How to Survive a Recession

Living in times of recession requires sometimes requires us to make some changes in order to come through successfully. Here are some relatively simple steps to reevaluate and change your spending.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Paper
• Pen or pencil
• Your budget
• Computer search engine or phone book
• Spouse and family, if you have one

1. Stop carrying cash and don't buy drinks out. You can't drop change in a vending machine that you don't have. Keep a bottle of water (or other drink) in the car and at your desk at work. You can refill the bottle at drinking fountains or the tap. Make your own coffee at home rather than stopping by Starbucks. Small cash purchases eat up more of your budget than you probably realize.
2. Entertainment. You don't have to give up on having fun just because there's a recession. Have a picnic. Get together with friends for a baseball game or a bring-your-own-meat-and-a-dish cook out. Play a board game or charades. Look for a dollar theater to see movies that have been through the first-run theaters. In our area the dollar theater costs $1.50, but if we go on Monday with three or more people it's just 50 cents each.
3. Clothes. Shop at bargain, resale, thrift, and discount stores first. Garage and yard sales are another good place to find some nice clothes at excellent prices. Go through your own closet and remove anything you don't wear anymore. Have a yard sale or take them to a consignment shop. Take inventory of what you have and determine what you really need to complete your wardrobe. Then take the money you made from selling what you didn't need and buy the things on your list (and nothing more!).
4. Plan meals. Plan ahead for meals at home so you aren't tempted to eat out at the last minute. When you fix a recipe (from scratch is cheaper), double it and freeze the extra for those times you need something quick. Discuss with your family how often you'll eat out at a sit-down restaurant and how often you'll go to a fast-food place. Plan specific dates, but if something comes up be flexible. Trade the date, don't add another eat out night.
5. Is your credit card burning a hole in your pocket? If you aren't in control of your credit card, get rid of it! The only charges that should be put on a credit card are expenses you have cash in the bank for. Always pay off the entire balance every month.
6. Use credit card points for things you need. (Warning: if you can't control your credit card, or if you have credit card debt now, then this step is not for you.) Redeem your credit card points for gift cards to hardware stores, home improvement stores or other places where you're going to need to spend money anyway. Get things you need rather than want.
7. Evaluate your car situation. Look into public transportation, sell extra vehicles, sell one with high payments or low gas mileage and buy a used and/or more fuel efficient car. Before buying a car check with your insurance company on how much the insurance will be and with the license branch to see how much licensing with be (if you live in a state that doesn't have a set fee for all). Check with Consumer Reports on how well that make and model fare in the repair department. The more you know, the more you can plan.
8. Evaluate your housing. Are you making the payments without stressing? Could you live in another house that costs less? If you're in danger of losing your home, sell it now. If, after making all the above adjustments to your lifestyle, it's still tight, look into the possibilities. Peace of mind is worth a lot, so if moving to a smaller home or to a less expensive neighborhood would give you some peace it is well worth it.
9. Plan a budget. If you don't have a detailed budget, you need to start one. Recessions can be a blessing in disguise because it gives you the opportunity to reevaluate your priorities and get yourself back on a solid financial track. See my article "How to Start a Budget."

Tips & Warnings

• Ask yourself the hard questions: Do I really need it? Can I live without it? Will I really use it?
• Plan every expense and don't buy if it's not in the plan.
• Never charge what you don't have the money for.