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How To Protect Your Finances During The Recession

Despite hundreds of millions of dollars in loans and loan guarantees, companies all over the world have been forced into bankruptcy. Some are bravely holding on but many, like the hospitality and travel industry, may need years to get back on their feet. So far 30 million Americans, many of whom could barely sustain a single paycheck loss, have found themselves unemployed. Here are some tips to help you and your family survive the coming recession.

1. Cut your losses immediately

You and your family need to sit down and examine every dollar you spend and prioritize which expenses are critical - food, medicine etc - and which ones you could live without - extra TV channels, cell phone plans, memberships, subscriptions etc. - until your finances stabilize.

2. Examine your insurance policies

Do you have a Whole life or Universal life policy? Do you pay for mortgage or credit card insurance? Get a Term life plan and cancel the other insurances immediately - they are money straight out the window.

3. Take advantage of government loans & grants

Research everything available to you. If you need to take out loans to put food on the table, do so but resolve to pay those loans off as soon as your income resumes.

4. Never take a loan from a PayDay loan company

These companies only make loans available at predatory prices. It's amazing to us that they are even allowed to exist.

5. Stay positive

Mental health issues are, understandably, on the rise. If you know anyone suffering or alone, reach out to them and offer support. We are endlessly creative people and problem solving is what we do. This storm will pass and we will get through it. Focus on the positives that surround you - family, friends, pets, nature, certain wines and think about a world of possibilities rather than the doom and gloom on the news feeds.

When your income resumes, resolve to do the following so that your future is protected:

1. Pay down debt

Paying down all your outstanding debt is crucial as it will help you create breathing room in your budget. Prioritize your credit card debt and other types of high interest loans so that you become debt-free in tough situations like this. Even if you are not worried about job loss in a downturn, it's still a very good financial practice.

2. Boost your emergency fund

A robust emergency fund allows you to live for several months panic free while you search for a new income. Even if you are still paying down debt it's important that you simultaneously prioritize saving.

3. Live within your means

Create a realistic budget at the beginning of each month and spend accordingly. Limit your spending on discretionary items, and ensure that you're living within your means.

4. Continue your education and build up skills

Your best investment will always be to continue your education and upgrade your skills. This can help you get a new or better job and opens up new income and life opportunities.