As you know, we have been experiencing one of the most challenging times in our country’s history.
During the past few months, we’ve encountered a housing bubble, credit crisis, a bear market in stocks, significant increase in unemployment rate, continuous increase in food and energy prices, etc.
As a result of these problems, the government has taken serious action to stabilize the country’s economic condition to avoid another “Great Depression.” According to National Bureau of Economic Research, the country is not yet officially experiencing a recession. Despite what the experts say, we should still prepare in advance for any possibility and take the appropriate steps to protect ourselves.
Remember, recessions come and go. Based on previous records, a recession may last anywhere between 8-16 months. At the same time, no other economic crisis within the last 50 years has been compared to the “Great Depression.” What does this mean for you and what should you do? First and foremost, do not worry and do panic. Not only will the economy eventually cycle back to a better condition, but you can still effectively prepare for what’s to come ahead.
Here are smart ways to help you survive a recession:
Spend wisely. Be sure to cut unnecessary spending. For example, if you usually buy coffee everyday, try to make coffee at home instead. You will be surprised on how much you will save.
Tip: If you don’t need it, don’t buy it. Check Money Saving Tips for more ways on how to save significantly.
- Pay-off your debt. If you can afford it, pay of all your credit card debts starting with the highest interest rates and be sure to avoid using the “plastic” unless for emergency situations. During a financial hardship, it becomes very tempting to use your credit cards but keep in mind that it won’t help you in the long-run. Also, keeping your balances low and credit cards open will act as an emergency line when and if needed.
Tip: Pay off your balances from purchases made from previous years before making new ones.
Continue Investing. When the economy is down, money becomes tight and most people stop making IRA and 401k contributions. You may want to give it some serious thought before you stop making these contributions, especially if your employer matches what you put in. In fact, during a recession, savvy investors like Warren Buffet consider these conditions as the best time to invest. If you have extra cash available, it may be time for you to get expert financial advice from your financial advisor as stock prices have become very low.
Tip: Invest wisely. Diversify your portfolio to lower your risks. As the popular saying goes “Do not put your eggs in the same basket.”
Work harder. During a recession, the unemployment rate goes up because companies are not generating enough revenue for numerous reasons. As a result, they lay off employees to cut down on their biggest expense, salary wages. With this in mind, be sure to work even harder and be proactive. Work extra hard to prove to your employer that you are indispensable.
Tip: If you’re scared of losing your job, make a back-up plan. Update your resume and start looking for a second job to be on the safe side.
Think long term. Based on statistics, recessions usually last for a period of 8-16 months. As mentioned earlier, this is not anything like we have seen since the “Great Depression.” When making any financial decisions, be sure to be very cautious and conservative.
Tip: If you do not need the money immediately, you may consider not selling any of your investments as the prices have gone very low. Your financial advisor may tell you to hold on to it and consider selling when the market has significantly improved. This way you can get the most out of your investments.
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About the Author: Catharine D. Allado is a Senior Care Expert and the COO of SeniorCareHomes.com – A trusted and comprehensive online directory of Senior Care Homes such as Assisted Living, Nursing Homes and other types of Senior Housing in California, Florida, New York, Arizona and the rest of the United States. SeniorCareHomes.com also provides FREE Assisted Living options to help seniors and families find the best Senior Housing on the planet!
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