We know, we know—you’re barely back from your honeymoon, and the last thing you want to hear is gloom and doom about your bank account. But you must have noticed the rising gas prices…rising health care prices…rising just about everything prices. Your income might be staying steady (or going up), but those dollars can’t buy as much as they used to. And paying off mortgages or student loans is a lot harder (thanks, inflation!). So, are we in a recession? The technical definition is pretty complicated, but honestly…it doesn’t matter. If you’re feeling economic effects, then you’re in a recession. But chin up: There’s a lot that you can do to protect yourself.
Tackle debt
- Why As long as you owe money, it’s difficult to make any true headway on savings. And, if you lose your job, debt will obviously become a much bigger problem for you.
- How Look for a credit card with a low rate to transfer all your debt to. Just be savvy here—cards that offer you super-low or 0 percent financing often have major hikes after a certain amount of time. If you’re sure you can pay off the debt before the hike, the card may be a deal. Otherwise, sign on for something with a higher rate that will stay constant for the long haul. Negotiating a better rate is always worth a try too.
Borrow carefully
- Why Installment plans and credit cards are sneaky little traps that let you say, “I’ll pay for it later.” You’re counting on future income, which may not exist in a recession.
- How Think (seriously!) before you swipe. The same goes for big-ticket items, like furniture or cars, for which you’ll often see no interest or even no-money-down plans. Remind yourself (repeatedly, if necessary): It’s only a good deal if you have the money now and still will when it’s time to pay it off in full. If you do borrow money to finance a big purchase, make it for something that will appreciate in value, like a home or education (sorry, that doesn’t include a flat-screen or new set of wheels).
Start an emergency savings fund
- Why You know that irritating expression your parents had about saving for a rainy day? They were right. Think of it as a backup plan in case anything happens to your job or health.
- How Once your debt’s taken care of, start putting money aside until you have six months’ worth of living expenses (for stuff like your mortgage payments, groceries, utilities and medical expenses, not clothes or cable TV) saved. Put it in a money market account; they pay better than savings accounts and are easier to access than CDs.
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