking sysyem has got to the point where most of the banks are not only too big to be allowed to fail, but are also too big to succeed in such turbulant times. If there is still a banking system after this recession, it will need consolodating... Badly!

Who'da Thunk It?

Guess what people of the business world? Scousers can do economics too!

OK, so I might be scouse, but don't let that fool you. Beneath this sarcastic, almost satirical exterior lies a mind filled to the brim with exchange rates, stock listings and utility theories.

This blog is all about (If you haven't already guessed) economics. My philosophy is that economics need not be a boring world, filled with graphs and numbers. Of course, there is that aspect of it and I will refer to it from time to time, but my aim is to bring the confusing world of economics to the average Joe-bloggs in an entertaining yet informative way.

Through my weekly blogging, hopefully I will help the whole world to understand what economics is and does. aaaahhh... Delusions of grandure. Nice.