Here's what I want you to do: take out all of your credit cards and lay them in front of you. How much do you owe on each one? Come on, how bad is it? Bad? Not surprised. You may even be one of the many who have filed for bankruptcy in the last few years. It's been pretty bad out there...I know. So, what to do...in this economy it's pretty scary.

I hate to tell you this but there's a very, very real chance that you are going to lose your job. There is! I'm a financial services professional and it happened to me, and let me tell you it's likely that it will happen to a lot of you. So what you have to do in order to be prepared not to be knocked off of your feet immediately is to have a plan, and that plan starts with this: lay yourself off starting now. Reduce your spendable income to 55% of what you bring into the home right now. Because on unemployment you would bring home an unemployment check that would be roughly 55% of your current paycheck.

The other 45% of your check will go straight to an interest-bearing savings account, in fact I want you to open a separate savings account in a separate bank - one that will never be accessed by overdraft for your checking account, one that does not have an ATM card, one that it's a complete pain in the rear-end to get to, and you make a weekly trip and faithfully deposit that 45% every week without fail, and don't you ever fail to do it! That is your emergency fund and it is untouchable and you need to forget about it, because you are now living on an unemployed person's income!

Next, you have to live like you are making less. Cut expenses. You have cell phones - what is your plan like? Reduce it! You have a 300 minute plan, reduce it to the lowest plan you can sustain. Cut the cable, or better yet, switch to satellite tv - and get the most basic cable tv you can stand. Cancel your automatic mail-order DVD's, who has the time? Cancel all of those little subscriptions that nickle-and-dime you to death each month, all of the subscriptions you have to this and that - take a good, long look at the things that are automatically coming out of your credit cards or debit cards or bank accounts and cancel those little things.

Cancel unnecessary insurance. Re-evaluate whether you need comprehensive on your car. Look for competitive prices on car insurance. Get rid of luxuries like weekly cleaning services, newspaper delivery and that sort of thing. Take advantage of all the free services on the internet for entertainment, and do your housework yourself - save on the money you spend at the gym!

Speaking of your car if you have a luxury car, trade it in and get a compact, gas-saver that will cost less to maintain, especially if you are leasing. Better yet, use public transportation where possible in cities like New York, Boston, etc. It is a lot cheaper. In the city if I lived in Boston proper I'd opt not to have a car, but that is me...it's preference.

Now, let's take a look at your taxes. What were they like last year? Did you get a refund or did you owe money? Have you discussed them with anyone? There are so many great services out there with trained, really excellent tax professionals who (come December) will be able to examine your tax situation in detail for you, but I can tell you a few things you can do: you can call certain big tax companies (I won't recommend anyone in particular but one rhymes with crock and the other with cruit) that have year-round offices open that will look at your w-4 forms and your previous year's tax returns and offer you good advice on how to maximize your tax refund. I would strongly advise you to take advantage of this tradition of "free tax advice" and while you are there set an appointment to have your taxes prepared professionally.

For example, think of your W-4 as a way of telling your employer how much you need now to support yourself and your household, and how much to send to the IRS for your taxes. If you tell them you have 0 exemptions, you are saying "you can take out the max for taxes, I'm good." If you say 1 exemption, you say "I need a little to support myself, but then I'm good." If you say 2, you are saying "I claim myself and one other exemption, then you can take taxes from there." Each exemption you add increases the amount of money you get in your paycheck and decreases the amount held back and sent to the IRS for taxes.

Last tax season I prepared taxes for a client who owed a great deal of money because he was single, had no wife and no dependents, yet he claimed four (4) exemptions. He'd done the same thing the year before! I explained to him his error, and that he should immediately change his W-4 to reflect "0" due to his high income. It did not help him that he lived rent-free with his grandparents!

Which brings me to one final point I want to make on this topic of control. If you are one of the few people who find that they are very young, doing well in this economy and making money, I offer you this advice with all my heart as a mother, a financial professional and a tax planner: if you have not done it yet, open an IRA and start saving money for your retirement. Even if you do not see that far away, it's yet another conduit for savings, it's a source of money in an emergency (medical crisis, for example) it's security, and it is a tax shelter. Don't talk back to me, just do it!

I really and truly hope no one who reads this has the catastrophic bad fortune that my family has faced over the last almost two years with health, finance and other things. It's been hard. We would not have come this far if we were not as careful, frugal and smart as we are. We are very resourceful individuals. And anyone who is impressed with me is free to offer me a job anytime, I'm in Boston/Quincy and available for interviews!

Now take care, kids. I will be doing taxes somehow, somewhere, this tax season, even if it's on my own...

MomintheMiddle