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Reserves; Build them or die! April 6, 2009

Posted by shaferfinancial in Finance.
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Like many people, I seriously underestimated the length and depth of this recession.  My business, like most, has been severely damaged by the failing economy.  But, fortunately, I built extreme reserves into my financial plan.  Now, however, changes are being made to the other side of my financial life.  I am radically ratcheting down expenses.  Like most people, my spending increased as my cash flow increased so I now find myself spending more than I am making.  If this had been a run-of-the-mill recession, I was prepared.  But it isn’t.  So now begins the painful process of radically decreasing expenses.  Now, I am not whining as I have much more reserves to get me through than the average person.  But I have always been honest with the readers so I thought it important to point this out.

Folks, make your number one priority to build reserves.  You can do this in a number of ways as I have pointed out in previous posts.  Money market funds, EIULs, savings accounts, etc. should be fully funded first before other more aggressive investments.  It is only with adequate reserves that you can feel confident to invest in stocks, real estate, private equity placements, hedge funds, build businesses, etc. that will create the real wealth for you.

Reserves; build them or die [financially]!  It is a powerful lesson being taught to me!

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