Avoid being a target for layoff

Make sure you know what your goals are and how you will achieve them.  Many companies outline specific quarterly or annual goals for their employees.  If you don’t have explicit goals, ask your manager what you need to do before the end of the year to be considered a success.  In either case, you better make sure you are on track to achieve those goals by Dec. 31 — you don’t want to give your employer any reason to doubt your motivation or abilities.  If you are struggling to get something done, talk to your boss about it now and ask for help in creating a plan to help you finish the task before the end of the year.

Take on new responsibilities.  If you’re set to meet your goals for the year, look at other areas where you can make an impact.  Prepare a report on competitors’ products; volunteer to manage a part of a big project; propose a way to make company operations more efficient.  Think of it like an extra credit project from school.

Document and communicate.  Your achievements are no good unless your boss and her peers know about them.  Write up a report that details your accomplishments and how they’ve benefited the company.  Talk about your accomplishments to your boss and other key managers before your review.  This is no time to be modest — you’ve got to toot your own horn!

Want to know where to put all that money you save by going green?  We featured some ideas a few weeks ago.

However, lenders make their offers very difficult to resist.  You’ve heard of “predatory lenders” in the mortgage market, but they’re not the only ones trying to put you into debt.  There are other marketers who spend every day trying to predict who will get sucked into their credit offers.  They scan data on your credit, work history, bank accounts, and more (much of which you probably thought was private), then segment consumers into different buckets.  Each bucket of people receives a marketing scheme directed specifically at them.  The New York Times had a fascinating series on this practice this week.

No wonder some people fall into these “debt traps” — it’s like bringing a hungry person to a Las Vegas buffet and telling them they shouldn’t eat anything in front of them.  So don’t dig yourself into a hole you can’t get out of — JUST SAY NO to credit offers that seem too good to be true!

So far, the Dow Jones Average is about 34% from it’s high right around this time last year.  That means that many people’s 401(k) plans are one-third smaller than they were a year ago.  Bummer, for sure.

Let’s compare that to the dot-com bust of 2000-2002.  Over the course of about a year and a half, the NASDAQ lost about 78% of its value.  That means if you had $10,000 invested in tech stocks (and many people had most or all of their money in tech stocks at the time), you would have been left with only $2,200 at the bottom.  Even at its recent peak last year, the NASDAQ was still down almost 50% from its high in 2000.

Or how about the famous crash of 1929?  The stock market then got hammered for a few days in a row, falling 40% in that time.  But over the next 3 years, the stock market continued to drift down, finally ending down almost 90% from its peak.  Ugly is an understatement.

The bottom line(s):

This is not the Great Depression (things are going to slow down but no one expects massive unemployment and poverty).  And, this too shall pass (have an emergency fund, dollar cost average your other investments, and you’ll be okay).

If you are freaking out right now or this all sounds too confusing or risky for you, you’re not alone.  If you have money in mutual funds or the stock market that you need to access in the next couple of years, you need to consider moving it to something less volatile.  I am liking TIPS (or TIPS mutual funds) and municipal bond funds (especially if you’re in a higher tax bracket) for a less risky place to park my cash.  You can also consider high-interest saving accounts.

If you are focused on saving for the longer-term (i.e. 5 years or more), this could be a good buying opportunity.  We are in the midst of a financial crisis for sure, but I think that it’s only temporary — the U.S. has a great history of coming back from these tough times, especially over the long term.

Bottom line: If this volatile market scares you, make sure you have a decent portion of your savings in safer investments like TIPS and FDIC-insured savings accounts.  If you’re a risk-taker, now may be a good time to find some investment bargains.

Check out the recent article in the NY Times discussing this theory.  Key recommendations from the article:

• Communicate and share your goals
• Run your home like a business (I love this concept.  Keep track of revenue (income), expenses, and “profit” (savings).  Always have some working capital (emergency fund)).
• Don’t outspend your income
• Don’t pool all your money together — save some to spend on yourself

The one thing I don’t agree with is that home prices are stabilizing (Kiplinger’s point #13).  With easy credit gone for the time being and adjustable rate mortgages continuing to reset to higher rates, I anticipate home prices in formerly hot areas like CA, NV, FL, and AZ are going to keep going down for at least another 9-12 months or more.  (That’s just my unscientific opinion, though.)

However, remember to think twice before taking a withdrawal from your 401(k) plan.  Not only are you cracking open your retirement nest egg earlier than you should, you are setting yourself up for additional penalties and taxes.  A 401(k) is for retirement saving; it’s not a rainy day fund.

That being said, if you are truly facing an emergency (medical expenses, imminent home foreclosure, etc.), then you may want to consider tapping into your 401(k) — just be prepared to pay the penalties and taxes that go along with it.

To avoid the penalties and taxes, you could take out a loan from your plan, assuming your plan allows loans.  Nothing’s free in this world, though, and loans are no exceptions — they come with their own issues, too, so be careful with them!

The problem is that the interest rates on many savings accounts are really low.  So it pays to shop around and look for high interest savings accounts, focusing on those paying 2% or more.  Bankrate.com has up-to-date listings of national savings account interest rates.  Popular FDIC-insured banks with above average rates include HSBC, ING, and E*Trade.

Shop around and find a good rate!  Don’t settle for less than 1% if you don’t have to.