The party is over! When the local luminaries (well not all of them as yet) state it in newspapers, magazines, and radio, it is definitely official — our economy is headed for hard times. Of course, the usual two or three brave realistic souls who have been sounding the trumpet way far earlier, months and months ago, while taking all sorts of abuse for trying, have got to have mixed feelings.

The temptation to say 'I told you so' along with the understanding of the realism that will arrive, is an unpleasant irony. You have to ask why would anyone bother? Because there are concerned citizens out there (count me as one of them) that still want to impart the message that if you know what is coming and you plan for it, it just might not be so bad — at least on a personal level.

In economic downturns, the wealthy worldwide may feel somewhat diminished, but for all us just plain folk, the story can be quite different. Yes, we all had a good Christmas. Yes, we probably ate too much and no, we don't have too many regrets about celebrating with family and friends. Now, we are back to reality — it has to be faced.

This year, dear readers, things are going to be different — all signs are pointing that way. The boat has left the shore and it is too late to reverse engines. It appears that local stores were well supported and busy over the holidays. This is a good thing because from economic reports right up through Wednesday of last week, the United States with millions of jobs lost and the UK are already in recession.

Consumer spending decreases are impacting negatively on these economies and are spreading across the pond in a ripple effect very soon, if it has not already arrived. There will be fewer of all types of people arriving here and leaving less of their money when they go back. We know it, you should know it and while there is still time, everyone should be making serious plans to weather the downturn, this latest financial storm challenge for our island.

How prepared are you? Take this short financial survival quiz. Answers next week.

Do you have enough cash (that you can get in a day) for the next six months of living expenses, including food, rent, car and mortgage payments? Yes No

If you don't have enough, can you borrow what you need from your bank or relatives? Yes No

If you borrow the money, can you afford to pay it back? Yes No

If yours is a two-person income family, can you survive on one income?

Yes No

Do you think your job is safe? Yes No

If you have a rental unit, have you had to reduce the rent to attract a new tenant? Yes No

Are you feeling that your employer is showing signs of slowdowns? Yes No

If you were made redundant next week, do you think you could obtain another position in less than a month? Yes No

Do you think your new job will pay the same salary? Yes No

If you lost your job, could you afford to pay your own health insurance? Yes No

Do you find that your credit card debt is decreasing? Yes No

Do you have any cash left just before the next payday? Yes No

Do you pay all your bills each month? Yes No

This is the second time that I may see an economic recession. Experience notes that in spite of all the bad news, there can be many opportunities to succeed. What should you do now?

The beginning of the New Year is always time for renewal and review — of your personal goals, and your finances. This time is no different. Draw up an agenda for your family. Everyone has to feel involved in this survival plan or it will only create more stress. Here are some thoughts to discuss to get things moving.

Realistic truths — be honest about where your family finances are, what is happening with your jobs. No sugar coating, this is the time to be absolutely honest and upfront — everyone has to make sacrifices.

Motivation — it is your role to motivate the group, talk about family values, goal setting, your personal convictions that you can get through this, ask for co-operation and envision being successful at conserving your resources until better times are at hand. Be sure to include some sort of small rewards, children have trouble looking down the road at the big picture.

As much as this sounds like pabulum, there is nothing that strengthens family values and collective determination like having to make sacrifices, but you have to try and make it fun, you have to have conviction and the power that you cannot falter in this goal — you are the leader.

All of these attributes will be needed and more in order to change your family's attitude toward where the money should be spent, and how much should be saved. IT WILL NOT BE EASY, it may be the hardest thing you have ever done

1 Raise cash. If your situation is severely strapped for cash or you have been made redundant, the first step is to figure out — right now, how much cash do you have? How long will it last? Can you access it easily? If your calculations are less than ideal, you must start to raise cash now and begin to build your contingency fund, in three ways: raise cash, control outflow, increase income.

Review your monthly debt burden. If your car is costing you a fortune, sell it, and get a cheaper one, fully paid for. Ask your mortgage officer for a temporary revised mortgage payment plan until you are back up to full monthly salary. Find a cheaper apartment, thereby reducing monthly rental outgo. Get rid of all those fancy bags, jewellery, watches, whatever. The E-moo market is thriving — there is always a buyer out there.

There are stories on the Internet of children selling their toys on eBay to raise cash for other things. Right now you don't need 'stuff', you need cold hard cash.

2 Control Outflow. Where is your cash going? Clamp down on ATM trips, food waste, utilities, cell phones, gas, parking, and fritter entertainment. Set strict amounts to spend every week on food — the family that cooks together stays together. Cancel expensive trips — this is survival of the fittest. Pay cash for everything, and work on reducing your credit card debt.

3 Increase income. Look for additional employment opportunities. You need to bring in as much revenue as you can. Yes, it will be tiring, and no, your family won't be happy. But it won't last forever and it could lead to a far better future.

There are many, many websites out there that have lots and lots of hints and tips on saving money, cutting back on expenses and holding the family together in times of adversity. There have also been helpful articles locally by Consumer Affairs Bermuda and grocery stores. Use them.

The only purchase you should make at this time is a computer and Internet access where the entire world will be available to you to keep you motivated. Good luck. You can do it; we can do it — individually and collectively.

Martha Harris Myron CPA -NH1929, CFP® -67184 (US licences) TEP — Society of Trust and Estate Practitioners specialises in comprehensive financial solutions and investment advisory services for international and domestic private clients and their families, business owners, endowments and trusts. Confidential e-mail can be directed to martha.myron@gmail.com">martha.myron@gmail.com The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of The Royal Gazette has final right of approval over headlines, content, and length/brevity of article.