This is an adaptation of an article written originally for Moneywise in early 2009 as the Bermuda economy fell off a cliff. It has been updated to reflect the current recession.

The state of our economy and the Bermuda government debt is on everyone’s mind.

We hear that it is “not business as usual”, that Government “cannot afford it”, that “foot traffic has been slow, so we’ve had to cut back on employee hours”, and “homeowners continue to struggle with meeting mortgage obligations”.

The overarching message is that Bermuda and her people have to learn to live within their means.

Capital markets started a downward slide more than seven years ago, which resulted in global economies having to cope with severe recessionary pressures. Many have gradually recovered.

While we hate to think of it, and many of us are still in almost total denial imagining the money faucet in Bermuda is permanently turned on, the Island was very vulnerable to its own economic downward pressures as well as exposure to world economic conditions.

We still are.

Budget restrictions continue to dominate the news. Companies must place their capital to the most profitable areas where they can generate the best return for shareholders. Cost containment measures assure profit efficiency.

Smaller employers are no different; often, they have no choice but to implement economic triage (cost cuts) across the board, keeping only the products and employees needed for the business to survive.

No company CEO in his or her right mind can operate altruistically (and unprofitably), because the final unpleasant alternative is to go out of business. Then no one has a job.

The resulting uncertainty permeating through local media, neighbourhood buzz, and speeches by local leaders has created legitimate community concerns. Individuals feel somewhat powerless and frustrated, not understanding how or why our economy is still struggling long after other countries are pulling back to a new normal.

You and I cannot manage the country’s economy, but we can control our individual financial position. Anticipating changes allows you to put your financial survivor tactics in place.

Here is a financial checklist to help you assess where you are now, and plan for the what-ifs in your life going forward. It is not inclusive, I know you can add more items to it.

Your plan will be to put aside as much cash as you can to provide a buffer for these uncertain times.

A word of caution, do not invest this cash in anything (or anyone) that remotely resembles risk of loss. Remember the higher the return, the higher the risk of losing it all.

• List all critical bills due, particularly rent/mortgage, utilities, phone, car payments and gas. These are necessary fixed expenses for your family and have to paid.

• Review your savings to assess if you have enough cash right now for six months (or preferably more) of living expenses to cover these critical bills and food.

• No cash cushion? Start saving as if your life depended on it. It does.

• Radically cut back on all non-essentials. In order to save you must stop spending on everything that is superfluous and unnecessary: cell phone use, eating out, snacks, new shoes, leisure clothes and shopping sprees, vacations, little expensive electronic treats, meals out, and so on. You are in cash survival mode.

• Cut your food budget down to plain, practical small portion meals. You’ll lose weight in the process.

• Make credit card charges a complete no-no. Reserve your credit card for absolute emergency use only. The psychological effect of coping with large credit card balances can create tremendous stress. Pay any balance you have down to a manageable level.

• Sell what you do not absolutely need, such as extra designer bags and jewellery. And trade down to a cheaper car with lower payments.

• Ride a bike, use public transportation, or walk into work.

• If you are a two-income family and own your home, arrange to have a home equity line contingency put in place now. You cannot borrow money if only one of you has a job, plus you don’t have to use it unless you absolutely have to.

• Talk to your mortgage officer. If cash is going to be tight, try to negotiate a short-term interest-only payment plan (or lower monthly payment) .

• If you rent, talk to your landlord — you may be able to negotiate a lower fee, or now look for a less costly rental.

• Get your CV updated immediately and keep networking with friends, business acquaintances, and family contacts for job changes or a potential new job.

• Step up your personal grooming. This is not the time to let your appearance slip, no matter how stressed you may feel. You never know where the next opportunity will arise. It is critical that you look like an absolutely polished professional at all times.

• Be proactive — do not act like the Bermuda toad sitting frozen in car headlights, just waiting to be run over.

• Increase your athletic activities. Work out that stress and uncertainty on the fastest walk or run you can. Picture that mental image of you as a confident successful person.

Operate in this financial survivor mode until you know for certain that the economy is truly recovering, that your job is still intact, or that you have attained another even more satisfactory position.

What if, despite the worry about your job and personal positions, nothing happens to you or your family? Think about that nest egg that you now have — because you have saved and saved in financial survivor mode.

Good for you for putting your cash savings plan in place. Congratulate yourself.

Change is inevitable. But you can become the change agent; embrace your choices, control them and use them to your advantage. You will remain the person in charge of your life.

Next in budget discussions — If you think your job is on the line, are you prepared?

Martha Harris Myron CPA PFS CFP JSM; Masters of Law: International Tax and Financial Services; Appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. The Pondstraddler* Life™ Consultancy providing planning for international tax, immigration, investment, retirement, legacy, and related financial challenges to the lifestyles of internationally mobile individuals and their businesses residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre.

Contact: martha@pondstraddler.com