Avoiding Debt During A Recession
It looks like we are heading into a recession so what changes can you make to make
the ride a little less bumpy?
If you remember the last recession in the early 90's you'll recall it was a uncertain
time for job security, stability and a large number of foreclosures were immanent.
This time round, think with a recession head on and learn from the mistakes form
first time around.
There are a few steps you can take to ensure things don’t go wrong for you and help
improve the chances of staying debt free during the uncertain time..
If you are worried about a recession then avoid signing up to long term monthly
based income eaters such as digital TV deals, aerobic classes and weight watchers
sessions. You really need to think about taking the necessary steps to
reduce your expenditure to make money
and leave yourself some surplus cash.
You have more chance of coming through the recession unscathed if you get your finances
in order now. The more debt free and solid your finances are, the less risk burden
you will need to carry. If you have savings then consider
paying off your costly debts with your savings.
This is because the interest rate you are paying back on loans is far higher than
what you are getting on your savings. You are giving the bank money all the time
you have a loan – with or without savings. When you have repaid your expensive debts,
the next task is to build an emergency cash fund for yourself. This should ideally
be three to six months worth of income – just in case you lose your job.
Next, the next best safe use of your cash is to make over payments on your mortgage,
though this does depend on your interest rate.
For peace of mind and security and be to confident that you can still meet your bills
if the unfortunate happens and you lose your job, consider Payment Protection Insurance.
Researched and implemented correctly, payment protection can protect loans, credit
card or mortgages and payment are met for up to a year leaving ample time for you
to find employment.