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Personal Finance From a Biblical Perspective

Why You Need to Diversify Your Income Sources

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Yesterday I ran into a friend I hadn’t seen in a few months; we only had a few seconds to talk but he let me know that he had lost his job a couple of months ago. Another buddy of mine was given word that his job would be gone by the end of this year. For what it’s worth, both men have families to support.

We hear stories of people losing their jobs all the time, so these episodes are hardly unique. But what is interesting is that both men were what you might call “well employed” – that is, each had a well-paying position with a large, well-known company that they had worked at for many years.

Why You Need to Diversify Your Income Sources

Jobs Are No Longer Secure

The moral of the story is that there are no safe jobs anymore. Anyone in nearly any job can be replaced either by some form of new technology, or by less expensive workers outsourced from overseas. This is happening with technical and managerial positions as well as clerical and factory jobs.

There are different ways to deal with employment instability and no matter how secure your job seems to be at the moment, you should consider investigating your options. And the time to do that is now, before you’re forced into it by a job loss.

Diversify Your Income Protect Finances

Savings Will Last Only So Long

Many people concentrate on building up their savings as a safety net in case of a job loss. That’s a good idea, however it’s not nearly as effective as it once was.

In an economy where it can take months or even a year or more to find a new job, a two or three months savings cushion just won’t be enough. Unless you can save enough money to cover your living expenses for a year or more, savings will do little more than give you a little bit of breathing room. Not that that’s a bad thing, but it will prove to be inadequate if the job loss turns into a long-term process.

What about unemployment insurance? There are two limitations with this, the first is that for most people, the amount of your benefit won’t come close to covering your living expenses. The second is that unemployment benefits only run for a few months. Like savings, they’ll help at the beginning but sooner or later, they will run out too.

Build up your savings in case of a job loss – but be ready with additional income sources. Savings will cover you in the months immediately following your job loss, but your additional income sources will be your long-term safety net.

How To Diversify Your Income Sources:

Using A Part-Time Job To Apprentice For A Back-Up Career

One of the best ways to be prepared for the loss of your job is to have another one ready. You may be able to do that with a part-time job. I’m not talking on a job pumping gas or serving lattes, but something more substantial.

Ask yourself the question, “If I didn’t have my current job what other kind of work would I do?” The answer to this question can provide you with the insight that will lead to the type of part-time job you should get. What you’re looking for here is a part-time job that will lead you into the career of your choice, or at least into one that could be a reasonable back-up career. .

By taking such a job on a part-time basis your accomplish at least two things: 1) you get the training and experience that you need to enter that field, and 2) you pre-position yourself in a job before you actually need one. The goal will be to convert the part-time job into a full-time one if you can’t find a replacement job in your primary career.

One of the problems with job losses is that they usually occur across an industry or even an entire career field. That makes finding a replacement job very difficult because not only are there a small number of jobs available, but there are also a lot of candidates applying for those jobs. Many people are having to change fields following a layoff.

With a serious kind of part-time job, you already have a replacement career waiting in the wings. The transition is shorter, smoother and easier because of your advanced efforts.

Diversify Your Income By Starting A Business

A similar alternative could be starting your own business. Choose a business that you would like to enter and/or one you have an aptitude for. You can begin it as a side venture and develop it at your own speed. The idea is to build up gradually so that if you do lose your job, you’ll be able to quickly convert the business into a full-time occupation.

Whether it’s a part-time job or a part-time business, not only will you be building a second career for yourself, but you’ll also be providing an extra income that you can put into savings. The combination of higher savings and a backup income source will leave you well prepared for whatever happens after losing your primary job.

Retraining

Retraining is another option. Even though some fields are in decline, there are others that are going strong or are in growth phases. Sometimes all you need to enter them is some formal training. This could be a degree program, technical training or just some courses that you might be able use as a springboard into another career field.

Check with the course offerings at your local community college. They often offer training in career fields that are what you might call “closer to the ground”. This might include fields that are more hands-on in nature, such as those in the medical and computer fields, as well as some of the trades. Those are the type of occupations that tend to do well no matter what else is going on in the economy.

