Merry Christmas
And
Happy New Year

May God richly bless everyone in this season as we celebrate the greatest gift ever given to humanity, Jesus Christ. This year has been a roller coaster ride for everyone financially.

That is why during this next year I will be not only keeping you up to date on current economic affairs but I will also be teaching on how we can manage our finances to lessen the impact of business cycles. Just because the rest of the world has a recession or depression does not mean we have to play along.

Follow this blog after the first of the year so the predicted down cycle for 2009 will not have as much of a negative affect on your finances. Economic downturns are survivable. In fact, many have been able to prosper during these times. So join me for the journey.

Surviving The Storm

The most devastating thing that happens during times of recession is that people lose their jobs. Having been in that situation in my life, I know it can be devastating, discouraging and depressing. We begin to fear we will lose everything. We can begin to lose our self-confidence. Some people even give up completely. In this posting, I want to provide a plan of recovery and encouragement to those who have or fear losing their jobs.

The most important thing to learn is that losing a job is an event not the end of the world. Many people live in areas where natural disasters occur on a regular basis. People living in these areas understand that these disasters are events and that with proper planning they can be survived. Job loss can also be survived if we have a plan for survival.

Here is a list of things we can do to survive job loss.

1. Update your resume – You should always have a resume prepared. The good news is that we can prepare a resume today and save it to our computer. Be sure to always have a backup copy as computer hard drives can crash causing you to lose your resume along with other important documents. Today’s word processing software makes it easy to update the information contained on your resume, so this should only take a few minutes.

2. File for unemployment – this will provide cash flow to take care of necessary living expenses such as eating and shelter. Understand you will not be making as much on unemployment as you were making on your job so the temptation will to say why bother but every penny counts now.

3. Cut out the frills – cash is now a precious commodity. When you lost your job, you may have been fortunate enough to receive a severance package. You also may have had a balance in a 401K. I encourage you to take this money and put it into a savings account. If you have a credit union account this would be an excellent place to put this money since it pays higher interest. However, avoid the temptation to spend this money on any frills. Instead, only use this money to make up for cash shortages needed to pay for necessary living expenses and anything you will need in your job hunting campaign.

4. Seek temporary employment – there are many agencies offering temporary jobs. Prior to becoming unemployed, it is wise to make a list of these agencies in your area. That way you can quickly begin making phone calls and sending them your resume. My current job started as a temporary position that became permanent. You may be fortunate enough to have the same happen to you.

5. Distribute your resume both online and in person – with the internet it has never been easier to get your resume out on the market. Unfortunately, the fact that it is easier to post your resume means that you are out there with thousands of other applicants. That is why I encourage you to also physically taking your resume to employers. Dress in your finest business dress as you only have one chance to make a good first impression. You may even get an interview, something that would not occur by simply posting your resume online.

6. Do not give up - As Winston Churchill said in one of his shortest and most famous speeches “Never give up”. The only way unemployment can change from an event to a disaster is for us to completely give up.

Earlier this year my family and I had the privilege of traveling to Israel. We saw where Jesus was born, grew-up, taught, was crucified, rose from the grave, and ascended back to heaven. One of the sites we had the privilege of visiting was the Sea of Galilee where Jesus did most of his teaching. A miraculous event occurred 200 years ago at this location and I want to share it as a way of encouraging both those who are currently unemployed and those who fear becoming unemployed during these turbulent economic times.

A Biblical record of this event is found in Matthew 14:25-36. Here is a summary of what happened. The disciples were on a boat in the middle of the Sea of Galilee. A storm had arisen and they feared being thrown from the boat. However, the disciples saw Jesus walking on the water. Peter, having a momentary time of faith, steps out of the boat and walks on the water towards Jesus but when he sees the turbulent storm around him he begins to fear and sink into the sea. Jesus then reaches out his hand and Peter and Jesus get into the boat. When Jesus gets into the boat, the storm immediately stops and the disciples arrive safely on the other side of the sea.

