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By Susan Tompor

RISMEDIA, Oct. 7, 2008-(MCT)-Wall Street has its financial rescue plan in place. The real question: Do you have a plan for unloading your toxic debt?

With or without all the bailout blather, many consumers have felt crunched for months. We all need to build a bailout, especially since economists say the fallout from the financial crisis is expected to drive a U.S. recession well into 2009.

After a nearly 800-point drop on the Dow, people just aren’t going to start this week by saying, “Oh well, glad that mess is over.” The aftershock will continue.

We’ll still open stinging statements for 401(k) plans. We’ll still feel on edge about the possibility of losing a job.

Credit markets will take time to adjust, and experts say the process could be slow, even after the House and Senate approved the strongly debated $700-billion financial rescue plan last week.

“Don’t expect much of an improvement for two or three months,” said Brian Bethune, chief U.S. economist at consulting firm Global Insight in Lexington, Mass.

So logically, we’d all be better served by engineering our own rescue plan. Some strategies:

– Build up your cash. Banks are continuing to be reluctant to offer basic loans to companies–and may be reluctant for a while. As credit remains tight, some businesses could continue to have trouble borrowing and have no choice but to begin cutting workers, said Mark Zandi, chief economist and cofounder of Moody’s

Some economists say they expect the Federal Reserve to need to lower short-term rates soon, too. Bethune sees the U.S. unemployment rate hitting 6.7% by the end of 2009-up from 6.1% for September.

More telling: The U.S. jobless rate had averaged 4.9% during the first quarter of 2008.

Do what you can to have at least 3-6 months of cash to cover bills, in case of a job loss.

“Nothing you do financially will help you sleep better at night than knowing you have money tucked away for a rainy day,” said Greg McBride, senior financial analyst at

– But pay attention to where you put your savings. If you buy a U.S. savings bond now, for example, you cannot cash it in for 12 months.

Some so-called safe havens have run into trouble. The oldest U.S. money-market fund, Reserve Primary Fund, failed to repay investors in full during this crisis because of losses on debt issued by Lehman Brothers. Families have not been able to use money in those accounts since Sept. 22. The fund was only the second registered money-market fund in history to hit investors with losses.

On Sept. 19, the U.S. Treasury announced a temporary guarantee program to protect shareholders of money market mutual funds. See for details.

One bailout benefit is that savers and small-business owners already are receiving more FDIC protection. The FDIC insurance limit to protect bank-and credit union-accounts went up to $250,000, from the current $100,000.

The change took effect once the bill was signed into law Friday by President George W. Bush. It’s set to expire at the end of 2009.

– Go for a credit freeze. “In a bad economy, the answer really is not to find more credit to use. It’s to make sure you’re able to make your payments and find ways to cut back and live within your means,” said Eve Pidgeon, a spokeswoman for GreenPath Inc. in Farmington Hills, Mich.

The idea, she said, is to live literally according to your wage.

Yet you may not want to close all your credit cards. As credit could be harder to get, some experts say you might want to keep accounts open for true emergencies.

– Do a round of layoffs. Gail Perry-Mason, a Detroit financial author, said people need to lay off premium cable channels, extra services on cell phones, the latest video games or rounds of golf.

“Our household is a for-profit business, not a nonprofit,” said Perry-Mason, a Detroit broker and coauthor of “Girl, Make Your Money Grow!” ($12.95, Broadway paperback).

Perry-Mason said mothers and fathers need to set limits on how much to spend entertaining their children, as well. “They will rob you blind.”

– Track every dollar. Gerri Detweiler, credit adviser for in San Francisco, said the best thing that consumers can do now is to start tracking their spending for 30 days.

“This will give you a clear idea of where your money is going and put you ahead if you need to seek help from a credit or mortgage counselor, or even a bankruptcy attorney,” Detweiler said.

– Do not wait for your monthly credit card statements. Call your card companies to monitor your charges and see how close you are to the limit, as well. has information on improving a credit score, shopping for a credit card and paying down debt.

– Look for value-but pay careful attention to risk. Jim Cramer, host of “Mad Money” on CNBC, said via e-mail that investors should search for stocks that have now come down so much in price that their dividend yield is 4%-5%. But he warned that investors need to make sure those companies do not have too much debt that they can’t pay the dividends. Examples: Duke Energy Corp. and Consolidated Edison Inc.

Also look for companies that have little economic sensitivity with a strong pro-shareholder background, such as General Mills Inc. or Procter & Gamble Co.

He also suggested that triple tax-free government obligation municipal bonds are a spot for tremendous returns, but should not be used in a tax-deferred retirement account, such as an IRA. Cramer also suggested that investors stick with general obligation bonds, which would be guaranteed by the government.

– Take inventory. Times might be tough, but we all have something that we can count on to bring us joy. Really funny friends, a great handbag bought when times were better, warm hugs, a leftover birthday gift card, two consecutive green lights, the best dog on the block.

Some of these things can matter more than ever now. Take inventory.

Susan Tompor is the personal finance columnist for the Detroit Free Press.

© 2008, Detroit Free Press.
Distributed by McClatchy-Tribune Information Services.