Whether you decide to use a part-time job, part-time business, or some form of retraining, seize the opportunity now to prepare for a job loss that may come later. If the job loss never happens, you’ll have yourself a solid second income. But if it does happen, you’ll be ready for it.

photo credit: freedigitalphotos.net

5 Ways to Get a Job After Long-term Unemployment

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The financial meltdown that began in 2007/2008 hasn’t just eliminated jobs, its destroyed careers entirely. Millions of people have been unemployed for six months, a year, two years or even longer. Extended unemployment benefits that initially allowed up to 99 weeks have been cut back to 73 weeks, and unless the program is restored, benefits will be cut back again by the end of this year.

If you’re one of the people who lost their career during or since the meltdown, or if you’re facing the prospect of disappearing unemployment benefits and you need to get back into the job market after a long layoff, you’re facing an uphill fight. There’s fierce competition for jobs, little chance of on-the-job training and no small number of employers who are reluctant to hire the unemployed.

But here are some strategies that could help you get back into the job market, if only gradually.

Get A Part-Time Job

If you’ve been unemployed for a long period of time, getting back into the job market will be like starting over. It’s very much like when you were a teenager looking for your first job. You have to start somewhere, and a part-time job is a way to ease in gradually.

No, a part-time job isn’t like a full-time job—you probably won’t have benefits and you’ll get nothing close to a living wage. But here are a few things a part-time job can do for you:

  • Working part-time will get you out, about and circulating, and meeting people who might help you find a full-time job
  • It will provide you with a current work reference when you apply for jobs
  • A part-time job could turn into a full-time job down the road
  • A part-time job can be an opportunity to earn-and-learn your way into a new field
  • Earning money in any kind of job improves self-esteem, and that’s something that probably needs to be rebuilt after a long period of unemployment
  • When you apply for full-time jobs elsewhere, you’ll have something to put in that ever present little box that asks “Present Occupation?”

Working part-time won’t be the answer to your career problem, but view it as a necessary and temporary step on the road to something better.

Do Volunteer Work

One of the biggest problems with being unemployed for a very long time is that you can get out of the work routine entirely. It’s not just a time management issue either—there’s a psychology to working that can get lost when you haven’t done it for a while. A good way to get around that is by doing volunteer work. You can do this at churches, charities and even hospitals and schools.

Even though you won’t be paid for the work you do, it can get you back “into the groove”, giving you a place to go everyday and something other than your unemployment status to think about. And much like a part-time job, it gets you out meeting people and making new contacts, and might even turn into a paying job at some point.

Look Into Temporary & Contract Assignments

This is an area that’s gotten tougher in recent years—it’s been degraded by the same factors that have weakened the overall employment picture. Even so, it’s still worth looking into.

Even if the assignments are sporadic, they will place you on the inside of potential employers where you can get valuable contacts who might help you get a job. Also, many companies are now hiring primarily by temp-to-perm, giving them an opportunity to see potential employees in action.

{Learn all you need to know about the contingent workforce.}

If nothing else is happening, give it a try—when you’re unemployed, doing something is always better than doing nothing.

Work For Small Businesses

Everyone wants to work for large employers; they pay more and offer more comprehensive benefits. As good as that sounds, it also creates a traffic problem—too many applicants for too few jobs. As a result, large employers can be very selective when it comes to hiring and they don’t look too kindly on the unemployed.

If you’ve been out of work for a long time, look for small businesses instead. I’m talking small as in no more than five to ten employees. You won’t get anything close to top dollar, and benefits will probably be out of the question, but small businesses do have their advantages, and they aren’t minor.

Small businesses can’t draw in the top talent—sometimes they can’t get any talent at all! And being closer to the ground, small business owners are likely to be more sympathetic in regard to your long period of unemployment. If you have a skill set that matches their needs, and there’s a good personality fit, you can get hired much more quickly than you could at a large employer.

While you’re working at the small business, you’re getting new experience and training that could translate into a better position somewhere else later on.

When All Else Fails, Try Working For Free

This is similar to volunteering, only you’re doing it with for-profit businesses instead of charities. Most organizations have plenty of work that needs to be done—they just can’t afford to pay anyone to do it. That’s an opportunity for you!

