Tips to survive a financial panic

News broke hours ago that Chinese banks have been forbidden from lending money to US banks. Although it may seem insignificant, the US cash deficit has averaged over $2 billion a day for several years, and the number one source for that cash has been China. The Congress may continue to argue over the $700 billion bailout of the financial sector, but the package aims to save local institutions. Take the Chinese money off the table, and the crisis is even more serious again.

More things you can do about this

Exercise prudence with finances
Don't overleverage, be a prudent borrower
Don't lock your money for long term
Holding cash is not a wise option
Fixed deposits, safer investment
Don't stay overexposed to a single asset class

via indiatimes

7 tips for Surviving a financial panic

For starters, here are seven tips for navigating the crisis:

1. Housing. Credit is going to be tight until banks can relax a bit. Only buyers with gilt-edged credit ratings will have easy access to mortgages. So this is not the greatest time to sell. On the other hand, if you have money stashed away and can come up with a hefty down payment, be on the lookout for a bargain that makes sense as an affordable home for the long term.

2. Home equity. If you've been thinking that equity in your home is your cushion against financial setbacks, think again.

3. 401(k) accounts. Markets do recover over time, though it can take years.

4. Your job. You should anticipate that the boss will get bad news about her budget.

5. Saving for a rainy day. The likelihood of a rainy day has increased.

6. Insurance. If you have policies that seem fair to you, stick with them.

7. Household expenses. Treasury Secretary Henry Paulson remarked the other day that this is a "humbling time" for Americans.

via moneycentral.msn