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10 Ways to Save Money During the Recession

By: Steve Johnson

3/25/2008 - 261 Comments

1) Stay alert as to what is going on in the financial industry.  A recession can shake things up very quickly, causing old industries to collapse (like the housing market) and new industries to be born (like the alternative energy market). 

The information you gain could save you a lot of money and lead you to new opportunities.  Make it part of your daily routine to read a few articles each day and a few books each year. Like author of Rich Dad Poor Dad, Robert Kiyosaki’s, new books called “Financial IQ”.  Being prepared for opportunities is perhaps the best strategy you can have. The people who are out of debt and stay informed, could stumble upon a once in a lifetime opportunity.

2) If you don’t already have a budget, it’s time to create one. Use a budget to reduce your unnecessary expenses (which average 30% in the US).  A budget could very likely help you save your family from a financial hardship. Here is a great Free Budgeting Tool.

3) Pay down your debt and build a savings account of three to six months of your living expenses. This will be a great help if you get laid off and have to find a different job.  Get out of consumer debt as fast as you can. 

4) Invest in your children’s education.  Education is going to continue to be very important as the global economy has little need for unskilled workers. Most Colleges and Universities are out of touch with the market, teaching skills that have little value in an economic downturn.  Your education is too expensive to get a degree in basket weaving.  Technical colleges are much better at reacting to market changes, offering programs that are relevant to the current job market – and they are cheaper.

5) Move your investments to lower-risk securities like bonds during the market shakedown, than move back to stocks after the market hits the bottom – in a few years. Another option is to invest in commodities like gold, silver, wheat and corn, which are returning high profits, but they are also very risks, so be careful and don’t bet the farm.  The coming inflation and sinking dollar will push long term interest rates higher, paying good returns for anyone that has cash.

6) Your mortgage payment is likely to be your largest monthly bill. Reduce your mortgage with one of the many options including downsizing, doubling up, renting, refinancing or even foreclosing.  Here is a good article about this: What to do with Your House

7) Put off dreams with large financial commitments, like remodeling or purchasing a new home.  Typically, large projects will hurt anyone's budget because most require a cheap cash advance or a loan just to fund the project. If you have been planning to finish your basement this summer, it might not be a bad idea to wait until next summer – just in case you need the money or run into an opportunity to invest it for a large return or get a good deal on a product being liquidated at a huge discount due to oversupply from the economic slowdown (like a pickup truck, the lots are full of them).

8) Reduce your food costs, by eating out less and buying more food from the grocery store.  Plant a small fresh salad and vegetable garden this summer to increase your health and save some money.  Food costs are going up for many reasons, Ethanol, population growth, rising cost of oil (falling dollar), increase in natural disasters, etc.  A small garden investment could result in a large savings.

9) Create another income stream, even a small one. Maybe you take a second job for a month to pay off a credit card or maybe you sell your baseball cards on Ebay or maybe you find another way to start a small business on the side.  Here is a good article about this: Get Your Own Customer

10) Instead of going on an expensive vacation, consider an alternative family vacation this year like - sleeping outdoors under the stars.  Many America’s have grown up with an annual family vacation, but it’s time to stop the tradition – at least for a few years. It you don’t have the cash to pay for your vacation, then it’s probably not a good idea to put it on your credit cards.

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