People without debts are a rare breed nowadays. Even those who had practiced strict self-discipline and always managed to live within their means are suddenly finding themselves knee-deep in debts due to economic decline. This is still good news because most people are indebted up to their eyeballs.

Let’s suppose you’re one of the rare breed. You have a nice nest egg you’ve been successfully tucking away since you started working. You never paid penalties on credit card payments. You are always on time on your home mortgage and utilities monthly bills. You even managed to save for your 3 kids’ college education. Your life sounds boring, really.

Here’s the catch. You were laid off from the high-salaried job you’ve had for years. The next month, the company that your husband worked for went bankrupt. Almost overnight, the bills started piling up. Penalties were being charged left and right. And your savings for the college education are rapidly depleting. If you’re not careful, you’d be slicing your retirement investments next.

You became depressed as debts started dragging down your family’s well-being and bright future. You have trouble sleeping. You’re getting nightmares. Hey, wake up. You must fight those fears and start climbing out. Recoup your strengths. You and your husband still have the severance pay. Your retirement savings is still intact.

These times are tougher than 5 years before. More people are finding it difficult to maintain their standard of living. Cutting back on credit card use is almost painful to some. Most families stopped eating out and started doing the house chores like washing and drying clothes at home instead of taking them to the laundry.

This scenario had shown that a debt-free existence is not enough. People should have a contingency plan, in addition to savings account and retirement plan. Set aside 30 percent of your income to cover for any misfortune that may befall the family.

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