Lower Your Property Taxes Through Assessment Appeal

CHICAGO, May 14 (Reuters) – One of the best investments I
made in my home this year was to hire somebody to prove that its
value had fallen.

I know this sounds daft, but it resulted in a lower property
tax bill. In our case, our taxes dropped by $1,000 to around
$10,000 for the 2011 tax year. But we didn’t challenge our taxes
ourselves – we will pay a specialized property-tax consultant
$250 – 25 percent of our tax savings – to appeal for us.

If you owe more than your home is worth and you want to stay
in your home – or just can’t sell – taxes are the one fixed cost
you can have some success in reducing. (You can also try to
refinance to a lower mortgage rate, but that can be difficult
or impossible when you haven’t any or enough home equity.)

To begin your home-assessment challenge, you can either hire
a consultant to appeal your assessed valuation locally as my
wife and I did, or do it yourself.

Part of this story is hardly satisfying. We knew our home
value declined by at least $50,000 in the housing bust. Our
estimated market value now is roughly what we paid for it more
than a dozen years ago when we built it. Fortunately, due to a
large down payment, we are not under water, although that equity
value probably will not be coming back soon.

It’s never made more sense to challenge your home assessment
than it does now, although relatively few do. Some 11 million
properties are underwater, meaning due to equity loss, the
mortgages on these homes exceed the value of the properties,
according to CoreLogic. Taxes will not necessarily track the
depleted equity values, so you have to see if your local
assessor has valued your property correctly.

Adding salt to homeowners’ wounds is the ongoing,
disheartening erosion of home prices in most cities: Over the
past year, 15 of the 20 largest markets have experienced
declines year-over-year through February, according to the S&P
Case-Shiller Index. U.S. home prices are now at their lowest
level since 2002.

The disparities between what homes are worth on the open
market now and what they are assessed at for tax purposes can
often be huge. The National Taxpayers Union estimates that from
30 to 60 percent of U.S. properties may be over-assessed, though
only 5 percent of property owners challenge their assessments.

The gap between assessed and market value is even larger in
some areas where assessors haven’t accurately marked down home
values due to the housing bust. That is one reason why there
were more than 25,000 assessment appeals in my county in
Northern Illinois last year, compared to 17,000 the previous
year. You will have to do the research on your own to tell if
you’re properly assessed since each property is assessed
differently depending upon home type and local market
conditions.

Should you choose to go solo on your assessment challenge,
you will need to find three comparable properties that have
declined in value. Also check the property description with your
assessor to see if it’s correct. If the assessor erroneously
included in your property record a finished basement or more
living space or amenities than you actually have, you can
correct it by contacting the assessor directly. That could
result in an immediate assessment reduction.

Are you a senior citizen or a veteran? There’s another way
you might be able to save on property taxes. Check to see if you
qualify for a special exemption. You also should have a
homestead exemption for living in your home. You also may
receive a break on recent improvements or energy-producing
appliances like solar panels. While this is not part of the
appeals process, it might be another way of saving you money.

Having tried appealing on my own in past years with meager
success, I would recommend you hire a consultant. Assessors are
really in the business of pooling money for taxing bodies; many
of them are not homeowner friendly and assessors may guard the
data and methods they use to value homes zealously. I discovered
this years ago the hard way, and helped set up a nonprofit group
in my area to inform homeowners on how to deal with assessors.

Most private consultants will take a percentage of your tax
savings or a flat fee, or both. They should be experienced
assessment professionals (mine worked in a township assessor’s
office) or a professional appraiser. You can find these
consultants through a search engine. Enter “property tax
consultants” for your county. We found ours through a
neighbor’s referral.

Keep in mind that an appraisal for a bank is not the same
thing as a valuation for the assessor. It’s a different animal
and your assessor may not accept a current real-estate
appraisal.

If you cannot reach an agreement with your local government
assessor on a lower home value, then you can appeal at the state
and county levels, although that typically involves more time
and paperwork. Many appeal boards are incredibly backed up and
if you miss their deadlines, you’ll have to wait another year.

