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Facing Up to Personal-Finance Realities

You probably have made personal-finance adjustments to cope with the recession.

But you'll need to face the hard reality that some things you grew used to no longer apply today -- or even tomorrow.

Here are five personal-finance realities that will help you get your house in order:

The downturn is going to last a long time: President Barack Obama made it clear in the opening statement of his press conference this week that we aren't near the end of this economic mess. As he bluntly put it: "It took many years and many failures to lead us here. And it will take many months and many different solutions to lead us out. There are no quick fixes, and there are no silver bullets."

If you were hoping the economic meltdown would be over by the end of the year, you probably need to rethink your timeline. While Obama believes the government is taking the right steps, getting back to growth is going to take time and patience. If he's correct, it will take at least a couple years. If he's wrong, it could be a lot longer.

It's a good time to begin thinking about making long-term or permanent changes. Since nobody knows exactly how long this economic crisis is going to last, your personal finances will be healthier if you make the assumption that we are looking at years rather than months.

You're going to have less purchasing power: The reality is that until the economy recovers, you're going to be paid less in one way or another. With so many qualified people out of work, companies don't need to raise salaries to attract top talent. Many companies have already begun to cut hours, reduce perks and other benefits, do away with training and taken a variety of other steps that ultimately shrink your purchasing power.

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