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How to Handle a Recession

Presented By: EJ Cooksey | Friday, December 05, 2008 | , , , , , , | Comments

Are we in a recession? Considering everything that has been in the news lately, one can say with confidence we are indeed in a recession.

Not too long ago Nouriel Roubini, a financial expert, predicted that only two major banks would be left after the housing crisis and the economy returned to normal. It was a prophetic prediction.

What does this recession mean for you and me? It means we have to tighten our bootstraps (if we haven’t already) and begin planning for any eventuality.

While economists comment that the last two recessions lasted for eight months respectively, it is no comfort to learn that the housing crisis has not yet reached bottom and more and more companies are closing down leaving thousands of people unemployed.

Wages have decreased, more families are in debt than ever before, health-care costs continue to rise, and our grocery bills have eaten into our household budgets significantly.

In order to alleviate the burden of all these factors, the best advice economists can offer is to take a fiscally conservative stance on our spending habits. Here are some additional suggestions:

* Stick to a monthly budget

* Refrain from buying expensive items on credit

* Set up a fund for emergencies (at least two months' income)

* Try to add the maximum amount allowed to your pension/retirement fund

* Stay healthy with a proper diet and exercise program (This is a preventative measure that will reduce the cost of prescription drugs and other health-related costs)

* Pay down debts

* Purchase with cash

* Buy groceries in bulk utilizing coupons whenever you can

* If you have teenage children who are receiving an allowance, determine if they can apply for a part-time job after school

* Increase your deductibles on car and homeowner’s insurance

* Keep your automobile well-maintained

* Winterize your home and use energy-efficient appliances and light bulbs

* Walk whenever possible instead of driving to a local store

Anything you can do to reduce the amount of expenditures can only help you through this economic downturn. In the meantime, stay calm, focus on your budget, and save as much as you can.

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