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Be prepared: Plan for all the ‘what-ifs’

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Financial advice maven Suze Orman says the motto of the day is, “Hope for the best, prepare for the worst.”

Many of the factors that lead to layoffs are not within your control, she writes in O, The Oprah Magazine. So plan for the “what-ifs,” so you’re prepared for anything. Her advice:

Bolster your savings fund.
“Make it a priority to have at least eight months of living costs set aside in a federally insured bank or credit union account,” Orman says.

Eliminate debt now.
While you still have income (and once you’ve stockpiled your emergency fund), make it a goal to pay off debt ASAP.

Orman adds, “If you have an outstanding 401(k) loan, pay it off now. If you are under age 55 and get laid off, the loan usually must be repaid within a month or two, or you will be stuck paying income tax on the loan amount as well as a 10% penalty.”

Cut back spending. Until you’re out of debt, pay for needs, not wants.

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