Here is another misconception you need to avoid: While you
can lower your home’s assessed value, it does not always
translate into a lower tax bill. The other side of the equation
is what rates local taxing bodies such as schools, fire
districts and counties charge you. They can – and will – raise
their rates to cover their budget shortfalls. So you can have
situations where home values have plummeted, but tax rates go up
to cover revenue shortfalls.

Begin planning your assessment challenge now. You will not
only lower your total ownership expenses, but make your home
more marketable. A lower tax bill than your neighbors adds
considerably to curb appeal when it comes time to sell.
Editing by Linda Stern and Phil Berlowitz)

Creating Your Investment Bucket List

By John Wasik

(Reuters) - Got travel or mountain climbing on your bucket list? How about taking up the guitar? If you really want to live life to the fullest in your remaining days, then what you should also add to those goals is a list of your investment priorities and adjusting your risk accordingly.

This idea doesn't come from a cheesy Hollywood movie, but rather from the study of behavioral portfolio theory put forward by Nobel Prize-winner Harry Markowitz and leading behavioral economics expert and finance professor and author Meir Statman (). They theorize that if investors divide their portfolios into mental account layers measured by risk, they can counter nervous investment errors.

This is how it works: let's say you have a $1 million portfolio. You can divide it up into different-sized buckets with goals for items like college savings and retirement. For example:

* The largest bucket, or sub-account, would be for retirement. Assume that about $800,000 is in this bucket for an event that's 15 years away. Ultimately, you would like to build this to $2 million.

* Saving for college? Earmark $150,000 for a goal that's three years away, eventually totaling $180,000 when your student matriculates.

* Want to fund a bequest for your alma mater or your favorite charity? Put aside $50,000 for a goal that's 25 years away.

If all of these goals were equal - and they are not - you might leave them in one portfolio. However, you want to take much less risk with the college fund than with the bequest goal that is 25 years away.

By marking each bucket high, low or medium risk, you've identified some prospective allocations in this behavioral approach. In this case, risk is roughly equivalent to the time you have to save for each goal. The shorter the time horizon, the lower the risk you can assign to the bucket.

The short-term bucket should be invested mostly in bonds or cash equivalents in which you cannot lose principal. This is your most secure bucket and it's for goals such as saving for a down payment on a home or a car, or to set aside money for a known expenditure like property taxes. Don't expect much, if any, return on these funds. Federally-insured money-market accounts, Treasury bills and certificates of deposit are probably the safest assets.

The medium-term bucket can be for major emergency expenses such as unemployment and out-of-pocket medical expenses. I keep that money in a short-maturity bond fund. It's not principal-protected, but it pays a somewhat higher return than a money-market fund.

A medium-term bucket is also a good place for college savings. For the biggest chunk of college funds for my two daughters, for example, I have money set aside in automatically age-adjusted 529 savings plans. As they get older, the fund company shifts more money from stocks into bonds. I like this approach because the accounts are rebalanced every year, so I don't fret about market risk. All I worry about is putting enough money in to cover soaring education bills.

Your longer-term goals can be weighted more heavily toward stocks and alternative vehicles. Again, you can choose an automatic approach through a target-date maturity fund that ratchets down stock-market risk as you age, balance your own portfolio of low-cost exchange-traded funds or hire a fiduciary adviser to select passive funds for you (the most expensive route).

As you create your bucket list, don't get tripped up by things like projected or "desired" returns. Guess on the conservative side - less than 4 percent for bonds and 6 percent for stocks.

It's also important not to try to overthink your decisions. Be flexible and try different scenarios. Use allocation engines to guide you through determining a comfortable portfolio mix. For some good calculators, see websites like those of Yahoo Finance, TIAA-CREF or T. Rowe Price.

Any comprehensive financial planner who works on a fee-only basis (no commissions) will be able to fine-tune your strategy if your needs are complex. Brokers and insurance agents should be avoided.

If you do this right, you'll be able to see a range of investing possibilities that you may not see today. There is no one right way to go about this, but if it is done with care, you can avoid a leaky investing bucket.

