We’re about 60 days into 2009, and one of the things people have been asking themselves is “where does all my money go?” When you look at your overall financial situation, your 401(k) has now been reduced to a 201(k). Your real estate property probably has devalued substantially, and really at the end of the day you make some income but you’re not quite sure where all of money goes after you pay your expenses. One of the things that we recommend at this time is to ensure that you’ve got a quality spending plan in 2009.

For years, our firm has always hated the word budget. Budget seems like such an ugly word. It reminds you of things like being frugal, penny pinching, and having to watch where every single dollar goes that you spend. We’ve instituted the idea that you are the CEO of your family business. What business would run itself without a CFO to manage their profit and loss statement? As the CFO of your own financial situation, one of the things that we know you manage is your overall income statement. That’s really looking at everything you make versus everything you spend. In today’s world while we’re in this recession, everything, and I mean everything, is negotiable at this time. One of the things you’ve really got to do is take a hard look at what expenses you are going to cut or negotiate in 2009.

The first item I would look at is your overall discretionary spending. These are items such as what are you spending on vacation, what are you spending on eating out and entertainment, and things that you may know that you have some control over. In the area of vacations, you may look at using frequent flier miles/points this year. In the area of eating out, just cutting back one or two times per week during lunch and one or two times per month during dinner may make all the difference in having more dollars in the bottom line in 2009. When you look at your fixed expenses, you should be looking at asking your cable or satellite company if you can get a better deal. You should be going back to your cell phone carrier and asking if you can get a better deal. Heck, you may ask your utility company whether you can get a better deal. Most importantly, if you plan to do anything to your house, whether it goes to landscaping or home construction, I would look to ask what type of discount you could get.

In the area of debt, you may look at strategies like refinancing or even going back to your credit card company and asking if you can get a lower rate or some other difference from where you are today. The fact of the matter is that all of these companies are in business and business is getting more competitive. The bad news about this is we’re in a recession. The good news about it is as a consumer, you’ve got the opportunity to ask to get something that may improve your overall financial situation. At the end of the day, most of you have seen companies over the past year and into 2009 that either have troubled balance sheets and income statements, or they in fact have gone out of business. The last thing that you want is your company to go out of business. Instead of asking yourself, where has it all gone, it’s time to sit down and develop a plan to figure out how much your income is, how much your expenses are and what your overall cash flow will be in 2009. Don’t make the same mistake many companies have made by not really analyzing your bottom line.

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Ted is securities licensed through Investacorp, Inc. A registered broker dealer member FINRA, SIPC. Advisory services offered through investacorp advisory services, inc.

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