Know your Industry

Many of us go to our place of employment everyday, perform the tasks required of us , and generally understand how the functions we perform relate to the mission of the institution we work for. For most, this is the extent as to which we feel responsible for knowing what our job means to us. If you think this is as much as you should know, you are missing the boat. Knowing your job is one thing and knowing your industry is another!

In my earlier post (Who is the King of Cash) I mentioned how Jacky (my lovely Wife:) and I came to saving two years worth of living expenses. For many, two years seems above and beyond what is generally required. However, understanding that our household income solely came from the financial industry, we began to aggressively save. We understand that recessions typically hit the financial industry hard and one or both of us could be without work for an extended period of time.

There was a time when certain industries had the perception of being "safe". Many would flock to education, insurance, municipalities, not-for-profits etc for the practical purpose of security. How many of us have heard from elders "You get a job wit the State, you gotta job fo Life". Twenty of our Fifty states are suffering budget deficits and the very jobs that people ran to for safety are being eliminated or suffering pay cuts. The one thing this current economic cycle has taught us, is that no industry is safe from job and salary cuts.

This "Storm" came through and wiped out everyone. Although there are many we can blame for the the current mess we are in, we won't. It is a waste of time. No one is going to jail and spending energy on "Who did what" will not fix anything. For all of us between the ages of 18-35 we have to realize that the industry we have chosen to work in has risks. We must better understand the vulnerabilities and prepare for the unexpected. Our personal cash flow depends on it! You owe it to yourself.

Questions to ask yourself about your Industry:

Is my industry depended on dollars that are considered discretionary? (Examples would be Fashion, Travel, Entertainment, Sports, Electronics, Auto, Beauty, Dining etc.)

Although my industry is not considered "discretionary", can dollars be easily be reallocated to core needs? (Example of this would be marketing/advertising. Although businesses will always have some need for marketing/advertising, in times like today they will drastically reduce what they normally spend to focus on core operations.)

My industry is considered a "Need", however my company caters to a specific niche. Can dollars be tiered down from the niche level to general? (An example of this would be the food industry. People always need to eat, however food is tiered. Organics have gotten to be very popular over the last 5-10 years, but in times when people are trying to conserve cash flow people will opt for a few extra hormones in their food if it will save them money. Think Whole Foods vs Stop & Shop!)

The questions above can be applied to all industries and by understanding the nature of your industry will allow you to pick up on changing trends and be able to protect yourself potential changes in cash flow.

News Flash, News Flash.......

For those of you that doubt "Cash is King"LISTEN UP!!!!!! JP Morgan Chase, Bank of America, and Citi Bank (all three represent the majority of the credit card market) announced they will be reducing their credit exposure to consumers by Two Trillion (yes Trillion) Dollars. Plain and Simple, all you people that use credit cards to bridge the gap to make ends meet, will soon fall in the water if you don't have cash. If you think you are safe because "I always pay my bills" or "I'z got good credit" YOU ARE WRONG!!!!! This will be a reduction across the board. Good Credit, Bad Credit we all risk seeing our credit availability reduced in the next 18 months. I can vouch for this occurring as I have seen the reduction of credit availability happening in the Commercial Banking market for the last several months.

Credit cards are the second most used source of liquidity for consumers behind our wages (sad thought). With this source of liquidity drying up, it is time to get back to basics. SAVE YOUR MONEY!!!!!

As Always, Stack your Chips...........Cash is King!

Link to article about the reduction in Credit Exposure to Consumers:

http://www.consumeraffairs.com/news04/2008/12/credit_card_cutbacks.html