Find out what jobs a business needs done that they can’t afford to pay for, and offer your services to do it for them. This will work better with small employers than with large ones, and there are several ways you can play this:

  • You can use it as a chance to show your worth to the business—if they see how good and reliable you are working for free, they may decide they can’t live without you, and make you an offer for a paid position
  • While working for free at a business you’re also building contacts and an important referral who may be able to help you land a paid job elsewhere
  • After completing one unpaid assignment, they may call you back again—for pay!
  • By troubleshooting at one business, you can start doing the same at others on a paid basis; as you build “clients” you’re beginning to develop your own business—self-employment could be the ultimate solution to your career problem.

Working for free won’t be easy, but is a chance to start making things happen, and that’s what you need to do when you’ve been out of work for a long time.

Have you gone through a very long unemployment? What did you do to get back into a job?

photo credit: FreeDigitalPhotos.net

Why The Contingent Workforce Is Growing, And What That Means To You

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As the outlook on the economy remains grim for many industries, many companies are still wary about hiring full-time workers. Very few companies are hiring in great numbers, and even less are continuing with employee recognition programs. Therefore, we are witnessing a rise in the number of companies that are turning to the contingent workforce in order to fill their staffing needs.

What Is The Contingent Workforce?

At one time, the only major distinction between workers was full-time vs part-time. However, as the workplace has evolved, so have the various roles.

When one speaks of the contingent workforce, they are referring to a group of workers which includes, temporary workers (working through an agency), contracted workers, per-diem, self-employed contractors, day laborers, and direct-hire temporary workers.

When I became a part of the workforce, these types of employees were very common in warehouses and/or industrial jobs, doing manual labor, office work, and tedious projects (such as mass mailings or taping together damaged money).

However, now we see the contingent workforce filling rolls in accounting, finance, health care, and information technology. With the rise in Internet sales & marketing, and freelance writers, designers, and programmers, we can expect these numbers to rise in the future.

The Rise In The Contingent Workforce

There has been a sharp increase in the number of temporary workers employed over the last few years. According to an article on Marketwatch:

Temporary-help services employment increased to about 2.3 million in March from a recent trough of about 1.7 million in mid-2009, according to the Labor Department.

That’s an increase of over 35% in about 2 years! Keep in mind that this is just one small segment of the contingent workforce. However, information from this category is probably the most reliable, since temporary workers are employed through agencies.

Why Are Companies Looking To The Contingent Workforce?

Many companies have present staffing needs, which must be filled in order for them to be able to conduct business. However, due to the unpredictable nature of the current economy, these businesses are not willing to make long-term commitments to large groups of workers. Therefore, hiring workers on a part-time basis, or bringing them on as consultants, seems to be the best move.

Reduced Benefits

Many contingent workers do not receive health insurance coverage, life insurance, retirement benefits (such as free money through a match, or the ability to take advantage of 401k contribution limits), or paid time off. Most temporary agencies will force their employees to wait for 6 months or longer before being eligible for such benefits.

There are also certain workplace laws that do not apply to contingent workers.

This makes it much cheaper to hire someone under this type of arrangement, which is one of the main reasons why employers are seeking more contingent workers!

No Long-Term Commitment

With most forms of low and mid-level employment, your contract can be terminated “at will”. This means that you can quit or be fired/laid off at any time. However, there is usually something owed when this happens. For instance, if someone is laid off, they are sometimes given a severance package, possibly vested (meaning that they can keep employer contributions) in a retirement plan, and even paid for unused time off.

This is usually not the case with contingent workers. Once the contract is terminated, the employer usually walked away from the relationship owing nothing. If an employer is not sure of long-term funding, this can be a great option. Of course, this also makes it very easy for an employee leave the company. This risk has to be weighed against the benefits!

Low Recruitment Costs

Since there isn’t much of a commitment made to these workers, it is usually easy to bring them on board. Many in the contingent workforce are hired through an intermediary firm, that does handles the initial interviews, background checks, competency testing, etc. This way, the employer simply has to pay a fee (or a percentage of the salary) to the firm, and doesn’t have to worry about the costs of advertising, background checks, and time spent holding multiple interviews. This also works out for the employee by reducing their job hunting expenses (especially if they work through an agency).

