What to Do During A Recession

Setting up an emergency fund will be very useful especially when there is a recession. This will enable you to survive several months without worrying if you still have money to buy stuff especially when there is a slowdown.

But when it hits you, cleaning up your balance sheet is just one way to survive the financial crisis. To help you along, here are a few other ideas which you may find useful.

In 2008, the unemployment rate grew by 6.1%, its highest level in 5 years. The last time it hit this mark was in 2003 as the economy was still recovering from the 2000-2001 recession. These job cuts happened in the airline, travel, retail and service industry just to name a few. If you happen to work in one of these industries, you should probably consider a career shift to an occupation that is more stable even if it means going back to school.

Going to school is not an option if you are raising a family. The next best thing to do will be take an extra job. Just make sure that the time you spend here does not affect your primary job otherwise, you could lose it.

Most Americans have invested in the stock market and if you are one of them, don’t panic and think about selling it just because things are down. You have to remember that a recession is cyclical so your portfolio will recover in the future. You just have to be patient because it is going to take several months before everything is back to normal.

But if you do have the money, now is the best time to buy stocks and bonds. Why? Because these are relatively cheap and you can cash it in when the economy is back on track.

Apart from going back to school and getting a second job, perhaps you can use your skills and then offer this as a service to others. If you like to cook, make some pastries and then sell these to potential stores. If you are good with your hands, maybe you can help repair leaks should your neighbor have a problem with their plumbing.

If you own an SUV, trade it in for a small vehicle because you get better mileage with a smaller car. If you have the money, see if you can get one that is a hybrid because apart from consuming less gas, you get tax breaks for investing in alternative forms of energy.

When you go to the grocery, only buy the essentials. Resist the urge to buy things that the kids want. If you can’t say no, try to get a similar brand that is just as good as what they want.

Lastly, we all have bills to pay monthly. If possible, switch to better and more affordable services because each penny counts during these dire times.

There are other ways to survive a recession apart from those mentioned. By following these tips and getting advice from a financial planner, you are sure to wither out this storm. Until that day comes, you shouldn’t live in fear but rather make the most of it because this isn’t the first time that you will face a recession and it surely won’t be the last.

We Are In a Recession

There is no doubt that we are in a recession. What you have to answer for yourself now is what are you going to do about it? On your own, you can change it but you can adapt to the situation until things blow over.

Now how do we do that? Well the best thing to do is tighten your belt because the credit market is frozen so you won’t be able to get a loan for personal or for business purposes.

With the money you have, it is best to use it wisely by buying only the important items when you go to the grocery. If there are other items you want to go get, you have to sacrifice in order to get it by buying different brand that is more affordable. Since most supermarkets have special offers, give out free vouchers or samples, you should also avail of it.

Do you drive yourself to work? If you do, has it ever occurred to you how much you spend on gas everyday? If you drive an SUV, chances are you spend a lot on gas just to go to and from work. Part of tightening that belt means trading in your SUV or a smaller car. If it is possible, go for a hybrid because you save on gas and get a tax break from the government.

Most people eat out during their lunch break. Instead of buying food, why don’t prepare it at home and then bring it to the office. That way, you don’t have to spend your hard earned dollars for lunch so you can use this elsewhere.

Your employer is aware of the current financial crisis. You can help him or her by suggesting if it will be possible to do some of the work at home. Some companies allow their employees to do this so just have to check if this scenario can work for you. Just be sure that you are as productive at home like you are in the office.

But because you spend more time at home instead of the office, your electricity bill will surely go up. To try and resolve that, the best thing to do will be to replace your lighting fixtures with those that consume less wattage. Since you have a landline and mobile phone, you should change this with a provider that offers better rates than what you are currently paying for. The same goes for other bills that pay monthly.

With all the money you are able to save, you should use it to pay any outstanding debts that you may have with the bank to ensure you have a good credit rating. You can also use this to take up a training course so you or go back to school so you will be able to shift to another career if the current one you are in right now is not working out.

The current recession isn’t going to end by Christmas since it is forecasted to last until next year. For you to survive, you have to tighten your belt. If you don’t know how to do this or want to learn more, it is best to hire a financial adviser who can come up with a plan so you can just follow it.

Benefits of a Recession

Would you believe that there are benefits to a recession? Yes there are and by knowing what they are, you can take advantage of them.

First, when the economy is in recession, you will soon get a fat check from the Internal Revenue Service or IRS amounting to $300 or $1,200. Why does the government issue it? This is the government’s way to help the economy. If you have not received yours yet, you will probably get it next year.

As a result of the recession, majority of the bonds and stocks are undervalued. This means you can buy these at reasonable prices. Just make sure you do some research first because you only want to buy those that have a good return when the economy recovers. You should also look into buying some property given that their value is also low.

Since you are a consumer, you will also get tax breaks. What happens here is that you don’t have to pay that much income tax this year as a direct result of a deduction for private mortgage insurance which happens to be an extension of the sales tax write-off and also a boost in the alternative minimum tax exemption amount.

Aside from the Internal Revenue Service, the Federal Reserve also does its share to help the economy by slashing interest rates. This means you can borrow money at a lower rate as long as you have good credit ratings.

For those who are employed, a recession increases your retirement account limits. This can be done by using your rebate check to turbocharge your retirement savings and investing this in a Roth or Traditional IRA. There are some people who have decided to invest it in both.

