How to Survive Bad Economic Times
Surviving in difficult economic times is more a matter of mental change than dollars and cents. People tend to not spend rationally. Since 1992, disposable income increased by about 50 percent, while spending increased almost 70 percent. Since more money means more spending in modern society, this cycle of debt must change. Changing the cycle is a matter of mental labor.
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Instructions
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Concentrate and focus. This sounds strange, but it is crucial. Surviving bad economic times begins with your own self-concept. This is because what we consider are wants and needs -- and the confusion between the two -- are essential to who we are. If you want to save money, you must re-evaluate who you are.
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List out your needs. You must define "needs" strictly. These are things that you could not survive without. They include, of course, food, water and shelter. Even here, these should be at a minimum. Food doesn't need to include eating out, and shelter does not mean buying a large home with an equally large mortgage. "Need" also includes transportation and medical care.
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List out your wants, which can be a problem. Wants are those things that you think will make you happy. They are not needs, since you will not die without them. You should reduce this to a minimum. You will need to use other things to encourage and produce happiness and a feeling of accomplishment. Exercise, family time and reading are essential, but often get lost in the flurry of spending. These things are free, and yet generally do more to create happiness and security than spending on non-essentials.
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Spend excess income on debt reduction, not new spending. The average American household with at least one credit card is carrying a debt of $14,743, as of May of 2011. Unless you pay debt off at the principle, rather than just the interest, and adjust your spending habits, bad economic times will send many into bankruptcy. The only good thing about a recession or depression is that it forces people to reconsider what is important to them.
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Eliminate eating out, cable TV and entertainment that cost money. There is no clear need for these. While it may be difficult, shifting to things that cost little will not only save you money in the long run, but introduce healthy lifestyle changes. Walking around the block is better for you and the family than sitting watching TV. Talk to the neighbors. This seems obvious, but this kind of "outdoor," social lifestyle has many benefits in addition to the clear financial advantages.
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