- Reducing your housing costs to 25% or less of your take home pay; that may mean downsizing your house.
- Aggressively attack and reduce your debt. You may have to sell off some toys or fancy new cars, but if you don't have a monthly payment on something like that, you will have much greater flexibility.
- Build up a big emergency fund. Most experts recommend three to six months of living expenses should be stored away for a rainy day.
No one likes to think about layoffs and lower pay, especially during the holidays, but 2011 is likely to be a tough year for many of us, so it is best to go into the year with a plan. Obviously, if you are faced with serious threats to your income in the near future, you have to take some immediate action. Many of the short term ideas will only help you for a short while; the long term changes are the ones that will help you weather anything drastic.
If you are 12 months from retirement, you may not have to worry too much about layoffs. However, as Camden has shown, most of us may not be immune if our employer faces a major fiscal crisis. There's no time like the present to start making a plan, just in case.