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The appropriate action is related to your liquidity. If you have enough cash and liquid assets to cover one year's worth of living expenses, you're in pretty good shape for the near term. Liquid assets include things that are often overlooked, such as IRAs, 401Ks, cash surrender or withdrawal value for life insurance and/or annuity funds that are immediately accessible, so you may be in better shape than you think. There may be penalties associated with some of those withdrawals, so tap them only as a last resort.

While regularly reviewing your financial status is a good idea for everyone, there may be no need to modify a thoughtful and balanced long-term financial plan if you have sufficient liquidity. Homeowners with minimal liquid reserves need to take action soon to strengthen their ability to access cash if they need it in increasingly uncertain times. Uncertain economic times can threaten even the safest jobs, and jobs take longer to find during a recession. For homeowners with less than a year's liquid reserves, a top priority should be to protect their limited liquid assets, look for ways to expand liquid assets, and look for ways to improve your ability to get additional cash in the future if you need it.

There are four important steps smart homeowners should take to protect their financial security:

• STEP 1: Review your home financing structure >>
• STEP 2: Review the allocation of other investments >>
• STEP 3: Make sure you're adequately insured >>
• STEP 4: Build liquidity by reducing unnecessary personal expenses >>