How to Survive a Recession

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

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.

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.

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.

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.

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.

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).

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).

Tips & Warnings

• Retrench your company's efforts behind a few premier clients to survive a recession. Small businesses need to cut dead weight off their client lists in order to streamline operating budgets. Most of your top clients will stick with your services if you show selectivity in your portfolio.

Resources

• Bank of America home equity line of credit application
• Fidelity Investment list of qualifications for 401k hardship loans

[carolynelaine]

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

[bacawind]

on 7/24/2008 Nice article! Some really good ideas, and it sparked further thoughts of things that relate to my person situation. Thanks