In these turbulent economic times many of us are in the boat of our jobs but find ourselves in a turbulent economic storm. We fear being thrown out of the boat. Some of us have already fallen out of the boat and fear drowning in the turbulent sea. Jesus is there with us, walking on the water. The storm does not faze him. If we will invite him into our boat, the storm for us will calm and we will arrive at the other side safely. If we have already fallen into the sea we need to reach out our hand to Jesus and he will take us back to the boat of a new job, get in with us, and the storm for us will also calm and we will be safe.

Perhaps you have never come to know the man Jesus who walked on the water. He did die on the cross but he arose and is still alive today. He loves us as the bible tells us in John 3:16 and is waiting for us to invite him into the boat of our lives. I encourage you to ask him to come into your boat today.

If you are unsure how to ask him in or you want to know more, you can go to the link for “Calvary Community Church” on right toolbar of this website. Go to the tab “How to know God” for more information about getting to know God. We all need something stable to hang onto in these turbulent times. The only stable thing in this world is God. The only way to get to know God is through his son Jesus. I encourage you again to get to know him for having him by our side is the most important thing we can do in these turbulent times. May God bless you.

Uncle Sam, Can I Have Some Money?

Once again this week we were subjected to the CEO’s of the big three automakers appearing before congress requesting money to rescue their failing operations. They all claim that they will be out of money and in default by the end of the year. There is no doubt that if one or all three of the automakers fail, it will have a major affect on the economy. The question we need to ask ourselves is if it is wise for the government to simply give money to the automakers in order to rescue them without addressing the reasons for the shortage of cash being experienced by the companies.

In last weeks posting we explained management of cash flow. The fact that the automakers find themselves going into default leads us to believe they have insufficient operating cash flow to sustain their operations at the present level. To fix this problem the automakers need to discover why they lack sufficient operating cash flow.

Prior to the introduction of foreign competition, the U.S. automakers held a majority of the U.S. auto market. It was during this period that the automakers decided they wanted to share their prosperity with their hard working employees. They did this by entering into labor contracts that provided lucrative fringe benefits. Included in these fringe benefits were healthcare benefits that employees continued to receive even after retirement. As the workforce of the automakers matured, a point was reached where they were paying more to provide benefits to employees who no longer produced for the company than they did for those who were productive employees. In other words operating cash flow is being used to provide benefits for employees who no longer produce operating cash flow, or income, for the company.

In addition, the companies provided a job bank where employees continued to receive pay even after being laid-off. The reasoning here is that these employees would still be paid while they either looked for another automaker job or went back to school to train for a different career. However, many employees abused this benefit and continued to receive pay for many years past their being laid-off. In a sense, the automakers would downsize and lay people off but the automakers received no financial benefit from the layoffs since they still had to pay the laid-off employees thus depleting more of the company’s operating cash flow.

To make matters worse, increased pressure from environmentalists on the government led to increased regulations on the companies. Among these regulations were fuel economy standards implemented to reduce carbon emissions and the use of fossil fuels. These regulations control how automobiles are built. Each time these regulations change, automakers need to retool their assembly lines and redesign their cars and trucks to adhere to the new regulations. These changes can cost the automakers millions of dollars, depleting more of their valuable operating cash flow.

To fix these cash flow problems, automakers will first require concessions by the company’s employees. No one likes to give up benefits from their employer but employees of the automakers must look at the long-term picture. Making concessions at this time helps insure the company continues to operate in the future. Without these concessions, the company may go into default and eventually have to liquidate in order to pay their obligations. If this occurs, all the benefits will cease to exist and thousands will become unemployed. Wouldn’t it make more sense to make some concessions now in order to insure continuance of benefits that remain and employment for those still working for the companies?

Second, instead of the government giving the automakers more of the taxpayers’ money, wouldn’t it make sense for the government to ease some of the costly regulations on the industry? This would make it possible for the automakers to build cars the way they want to which is to build cars people want, and can afford to buy. Perhaps it would be wiser for the government to give the automakers tax breaks, instead of cash, so they can reduce the price of their cars and become more competitive in the marketplace.

A loan to automakers does nothing to increase the company’s operating cash flow. It just increases the company’s cash flow through financing. Before throwing money at the problem, we need to take time to discover the reason for the problem. Otherwise, we will only be prolonging the inevitable default and possible liquidation of these once successful companies.