Ignoring the Market and Being True to Yourself

By John Wasik

(Reuters) – For many investors who have stayed away from the stock market for the past four years, this is a Hamlet moment. Returns look so tempting right now as stock indexes show their best performance since May 2008, with technology shares leading the way. To invest or not to invest?

Fortunately, you can take a Polonius approach to the market. He’s the father of Ophelia and Laertes who gets stabbed by Hamlet while spying on the vengeful prince of Denmark. Despite his bad timing, he has some great advice: “This above all: To thine own self be true.”

I’m reminded of Polonius’s speech by the notorious bear money manager Jeremy Grantham, who counsels long-term patience and resilience in a recent newsletter. While Grantham is bullish on “high-quality” (dividend-paying) stocks, oil, copper, forestry and farmland, I’m not suggesting you jump into anything before you do some serious self-analysis.

How do you be true to yourself? You need to lay down a set of investment principles and goals — if you haven’t down so already. When do you want to retire? Are you saving for college? Do you have to take care of an elderly relative? How much risk can you tolerate in the form of annual losses? Once you’ve answered these questions, write them down. This is your template for asset allocation.

COOKING LESSON

Your asset allocation is like making a pie. In fact, when you’re done, it should look like a pie chart with each portion of stocks, bonds, cash and other investments graphically displayed. It won’t come out right, though, unless you’ve been honest with yourself.

A self-questionaire will get you most of the way there. I like the retirement asset allocator at Yahoo! Finance (link.reuters.com/buq86s).

Bankrate.com also has a useful tool (link.reuters.com/cuq86s).

The Yahoo tool, for example, asks you about upcoming major expenditures, time horizons, income, age and investment risk profile. Since it’s geared toward behavior and not absolute numbers and market predictions, it tends to focus more on your psychology. Very few people are good at market forecasts, nor should they be.

Based on what you tell these calculators, they will give you a thumbnail asset allocation. Here’s a sample based on my inputs:

* 50 percent stocks, with 15 percent in large-company value, 10 percent in large-company growth, 10 percent in small/mid-sized companies, 15 percent in non-U.S. stocks.

* 45 percent in fixed income, with 25 percent in U.S. bonds and 20 percent in international bonds.

* 5 percent cash in a money-market fund.

Of course, this pretty much reflects my age (54) and how I’ve invested my family’s portfolio. You have to adjust the percentages to your situation. It’s a fairly conservative mix.

I’d like to see more of an allocation to treasury-indexed securities and commodities for inflation protection. I’ve done that in our portfolio, although you probably won’t get this kind of advice from a generic, off-the-shelf tool.

FILLING IN THE PIE

Wait, you’re not done yet. At this point, all you have is the crust and shell of the pie and what it might look like. You need to fill it with something. You can easily create your mix with passive, low-cost exchange-traded or mutual funds. Sites like MyPlanIQ.com, Folioinvesting.com or Betterment.com can help with individual portfolios.

With these pre-packaged portfolios, you can take as much or as little risk as you want. Don’t forget to do some retirement-income estimates as well. There is a plethora of calculators, on every mutual fund and brokerage-firm site.

For even greater customization, you should talk with fiduciary advisers such as certified financial planners, registered investment advisers or chartered financial analysts. Even certified public accountants designated as personal financial specialists can help you craft a personalized plan. These are the kind of professionals you need to consult if your needs are complex and you also need tax, estate and college-planning advice.

Having invoked Polonius’s famous line, I caution you to do what he says and not what he does. Do your homework. Spell out your dreams and fears. Don’t act on impulse just because the market is surging. Invest based on the way you live, not what Wall Street tells you to do. Don’t follow your gut; look at long-term returns.

In other words, don’t stand behind a curtain waiting to hear what you want to hear and end up getting skewered. You don’t have to be a bit player in a tragedy involving your money and future.

(Reuters Editing by Beth Pinsker Gladstone and Andrea Evans)

A Way to May the US Tax Code Fairer

(Reuters) - If the president and Congress are serious about income equality and cutting huge breaks for the wealthy, they should raise the capital gains rate.

