How to Survive a Recession

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By eHow Contributing Writer

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Research economic survival methods

The economic decline caused by a recession penetrates every part of daily life. A small number of professionals are immune to strenuous lending standards, decreased property values and other characteristics that can ruin finances for a majority of people. Low-income families and individuals with high debt loads need to think about ways to survive a recession.

Difficulty: Moderately Challenging

Instructions

Step 1

Switch your health, dental and vision insurance policies to free up money needed to survive a recession. Reduce coverage levels to decrease the amount taken out of each paycheck to help you pay off other bills during lean times.
Step 2

Develop an annual household budget that cuts your expenses drastically in order to survive a recession. You should be able to make small cuts in every area from groceries to entertainment as a way to keep your family afloat.
Step 3

Approach the sale and transfer of properties with caution to survive a recession with your holdings intact. You should not accept low-ball offers for rental properties and land unless there is no other financial recourse.
Step 4

Spend time researching growing industries to jump from one job to another during a recession. You can survive after a layoff by taking part-time work and by learning new skills at technical schools that will be needed during an economic rebound.
Step 5

Eliminate your household debt before you take any other measures to survive a recession. You should use all available assets to pay off credit cards, consumer loans and other debt to increase your flexibility during difficult economic periods.
Step 6

Cultivate the equity in your home as a recession survival tool with the help of a home equity line of credit (HELOC). Bank of America and other lenders ask for your current mortgage amount and property value to provide a line of credit that can be used like a credit card for large purchases (see Resources below).
Step 7

Apply for a hardship loan from your 401k provider to deal with emergencies during a recession. You can look at qualification lists from Fidelity Investment and other providers to learn how to take out a loan for education expenses, medical bills and other hardships (see Resources below).

Comments

tedon-63126 said

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on 11/20/2009 Fully agree with carolynelaine, Step 1 is not the first thing you should do. Unless you have too much medical coverage, you can be put in a very difficult spot if you have inadequate coverage. One of the best excersizes is to look at your expenses (all of them) and put together a personal budget. Take a real hard look and kick out anything that is not a necessity. Even if you manage to do better than you thought, save up, because the extra funds may come n handy when an unexpected problem pops up, health issue, car problem, etc. Overall the points may be a bit obvious, but can never be understated. Just be careful about becoming vulnerable to too little health insurance that can end up costing you a lot more, especially if you have kids. They can get sick and rack up costs quickly.

carolynelaine said

on 6/13/2009 While cutting back on health insurance may seem like a good idea to many, individuals need to remember to maintain a good health insurance plan if they can. Nothing can entirely wipe out your financial security like a catastrophic accident or health crisis. (Ramsey)
People 50 and over without health insurance should look into the American Association of Retired Persons for a plan availability. And by 55 or 60, long term care insurance should be purchased. To know HOW to cut back is difficult for many who see some things as necessary when they are not. My favorite books are:
1) Total Money Makeover by Dave Ramsey
2) The Complete Tightwad Gazette by Amy Dacyczyn