If these employees are offered any benefits, they are usually handled though the staffing firm (and are subject to a waiting period). This way, if the employment arrangement doesn’t work out, the employer hasn’t wasted any money by adding a worker or group of workers to their various benefits plans.

Why Does This Matter?

Most people are probably wondering why this shift is important. The main impact that it will have is that we may be forced to rethink how we market ourselves. Many people are not willing to take a job on these terms, because they have been looked down upon for so long. However, if you are currently looking for a job – or if you are suddenly laid off – you may have to consider becoming part of the contingent workforce.

Depending on your status, you may have to arrange for your own health-care coverage, and start paying self-employment tax. You may also have to look into various certifications that demonstrate your competency in your field. While the contingent workforce still makes up a very small part of all workers, the numbers are growing, and the trend will most likely continue in that direction as uncertainty about the economy lingers.

For employers, this type of arrangement is a great way to grow your business, without all of the costs traditionally associated with hiring employees.

It is better to be prepared and able to adapt, than to be caught by surprise, struggling to support your family!

photo by Idea Go

The Monetary Policy Debate: Austerity Or Stimulus?

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The Monetary Policy Debate: Austerity or Stimulus?

The global economy is unchartered waters at the moment.  The world has never received a systemic financial shock like it did in 2008 when the Global Credit Crisis erupted and nearly destroyed the current global economy as we know it.  Literally, there was a stretch of a few days during the fall of 2008 when the outcome was uncertain.

There was a small window of time where complete and utter chaos and economic collapse seemed imminent.  However, global leaders gathered together and acted in unprecedented unity in order to stave off a financial Armageddon, as developed nations around the world slashed interest rates and injected trillions of dollars into their economies in an attempt to free up frozen credit markets and stimulate economic growth.

Now, over two years after the near-collapse, the global economy is still struggling to find a sure footing.  The United States economy has definitely rebounded well of its lows of early 2009, but the long-term prospects are still daunting.  The Federal Reserve had to inject a second round of quantitative easing into the economy in November 2010 in order to, hopefully, spur economic growth and job creation, which remain two persistent problems in the U.S.

In the Euro Zone, disaster seems to keep knocking on the door.  First, it was the Global Credit Crisis, second, it was Greece needing a bailout, third, it was Ireland’s banking system needing a bailout, and now, it seems that Portugal, Belgium, and Spain are all in big trouble.  Several peripheral countries in the Euro Zone are still facing recessions and contracting growth.

In the United Kingdom, prices are rising, but economic growth is not.  That is one of the most deadly combinations a n economy can face because rising prices require higher interest rates in order to curb inflation, while a lack of economic growth requires the exact opposite in order to spur economic growth.

Thus, what is a country to do?  Preliminary GDP figures came out in January 2011 a full percentage point lower than the market had expected.

The Monetary Policy Response: Do We Stimulate More?

This is the debate that is raging among economists and experts around the world.  Should struggling countries continue to inject stimulus into their economies in hopes of jump-starting them, or should they rein in government spending and let the free market do its work?

In the Euro Zone, the European Central Bank and International Monetary Fund have opted for austerity.  In order for Greece, Ireland, and other weak countries to receive bailout funds, these countries must first agree to very strict austerity measures.  These measures typically include things like slashing government spending, which generally means cutting government programs and slashing government wages.

These countries do not receive their bailout funds in one lump payment.  Instead, they will receive the funds in several distributions, and at each distribution the struggling country has to prove it has done what it was required to do.  If it has not, then the struggling country will not get the next bailout distribution.

This can lead the euro drop quickly.  A person can search for the best forex broker to find charting packages that allow a person to track the movement of the euro versus other currencies in the FX market. Keep in mind that trading currencies on margin is risky.

The United States, on the other hand, has not adopted any austerity measures.  Instead, it has continued to spend money at a rapid rate.  Currently, the United States has injected about $2.3 trillion into the economy over the last two years.

Back to our original thought in this article—we are in unchartered territory.  The truth is that no one knows what the long-term effects of massive stimulus spending will be.  Some believe that inflation will become rampant, while others believe there will be no inflation.  Unfortunately, we are the mercy of time.  In the end, time will reveal exactly what the consequences will be.

photo by renjith krishnan

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