The Federal Reserve has dropped interest rates 2.25% points since August 2007. There were approximately 700,000 foreclosure filings in 2008. Congress is trying to combat the recession by giving Americans tax rebates. Oil prices are over $120 a barrel and gas is $4 or more a gallon. Food prices rose more than 4% from last year. With the high cost of gas, food, housing, utilities and travel costs you have to develop a plan to ensure you can sustain yourself through the current recession. Here are 6 ways to ensure you survive the recession.
1. Find stable employment – Many companies are having layoffs or reducing salaries or employee hours. To protect yourself, if you are a contractor or a seasonal employee try to find a stable job or get a part-time job to get additional income. Do research on a company to see their annual finance report, see what the company's plans are for the future and ask others if they have heard about the company to ensure you are working with a stable company. If you hear rumors of layoffs dust off that resume and start looking for a new job.
2. Reevaluate your finances – If you don't have health, life or disability insurance consider getting at least basic health insurance. Health costs are one of the biggest reasons for filing for bankruptcy and bad credit ratings. Get life insurance to at least cover funeral costs and cover bills for a few months.
3. Pay down debt – A balanced budget should consist of no more than 15% of your monthly income to pay monthly debt such as credit cards or student loan (this can vary based on your income and does not include rent or mortgage). Start small and pay off small bills first then work your way up to pay off larger debts. Double the minimum monthly payments when you can to pay down debt faster.
4. Create a budget or spending plan – create a budget and write down all of your monthly expenses and bills and your total monthly income to quickly see what you are spending your money on. Find ways to reduce expenses. Include savings goal in your budget and save enough money to cover at least 3 to 6 months worth of expenses.
5. Reduce Expenses – reduce your expenses one step at a time. Start small by taking your lunch to work, skipping that Starbucks Latte and bringing your coffee from home, use coupons or buy items on sale to save money. All these little things add up and will give you extra money to pay bills or pay down debt.
6. Don't avoid overdue bills. Many companies are desperate for money and may not follow the proper procedures to collect on a debt. They may file for judgment against you without ever notifying you. Call your creditors right away to setup payment plans to get current on old bills and prevent harassing calls or letters and damage to your credit report
Following these 6 tips will ensure you survive the current recession.
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