While the president didn't mention it by name in his State of the Union speech on January 24, it's one of the many gorillas in the tax reform room.

There's no question that the 15 percent rate on capital gains and dividends largely favors super-wealthy taxpayers over wage earners. Just look at Mitt Romney's tax return. As former Labor Secretary and economist Robert Reich once noted: "It's a loophole large enough for the super-rich to drive their Ferraris through. About 80 percent of the income of America's richest 400 comes in the form of capital gains." (link.reuters.com/gen36s)

According to economist Jared Bernstein, who analyzed Congressional Research Service figures, capital gains and dividends were "the largest single contributor to the growth of inequality from 1996-2006." (link.reuters.com/hen36s)

Why should those who primarily make money from private equity, financial, business and real estate appreciation and dividends pay more than 50 percent less than wage workers who are subject to the top rate in federal, state, Medicare and Social Security taxes?

If you're from the supply-side camp, it's because the lower rate may encourage wealthy taxpayers to invest in capital, business and job formation while raising more tax revenues. More fundamentally, at least according to the conservative group Americans for Tax Reform, "when you tax something more, you get less of it."

When taxpayers know that the capital gains rate is going up, the "fire sale" effect comes into play: They sell assets to get taxed at the lower rate before the higher levy kicks in, hence the higher cash flow to the Treasury before the lower tax expires.

But there's no consistent evidence that shows that a lower capital gains rate does much for the economy long term. The rate of new business formations actually climbed from 1983-1987, when the maximum capital gains rate was 20 percent, according to the Kauffman Foundation, a think tank that specializes in entrepreneurism. (link.reuters.com/jen36s)

When the gains rate hit a maximum 29 percent from the middle of 1993 into 1997, there was another spurt of new business growth. Since 2006, though, small-business creation has generally fallen - even with the lower capital gains rate. The recession and housing meltdown are the likely malefactors.

Of course, recessions or periods of double-digit interest rates - which hurt small businesses the hardest - are the worst times for small-firm growth anyway, so the capital gains rate would not necessarily have been a primary hindrance during times like 1979 through 1983.

When do capital gains proceeds fill up the national Treasury the most? The data is inconclusive. In 1988, realized gains as a percentage of gross domestic product were more than 7 percent - the highest amount in almost a quarter century, and that was when gains rate was 20 percent.

Tax rates are often like porridge. Sometimes they may be too high; at other times just right. It could be that 20 percent is a sweet spot for gains. In contrast, the lowest capital gains/GDP percentage was 1.57 percent in 1977, when the maximum rate was nearly 40 percent.

What can barely be debated is that the capital gains rate is one of the multi-millionaire's best fiscal friends. Those who made $10 million or more, according to IRS statistics from 2009, reaped a total of nearly $70 billion in long-term capital gains. That's 10 times the amount of gains taken by those making from $75,000 to $100,000.

While cutting the capital gains rate generates more revenue overall due to the fire-sale effect, it's not in the best interest of the country to keep it at 15 percent. Raising it would also reduce the burgeoning federal deficit. If it's not an efficient way of creating jobs or businesses, why keep it so low?

"Arguments that the capital gains rate affects economic growth are even more tenuous," says the non-partisan Tax Policy Center. The group saw no correlation between rates and GDP growth "during the last 50 years."

Of course, the gains rate is but one item among thousands of special breaks in the tax code. You have to put everything on the table, from mortgage deductions to offshore corporate income if you want to ferret out wasteful tax handouts, which is highly unlikely in this election year.

Yet if one believed that Congress was earnestly tackling deficit reform in the interest of fairness and fiscal sanity - or did nothing this year - I would tell my tax preparer to take every possible break in 2012. That's because the special rate on capital gains will expire after December 31 - a deadline that will seem pretty urgent right around election time in November.

(The writer is a Reuters columnist. The opinions expressed are his own.)

