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6 Ways To Prepare for A Recession

Economists usually define a recession as the point where a country’s GDP (Gross Domestic Product) has declined for two or more consecutive quarters. Rising energy & food bills, stock market volatility, job loss reports growing higher, a crisis in the housing and fuel market as well as inflationary pressures on the dollar all point towards a possible recession in the U.S. The Congressional Republicans may not be ready to say that the country is officially in a recession but the $700 billion bailout plan on the table snaps the cap right off the bottle. “I think if you ask the average middle-class American, they would clearly say we are in a recession,” said Sen. Charles Schumer (D-N.Y.).

As families across the country begin to feel the credit crunch, now is the time to prepare for the worse. Americans should put away their credit cards and start saving. Everyone from the pensioner to small business owner to single mom and average family should begin preparations for the worse. Here are a few tips to help you position yourself for an economic storm.

  1. Get a hold of your finances.
  2. Put together a budget that compliments your means.
  3. Sort out your mortgage by taking advantage of low, fixed rates.
  4. Reduce your debt by paying off your credit cards right away. Transfer balances if you must.
  5. Stop spending as if the world will end tomorrow. Take a hard look at your expenses and decide what is and what is not essential.
  6. Bargain shop. Spend less on what you buy, including food, clothing, insurance, and a car loan.

In reality, most of us already know how to solve our problems; we just need a little guidance. Hold your nerves. Don’t panic or make quick decisions that will prove more harmful in the long stretch. Trust in your survival instincts. Don’t wait on government to solve your personal financial problems.

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