Recession talk is all around us and the recession is on virtually every news cast. Paul Harvey even says we are in a recession because 9 out of 10 CFO’s believe we are. Whether we are in one or not, we won’t officially know until July or August of 2008 at the earliest. But, assuming that we’re in a recession, here’s how I plan to survive.
1. I will survive the recession by living within my means.
A recession is defined as two consecutive quarters of negative gross domestic product growth. There are several ways that negative growth could affect me personally:
- I could experience higher costs for regular daily items such as food and fuel. Check.
- I could see my paycheck being worth less and less. Check.
“Living within my means” translates to having a safety net of cash left over every month. It means I have to hold the line on expenses. Saving ONE dollar is like earning TWO because dollars saved are “after tax” dollars. “Living with my means” is constantly seeking out ways to save on my electricity bill, ways to save money on my car, ways to save money at the grocery store, and finding ways to save money around the home. It means being frugal. Frugality comes from a Latin base frugalis which means virtuous, but it is also very close to the Latin word frui which means to enjoy. It literally means to virtuously enjoy the economic use of resources.
Living within my means is best accomplished by a budget and living within a budget allows me the breathing room to live life without the constant worry about bounced checks and empty cupboards. It means watching out for retail strategies that will separate me from my money!
2. I will survive the recession by increasing my value to my company.
A high value employee is target for retention and promotion. I’ve recently finished my MBA and have constantly worked to increase my likeability factor by being trustworthy, hardworking, creative, and positive.
Other important factors to get promoted are:
- Maintain your health so you can handle stress and have higher energy levels. Stressed out, sluggish employees don’t get promoted.
- Always perform your work higher than expected. If you only perform to expected levels, you don’t stand out.
- Keep your integrity level high and your character clean. Management will be more comfortable promoting someone they trust.
- Learn how office politics work and then work within that system.
3. I will survive the recession by generating alternative income streams.
This is probably my weakest point since 96 percent of our family income comes from my job. Several other bloggers have listed multiple ideas for generating additional income.
Pinyo from Moolanomy lists 30 alternative income ideas and resources and Jeff at My Supercharged Life lists 50 ways to legitimately raise your income. Both of these articles are fantastic resources I plan to read in depth over this coming weekend.
The current issue of Businessweek suggests that real estate may be a prime opportunity to generate additional income. Given the current economic situation, investing in real estate sounds counterintuitive, but that’s what makes it an attractive investment. If you “zig” when other people “zag,” you can reap benefits that others miss and find the profits that others overlook. Right now, it is definitely a buyers market for real estate.
4. I will survive the recession with a fully funded emergency reserve.
Currently, I have about 4 months of expenses in a liquid account. If you don’t have an emergency reserve fund, start out by saving up $1,000 to $2,000 for emergencies. Having these funds readily available helps me sleep a little better at night!
5. I will survive the recession by paying off as much debt as possible.
My credit card debt will be gone in May of this year, my oldest daughter’s braces will be paid off shortly after that, and my car loan will be paid off within another 6-8 months. After that, I’ll have a little student loan debt and my mortgage to attack. If the recession lasts any significant length of time, I could be close to debt free by the time it’s over.
Surviving the recession isn’t what I really want to do. I want to thrive. When it comes to and end, I want to be in a position to snatch up deals and steadily increase my family’s wealth. But first, I have to survive the recession that the media seems to be clamoring for.
What ideas do YOU have for surviving the recession? List them here by commenting below!