Even the Bond King Can Be Wrong

By John F. Wasik

No matter what theme you adopt in a market forecast, predictability has always been a bugaboo. Just ask Bill Gross, the legendary manager of the PIMCO Total Return bond fund.

Gross's $244 billion baby saw at least $5 billion in assets flee in 2011, more than $1.4 billion in the fourth quarter alone. Relative to the size of his fund, this is a notable vote of no confidence ().

Investors voted with their money because of Gross's bet against U.S. Treasuries last year. Like many of us, he digested the headlines and became dyspeptic over the Congress defaulting on its debt, sluggish economy, the S&P credit downgrade and euro zone debt woes. Yet what actually happened didn't follow Gross's "new normal" script. Instead we got the "old abnormal" of unpredictability.

While none of those perils can be dismissed - nobody is out of the woods - something odd happened. U.S. debt remained a safe haven and even more money flowed into Treasuries, which became the best-performing bond class and returned 17 percent last year.

In the second half of last year, U.S. Treasury prices climbed, while hot money fled European paper. It wasn't too long ago that the euro was seen as a respectable currency while the buck was being battered. Gold, that ultimate nervous Nellie insurance policy, also went south for a while.

"The 'new normal' thesis at PIMCO was predicated on a low interest rate environment dragging safe bonds down as investors sought higher-yielding opportunities elsewhere," said Jeff Tjornehoj, director of research at Lipper, a Thomson Reuters company. "That was reasonable in 2009, but started to fade in 2010 and was completely undone in 2011 as credit conditions in European banks deteriorated and investors rushed to safety."

So it's time to question whether Bill Gross is on target with his new "paranormal" theory and more importantly, if active managers can consistently predict market movements and protect your wealth.

Is Gross still on track? Here's what he said in his most recent "Investment Outlook" ():

"For 2012, in the face of a delivering zero-bound interest rate world, investors must lower return expectations. 2-5 percent for stocks, bonds and commodities are expected long term returns for global financial markets that have been pushed to the zero bound, a world where substantial real price appreciation is getting close to mathematically improbable."

Of course, Gross has forgotten more about bond trading than I'll ever know, so his long-term record is worth respecting. His cautions are still valid. But actively managing money becomes nettlesome because the future is as slippery as a politician's promise. What's predicted doesn't always transpire; if you make big bets, you can suffer big losses.

The larger question for investors is should you even bother with an active manager making periodic wagers based on theories that may not hold water?

Would you be better off in passive bond-index funds like the Vanguard Total Bond Market ETF or the iShares Barclays Aggregate Bond fund, which I hold as a U.S. broad-market bond proxy in my 401(k) portfolio?

Passive investing usually makes more sense since you avoid the high costs and frequent missteps of active managers. As of the last Lipper research report, Gross's PIMCO Total Return fund finished in the bottom 12 percent of its category, posting a 4.15 percent return. That's compared to a 6 percent average performance for its peers.

That's why a passive strategy still makes sense. The Vanguard fund, for example, samples a fairly static basket of U.S. government-based mortgage bonds, Treasuries, corporates, utilities and a touch of non-U.S. paper. It charges 0.11 percent annually for management. The PIMCO fund has an expense ratio of 1.15 percent annually with a costly 430 percent turnover rate, indicating high trading costs that are passed along to investors.

As for predicting the market going forward? Be cautious and hedge any large position in bonds (European or American), stocks and metals. The only guarantee is that big financial events often follow an abnormal course.

How to Help the Jobless

(Reuters) - Two of my friends lost their jobs in the last month. One had worked for a large computer services company for 31 years. Another was an information technology manager whose position was eliminated in a restructuring. Both men are in their fifties.

Having been laid off more than once, I have a certain protocol I share with friends. I hope it's of value to them; I know it's paid off for me. Here's the plan that has worked for me in the past:

-- The best strategy is to be ready for a potential layoff with several months of cash, no credit card debt and an up-to-date resume. But don't lose heart if you're one of the more than 15 million unemployed and 1 million "discouraged" workers who can't find openings suitable to their skills and have stopped looking. There are strategies to lessen the pain and to improve your chances of finding a new job.

