As the last week has brought home to many, we live in troubled financial times.  Scott Johnson of Power Line posts some great advice from Lawrence Lindsey on financial self-preservation in times like these:

First, readers would be well advised to actually sit down and write up a budget if they have any doubts about whether their current income is covering their bills. Just to be clear, expenses include not only the minimum payment on an item like a credit card, but all the charges incurred in the month plus the minimum payment. And income does not include any draws on saving or home equity lines of credit. I once went through a budget exercise with a struggling 20-something and asked why he didn't have anything budgeted for gasoline for his car. His response was that he simply put it on his credit card so it didn't count as long as he was making the minimum payment.

Making minimum payment on a credit card or other revolving credit account is the path to bankruptcy.  If you can't pay the whole thing off every month, pay all new charges plus twice the minimum payment.  If need be cut up the credit card so there will be no new charges, and then pay more than the minimum payment each month.  No matter what you do, make sure the payment gets in on time each month.  Late charges will cost you far more than the interest rate.

Second, people should make sure that they have at least three, and ideally six, months' income saved in a place where they can get at it readily like a bank account or money-market fund. This is on top of items like retirement saving and college accounts.

Have enough cash (as in the folding green stuff) on hand to hold you though at least a week in case you can't make it to the bank (storm or other emergency).

Third, once this threshold is met, it is doubtless a good idea to start reducing debt, particularly on credit cards and auto loans. These are about to get much harder to obtain as the credit crunch inevitably spreads from the commanding heights of the financial sector into the consumer credit arena. It will not be surprising to see the limits on credit cards lowered sharply, fees for holding cards rise, and auto loans tough to qualify for. The goal for households should be to be able to use credit cards for convenience only--paying the bill in full each month--and to have the ability to pay cash for larger purchases like a car.

Finally, for those lucky enough to meet the above criteria, where one deploys one's assets becomes a serious matter in the current environment. There was a saying in the 1930s that you should not have all your eggs in one basket. It meant spread the assets around. In the calm environment of the last few decades this dictum was rejected for the convenience of one-stop financial shopping. You might want to consult a financial adviser or at least inquire at the institutions where you have assets what the insurance limits are and under what circumstances your assets can be seized by creditors of the institution. This means asking questions about deposit-insurance limits, the assets backed by money-market funds, and whether your investments are in custodial accounts.

The Federal Deposit Insurance Corp. (FDIC) insurance limit is high enough to protect the amount of money most folk have in a bank, but for those better off it may be required to split your money among several banks to be sure it will all be covered.

Another factor to consider is that if your bank fails, while the FDIC will make sure you don't lose your money, it may take some time before you have access to it again.  Meanwhile you still have to pay the mortgage, the auto loan, credit cards, and put food on the table.  This is another reason to have an account at another bank with a month's worth of money in it.