海角大神

If you鈥檝e been following the news this week, you鈥檝e heard that聽. The city is holding $11.5 billion in unsecured debt, the repayment of which has the city in such a deep financial hole that they can鈥檛 keep up with the basic maintenance of the facilities they already have.

For those of us who have reached a financial low point in our lives, this sounds pretty familiar.

I never reached a point where I had to file bankruptcy, but I did reach a point where I had bills on the table and not enough money to pay them.

It was frightening. I had people relying on me 鈥� not just myself, but my wife and my infant son. I needed to make sure that certain things were provided for them 鈥� a roof over their head and food in their bellies, for starters.

That experience, in many ways, parallels what鈥檚 happening in Detroit.聽

Much like Detroit,聽we all have basic maintenace we鈥檙e responsible for.聽Detroit has facility maintenance, while we have rent and insurance and so on.

Much like Detroit,聽we have people relying on our hard work.聽Detroit has pensions and salaries for thousands of employees, while we have the safety and well-being of ourselves and those in our immediate family.

Much like Detroit,聽we can face suffocating debt.聽Detroit has interest payments on $11.5 billion in unsecured debt. Many people in financial peril are facing interest payments on student loans, mortgages, car loans, credit card debt, and so on.

Much like Detroit,聽the solution is to carefully evaluate how your money is being spent and come up with a plan for fixing things.聽Detroit鈥檚 plan might involve cutting pensions or selling some city assets. Your plan might involve cutting back on spending or selling some of the items in your closet.

This touches on another aspect of Detroit鈥檚 bankruptcy that people everywhere should be thinking about:your pensions are not golden, even if you鈥檙e employed by a government or other public-sector employer.聽You should not be planning your retirement based on your pension being available for 40 years. It鈥檚 just not a good plan.

If you are in that situation, I highly recommend taking some of your income and banking it for future years. There very well may come a time in the future where you need it, particularly if your former employer winds up in a Detroit-like situation.

If you鈥檙e still working but are banking on a pension, consider opening up alternative retirement savings plans, like a Roth IRA or a 401(k)/403(b). Live off the pension when you retire and use the money in the 401(k)/403(b) as a true emergency fund.

If you鈥檙e just starting off and have an option of a pension plan or a individual retirement plan, choose the individual one. Only utilize a pension if it鈥檚 a given benefit or if it鈥檚 in addition to your individual retirement planning.

Detroit鈥檚 bankruptcy is a sad phenomenon, but it鈥檚 something that all of us can learn from.

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