Dealing with a Recession

DEALING WITH A SLOW ECONOMY

Over the past decade, we as a nation have experienced extreme financial swings – from extreme economic growth to today’s current state of recession. There is no concrete method for predicting what the economy is going to do next. The only thing we can be certain about is that there is more change on the horizon.

One of the most effective means of surviving volatile economic times is by practicing sensible money management and to make sure you line yourself up with maximum financial security no matter what the economy is doing.

Below are some tips to follow to ensure that you are always maximizing your financial well-being.

Reduce expenses
Begin by evaluating your budget and trim back on all unneeded expenses. If buying lots of expensive goods and going away on lavish vacations was common during the big-money days of the 1990s, reclassify what is necessary and what is not. Change your overall attitude towards the way you spend. Be careful with spending on high ticket items at the very least until the economy reaches a more stabilized point. This will assist you in getting through these hard times

Eliminate your debt
Attempt to eliminate as much debt as you can every month. There is a very strong statement ‘It is better to earn interest that to pay it’. Set some goals for paying off credit cards, and if needed, make some temporary sacrifices. When you pay off debt, you will slowly find your standard of living to improve. In addition, do what you can to avoid incurring any new debt. Believe it or not, there are millions of Americans that live 100% debt free! A good rule of thumb to follow is, ‘if I can not afford to pay cash, I can not afford to pay buy it!’.

Work hard
Make yourself indispensible and you likely will keep your job. Even though we here about all these layoffs on the news every week, the unemployment rate is still relatively low. However, the days of being able to name your price when looking for a job are over. Businesses are now utilizing a more cautious approach when hiring new employees. In addition, if you are considering a career move, remember that you are going to have to start at the bottom of the seniority list…making you ‘last hired, first fired’ in the event of another round of lay-offs occur. Read more about keeping your job during hard economic times. If you have lost your job, get help finding a job.

Continue to pay your bills
If you get in a financial bind, continue to pay your bills. If you don’t, not only will your interest rates go up, you are going to wreck your credit. You may want to reach out to your creditors and explain your situation. It is very likely that they will develop a revised payment plan with zero penalties or added interest. Read about 'how not to pay your bills'.

Do not touch investments
Avoid withdrawing from any sort of IRAs unless you have no other choice. You will likely be penalized for cashing out early. Most impacting of all is that you will be taking away from retirement funds that have been accumulating for a long time and will likely have a difficult time replenishing.

Insurance
Maintain coverage for all of our insurance policies including life, disability and medical. It is easy to let your insurance lapse when having to decide whether to pay the premiums or your mortgage. However, your financial well-being is very important during these hard economic times.

Bottom line, the most effective means of weathering economic uncertainty is by reducing your overall expense costs. It is important to note the history has proven increasing prosperity follows economic despair. Therefore, if you can maintain your financial discipline during the difficult times, you will be on top when the economy turns around.

Related Reading:
Surviving an Economic Crisis
Saving Money While Shopping
Saving Money When You Have Kids
Reducing Work-Related Costs
401k Investing When the Market is Bad
Getting a Loan While Unemployed

Surviving a Slowing Economy- Entrepreneur.com

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