How To Survive a Recession

1. You're not a rock star—stop living like one

Living within your means begins with simple budgeting; you must calculate all monthly expenses, both necessary and discretionary. It will most likely be almost impossible to decrease necessary monthly expenditures such as rent, mortgage, and minimum credit card payments (although several possibilities are discussed below). Even though drastically cutting out all discretionary funds is always an option, experts recommend merely trimming the fat off of each expense to maintain quality of life and peace of mind. For example, get rid of all your premium television channels instead of cutting all cable, rent movies and eat microwave popcorn instead of going out to the movies, and cancel the pool membership without letting cancelation fees stop you. If the fee is less than the cost of continuing the contract, it's probably worth getting rid of it. The last important tip—when calculating monthly expenses multiply weekly expenditure by 4.33 instead of four (this really adds up).

• Learn how you can cut everyday expenses.
 

2. You knew you were going to have to do it someday—pay back your credit card debt

Most people have credit card debit because they have been living a lifestyle they can't afford. Once you've learned to live within your means, the next priority should be paying off debt, especially high interest credit card debt. If you choose to pay a minimum monthly payment of $40 on a balance of $2000, with an interest rate of 18%, (and they do get much higher) it will take 30 years to pay off. Only $10 of each payment will go towards the balance, whereas $30 will go towards the interest and it will take a grand total of $7,000 to pay off the $2,000 of debt. To save at least a portion of the $5,000 lost in this scenario, you should pay as much over the minimum payment as you can each month. Even if this means taking funds out of an emergency saving account, you must be aware of how much money can be lost paying interest only. To buy yourself more time, move old balances to credit cards with lower or even no interest rate on transfers for the first few months. Finally, whenever possible, leave your credit card at home because you never know when you are going to walk by a sale at your favorite store.

• Money Quiz: What do you know about debt?
• Learn more about how to get out of debt.
 

3. Sort out your mortgage

For most households, the mortgage is easily the largest monthly expense, making it the best place to try and find savings. If you have at least 10% equity in your mortgage and want to switch from a variable rate to a fixed rate, or the mortgage rates have dropped 2% below the rate at which you took your original loan, it's probably time to refinance. Even if you're already in a fixed-rate term, it's important to know exactly when it ends and spend at least 3 months actively searching for the best deal on a new rate. Unfortunately, refinancing isn't always enough. Some families have been known to rent out rooms or even their entire house to help meet mortgage payments.

• How do I refinance my mortgage?
 

4. Hey big spender, hold off on that Bentley

Although this may seem like the most obvious advice, it is surprising how many people choose to ignore it. Cutting back on big spending means more than holding off on the new car or TV, it also means holding modest social events and keeping holiday shopping economical. Finally, even though it will seem tempting to make big buys when prices are low, there is no way to know that we actually hit rock bottom until the economy takes a substantial upward turn— so watch out!

5. Save your energy

Okay, turning off lights before leaving the room may only save pennies, but pennies do add up, and what adds up even more quickly is the energy usage of dishwashers, washing machines, dryers, air-conditioners, and heating systems. These costs can easily be reduced by only running machines when they are full and keeping thermostats at a moderate temperature. If this isn't enough, try the only type of home renovation recommended during a recession and go green. Wind mills in the backyard, sun panels on the roof, and energy efficient lights and appliances don't only save money but surplus energy can actually be sold back to utility companies. Go green—save money and be trendy!

If you've only started placing importance on the environment in which you live, here are the basics of going green. If you consider yourself more environmentally aware than the average person, here is an advanced resource for your reference.

Is going green really going to save me some green? Watch CNN report on this issue.

6. Invest in vices

Although bond mutual funds may seem like the best place for money during a recession, experts warn against fearfully placing too much money in bonds. Even though not much money will be lost, when the economy picks up (which it will) no money will be gained. In any case, it is believed to already be too late to sell stock; it should either be held on to or slightly diversified. The stocks that usually do best while the economy is at its worst are related consumer necessities such as utilities and health care and the ways in which people drown their miseries—alcohol, tobacco, and gaming.

• Are you keeping your stocks in places that are on the decline? Diversify your portfolio away from the recession.
 

7. Don't get fired

If you work in health care or direct sales you should feel lucky, your job is considered recession proof. Those who don't bring money directly into the company, such as those in customer service and administration, are usually the first to go. If you are in one of these risky positions, keep your eyes peeled for safer job openings within the company. No matter what your position, during a recession it is important that you are viewed as competent and hard working; get to work early, leave late, work hard and most importantly, make sure people notice. Lastly, be aware of the financial situation of your employer. Did they cancel the annual holiday party? Have they cut back on benefits? Once these things begin to happen all you can do is prepare for the worst. Here is an additional list of things you can work on to avoid being fired.

8. Keep an updated résumé

An essential part of preparing for a recession is maintaining an updated resume. Even those working in jobs considered "safe" should be aware of the fact that their job is less secure than it was in times of economic prosperity. Those working in risky jobs may even want to keep their resume posted (minus current employer of course) on online job sites such as Monster.com. There is an inherent risk in this practice, however, so be careful. 

• Polish your résumé and cover letters.
 

9. Screw the government, use the economic stimulus package on yourself

When you receive your $600 or more rebate check from the government, go ahead and use it to pay off some debt. You don't need to feel guilty about not "stimulating the economy" since it's not a large enough amount of money to make much of a difference and it would most likely be spent on small retail items made in India and China.

• Are you still unsure about how the economic stimulus package will benefit you? Find out more.
 

10. Get educated about the presidential candidates before you choose one. Then, hope for the best!