New Year’s Resolutions for a Recession

Here are 7 tips help you survive the recession in 2009 and develop good money management skills so if another crisis occurs you will not feel the pain as much as you did in 2008.

1. Admission. Admit you are in debt and stop charging! Face reality and make a plan to get out of debt. You can’t get out of debt doing the same things you did in 2008. You have to make a change. If you are in a lot of debt then you need to make some drastic changes. If you drive an expensive car consider selling your car and buying a used car with a smaller payment or no payment at all. Negotiate with creditors to setup payment plans to pay off debt.

2. You are Not the Jones. Don’t live above your means. Buy needs instead of buying wants. Don’t impulse shop or buy something based on how you feel (sad, happy, angry, mad, depressed). Shopping doesn’t make you feel better, it is a temporary feeling, when you get your credit card bill those happy feelings go away quickly. Find ways to reduce expenses to help pay down your debts. Catch public transportation or carpool to work. Buy items or sale, buy used instead of new, use coupons, or shop at wholesales or thrift stores.

3. Be Responsible. Because of the bailout things have changed and creditors are looking for any reason to identify someone as risk. It doesn’t matter what your previous payment history has been. Only use your credit card for emergencies only. Don't use your credit card to purchase gas, food or other everyday items. Keep credit card balances at 30% or below the credit limit. Pay balances off at the end of the month.

4. Track Spending. Write a list of all of your total monthly expenses including debt and write down your total monthly income (net). If you have any money left over use that to pay down your debts. If you do not have any money left over look at the areas where you can reduce expenses. Use paper and pen, and a tool like Microsoft Money or Quicken or use the envelope method.

5. Save. Save. Save. I cannot emphasize this enough. Create an emergency fund with enough to cover at least 6-8 months worth of bills. This will prevent you from getting into debt. For long-term goals begin planning for retirement or increase your allotment for retirement. You should save at least 10-20% each month towards retirement.

6. Education. Further your education by taking training classes, get a college degree or an advanced degree to increase your skills set and salary. Plan to take at least one training course every year during your career to stay current with industry standards and technology advances.

7. Financial Planning. Get health, life and disability insurance. Also, create a will even if you don’t feel you have anything of value, but someone else might be eyeing something you possess. Your will can ensure that all your possession are distributed properly to your heirs. You should also consider getting a trust. Store copies of your financial and insurance papers in a fireproof and waterproof safe. Make copies of all of your credit cards, insurance papers, mortgage and creditors bills and store in your safe.