-- Ideally, don't leave your employer without knowing what benefits are available. Many large companies offer a suite of outplacement services to laid-off workers. Always take advantage of them.

One of my newly laid off friends got help in writing a resume, branding statement and doing interviews. He also got to keep his company-issued laptop. You're also entitled to at least 26 weeks of unemployment compensation, and in some cases as much as 99 weeks (assuming Congress extends long-term benefits by year-end).

-- You'll also need to make decisions about health care and your 401(k) plan. You have a choice of whether to keep your 401(k) with an employer or roll it over into another plan. Take your time in deciding what to do. I generally recommend that people look at the offerings of the largest fund companies (Fidelity, Vanguard, T. Rowe Price) and see if they can get better service, lower expense ratios and more diversification.

If health insurance is not covered in a severance plan, you may be eligible for it through a COBRA extension (link.reuters.com/zyq35s). This is a federal law that says an employer with more than 20 workers must extend their health plan to you if they lay you off. There's a nasty catch, though: You may have to pay for the premiums, although they can't be more than 104 percent of what employees are paying.

Of course, with no income coming in for a while, a large insurance premium could be unaffordable. If so, look at trade or alumni associations that may offer less-expensive group coverage. You'd have to be a member to qualify. A third alternative is to shop for short-term policies online (www.ehealthinsurance.com/).

Price high-deductible health policies first. Although out-of-pocket expenses range from roughly $1,200 for individuals to $11,900 for families (link.reuters.com/car35s), they are designed to cover most catastrophic health events such as heart attack, stroke or cancer. The premiums are much lower than full coverage policies and don't offer "soup to nuts" coverage.

-- Cash reserves are also essential. My friends were diligent savers, but they needed to do cash-flow statements to see how long their cash would hold out. That's a simple matter of adding up all basic expenses such as mortgage/rent, food, property taxes, health insurance and utilities to come up with a monthly "nut" number. These are the core bills when all discretionary items such as restaurant meals, movies/entertainment and cable TV are stripped out.

-- Need quick cash? Don't forget, that in a pinch, you can cash in or borrow against a life insurance policy -- if it carries a cash value -- or go down to one car.

And if you absolutely need the money, you can tap into your retirement plan, although I don't recommend it, because if you do it prior to age 59 ½, you'll pay income tax plus a 10 percent

federal penalty on withdrawals. That money's awfully hard to replace.

-- The nonmonetary part of joblessness is no less important. How well networked are you? Have you updated profiles on social media services such as Linkedin? Have you told friends and associates that you're looking for work? Have you checked college alumni association for job services? Use all social media options.

Often the hardest emotional toll is the long wait before another job is secured. Prior to the 2007 recession, the average wait to reemployment was five weeks, according to the U.S. Bureau of Labor Statistics. Today the wait is double that, and potentially longer if your chosen profession or industry is contracting.

New perspectives and brainstorming are essential. Forget about what you did; what can you do? Write down your life skills. What are you best at? What have you accomplished on the job and outside of work? What are your social skills? Do you need additional training? Don't forget skills you may have mastered outside the office volunteering.

The best jobs are often not advertised. Look at business headlines to see if companies are expanding. What kind of people are they seeking? Drill down into the story to see which executive is quoted and pitch them directly.

My recently unemployed friends are optimistic. They have decades of experience, are highly motivated and are well organized. One friend has already been on two interviews, and the other one has spent hours with an outplacement firm refining his resume.

Ultimately, getting a decent job is a numbers game. Job candidates need to make contact with the people who are doing the hiring -- and do it on a daily basis. Resumes are useful, but they may not sell their talents well enough.

---

The author is a Reuters columnist. The opinions expressed are his own.

How to Help the Jobless

(Reuters) - Two of my friends lost their jobs in the last month. One had worked for a large computer services company for 31 years. Another was an information technology manager whose position was eliminated in a restructuring. Both men are in their fifties.