If ever your gross income is $100,000 and below, you can now roll over your 401(k) directly into a Roth IRA without having your funds go through a Rollover Traditional IRA first. But if your income is above $100,000, you will have to wait until 2010 when that income limit disappears so that you too can invest this into your retirement account.

The environment also gets benefits from a recession. How? By making people make reductions in their expenses. For instance, car owners will trade their SUV’s for smaller vehicles and people are less likely to travel for vacation. As a result, it will reduce the number of carbon gases that are released into the atmosphere.

This will also help boost online businesses since people will order items instead of driving over to the mall and make the roads less congested so there will be fewer traffic jams.

For those who want a career boost, this is the best time to go back to school since no one is hiring. Take a course that will enable you to switch to a better career or get an MBA. The current recession is not expected to go away this year or even the first half of 2009 so weigh your educational options.

Indeed, there are benefits to a recession but most of us don’t see it because of how the media depicts it as a very bad thing. Now that you know that it is not entirely true, you just have to make the most of it until things do improve.

How to Survive a Recession

Recessions happen and you can see it and take the appropriate steps before it is too late. Here are a few tips you should know about to help you survive.

1. If you happen to be in debt, get out as quickly as possible by finding ways to pay for it. If ever you need help, hire a financial consultant who can help you with your budget.

2. We have to pay the bills. Instead of just paying for them, perhaps you should see if you can switch to another company that offers cheaper rates. Take a look at your electricity, gas, mobile phone, television broadband package, insurance and even your bank account then make the necessary changes.

3. You should also make cuts on daily spending. When you go to the grocery, buy only what is necessary or switch to a cheaper brand. If there are items in promo, get it because they could be just as good or even better to what you are used to buying.

4. One thing that every grocery always is people offering free samples. Since you are there, get some as this will surely save you a few dollars for other more important items. If the grocery you frequent gives out vouchers, make use of it as well.

5. Do you always have to go out for lunch when you are at the office? Of course not. You can prepare the food at home and then take it to work. Your kids should also have a lunch bag instead of getting their weekly allowance so even at a young age, they understand the current situation.

6. If possible, ask your employer if you can do some of the work at home. This will help you save gas since you don’t have to drive to work. Just be sure you are as productive at home like you are in the office. If this is not possible, see if you can carpool with someone from the office.

7. Owning a large vehicle may sound cool but since it is a gas guzzler, perhaps it is time to trade this in with a smaller one. The advantage of a smaller car is that you don’t burn that much gas so you don’t have to spend that much when it is time to refuel the tank.

8. You can cut down your electricity expenses by replacing the bulbs to those that use lower wattage. You may also want to put the heater down by one degree, reinsulated the ceiling and stop drafts coming from the windows and doors.

9. Cutting down expenses is just one way to survive a recession. You can make money from it by selling some old stuff or renting a spare room.

10. If your work is not stable, perhaps you should consider switching to a career that will ensure better job security for the long term. One way is to go back to school.

11. For those who have money to spare, invest in long term investments such as stocks or bonds. Their value will go up once the recession is over.

A recession lasts for months so you have to know what to do when it happens. Your ability to stay financially stable is the only way for you to deal with a possible loss of income and inflated prices.

A Recession Is a Fact of Life

Believe it or not, a recession is a fact of life. Why? Because it is part of the business cycle and this is bound to happen when the economy expands, slows down until it hits rocks bottom and then recover once again.

The only difference between a recession and the four seasons we experience in a year is that this problem does not happen often. It may take years before this happens again and in our county’s history, the last time we had a recession in 2000.

When it does happen, experts won’t admit that it is there even if everyone around knows that it is. How? By looking at various factors which include consumer spending, the unemployment rate, industrial production, real income and wholesale trade.

One solution to help stimulate the economy is to lower the interest rate. But since this is not enough to make the problem go away, we have to our share until this is over. Companies have to make job cuts but the bad news is that you put more people out of work because this is the only way to stay in business.

But is putting people out of work the only solution for a business to survive? Some experts disagree because if the company is able to focus on customer service, lower price points and make cuts elsewhere, you help prevent the unemployment rate from getting higher.

On your end, if you still have a job, you have to spend less because the prices of goods will go up which is why you only have to buy the essentials. One thing you have to cut down is your fuel expenses so you might want to trade in your SUV for a smaller car that has better gas mileage.

To make sure you are not on the list of the next people to be axed, find ways to make yourself valuable in the office by taking on other responsibilities. If this is not enough to put money on the table, see if you can get a second job until the situation improves.

There is an upside to a recession. If you need money, you can borrow at a lower interest rate and you will be able to buy stocks, bonds and property at very affordable prices.

A recession is a fact of life and if you think that this happens only in the US, it has happened in other countries as well. What makes this current one so different from others in the past is the fact that what started here is now spreading around the world which is why nations are talking to one another to help prevent it from getting worse.

How long will this recession last? It is anybody’s guess but this will last until the end of the year with hopes that things will improve by the first or second quarter of next year. How it affects people will be different depending on their current financial situation so before it is too late, save up. If you can, invest in a few things which you know will make you money in the future. For those who are unsure, you better hire a financial planner so you are safe if ever life throws you a fastball.

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