Having been laid off more than once, I have a certain protocol I share with friends. I hope it's of value to them; I know it's paid off for me. Here's the plan that has worked for me in the past:

-- The best strategy is to be ready for a potential layoff with several months of cash, no credit card debt and an up-to-date resume. But don't lose heart if you're one of the more than 15 million unemployed and 1 million "discouraged" workers who can't find openings suitable to their skills and have stopped looking. There are strategies to lessen the pain and to improve your chances of finding a new job.

-- Ideally, don't leave your employer without knowing what benefits are available. Many large companies offer a suite of outplacement services to laid-off workers. Always take advantage of them.

One of my newly laid off friends got help in writing a resume, branding statement and doing interviews. He also got to keep his company-issued laptop. You're also entitled to at least 26 weeks of unemployment compensation, and in some cases as much as 99 weeks (assuming Congress extends long-term benefits by year-end).

-- You'll also need to make decisions about health care and your 401(k) plan. You have a choice of whether to keep your 401(k) with an employer or roll it over into another plan. Take your time in deciding what to do. I generally recommend that people look at the offerings of the largest fund companies (Fidelity, Vanguard, T. Rowe Price) and see if they can get better service, lower expense ratios and more diversification.

If health insurance is not covered in a severance plan, you may be eligible for it through a COBRA extension (link.reuters.com/zyq35s). This is a federal law that says an employer with more than 20 workers must extend their health plan to you if they lay you off. There's a nasty catch, though: You may have to pay for the premiums, although they can't be more than 104 percent of what employees are paying.

Of course, with no income coming in for a while, a large insurance premium could be unaffordable. If so, look at trade or alumni associations that may offer less-expensive group coverage. You'd have to be a member to qualify. A third alternative is to shop for short-term policies online (www.ehealthinsurance.com/).

Price high-deductible health policies first. Although out-of-pocket expenses range from roughly $1,200 for individuals to $11,900 for families (link.reuters.com/car35s), they are designed to cover most catastrophic health events such as heart attack, stroke or cancer. The premiums are much lower than full coverage policies and don't offer "soup to nuts" coverage.

-- Cash reserves are also essential. My friends were diligent savers, but they needed to do cash-flow statements to see how long their cash would hold out. That's a simple matter of adding up all basic expenses such as mortgage/rent, food, property taxes, health insurance and utilities to come up with a monthly "nut" number. These are the core bills when all discretionary items such as restaurant meals, movies/entertainment and cable TV are stripped out.

-- Need quick cash? Don't forget, that in a pinch, you can cash in or borrow against a life insurance policy -- if it carries a cash value -- or go down to one car.

And if you absolutely need the money, you can tap into your retirement plan, although I don't recommend it, because if you do it prior to age 59 ½, you'll pay income tax plus a 10 percent

federal penalty on withdrawals. That money's awfully hard to replace.

-- The nonmonetary part of joblessness is no less important. How well networked are you? Have you updated profiles on social media services such as Linkedin? Have you told friends and associates that you're looking for work? Have you checked college alumni association for job services? Use all social media options.

Often the hardest emotional toll is the long wait before another job is secured. Prior to the 2007 recession, the average wait to reemployment was five weeks, according to the U.S. Bureau of Labor Statistics. Today the wait is double that, and potentially longer if your chosen profession or industry is contracting.

New perspectives and brainstorming are essential. Forget about what you did; what can you do? Write down your life skills. What are you best at? What have you accomplished on the job and outside of work? What are your social skills? Do you need additional training? Don't forget skills you may have mastered outside the office volunteering.

The best jobs are often not advertised. Look at business headlines to see if companies are expanding. What kind of people are they seeking? Drill down into the story to see which executive is quoted and pitch them directly.

My recently unemployed friends are optimistic. They have decades of experience, are highly motivated and are well organized. One friend has already been on two interviews, and the other one has spent hours with an outplacement firm refining his resume.

Ultimately, getting a decent job is a numbers game. Job candidates need to make contact with the people who are doing the hiring -- and do it on a daily basis. Resumes are useful, but they may not sell their talents well enough.

---

The author is a Reuters columnist. The opinions expressed are his own.