10 Ways to Make Your Life Recession-Resistant

By Dawn Handschuh, Personal Finance Writer   

how to survive the recession

While it's nearly impossible to recession-proof your life, there are many things you can do to make it recession-resistant. To avoid being sucker-punched, you only have to remember two things:

  1. Save more money.
  2. Reduce your expenses.

Save more money

  1. Bulk up your emergency stash. The old rule of thumb was to save three months' worth of living expenses in a checking, savings or money market account for ready access. But today's economy has made mincemeat of that formula. 

    With rising unemployment and a stagnant economy, it could take over three months to find a job, so count on having six months' worth of living expenses on hand. If you're the family's sole breadwinner, make it 12 months. Consider putting your emergency stash in a high-yield, online money market account, some of which now offer 4% interest. 
  2. Stay employed. Steady employment during shaky economic times is the key to weathering the storm. If your job looks iffy, or even if it doesn't, network and stay aware of other opportunities. If you're employed but still struggling, consider supplementing your day job with freelance income or a side gig. Even an extra $200 a month can make a difference.
  3. Pay yourself first. Put savings on autopilot by signing up for automatic contributions from checking into savings. If you wait until month's end to see what's left, your savings rate will slow to a crawl.
  4. Get a blankie. If you like to sleep well at night and have very good credit, apply for a home equity line of credit (HELOC), but don't touch it unless you have to. HELOC rates are lower  than most credit cards.
  5. Get creative. In a pinch, raise quick cash by having a yard sale or selling your stuff on eBay.

Reduce your expenses

  1. Pay down debt. Focus first on high-interest debt, like credit cards. To find the extra cash to do so, see #2 below.
  2. Cut discretionary expenses. Look for big ways to save money first, like refinancing your mortgage or looking for cheaper homeowners/car insurance. Downsize your vacation. After that, look for expenses that have become ingrained habits, like premium cable TV, your Netflix subscription, magazine subscriptions or that weekly manicure.
  3. Become a frugalmeister. Cost-cutting opportunities exist everywhere:
    Ride-share to work.
    Take up cooking.
    Eat in more.
    Seek out free entertainment.
    Eat your leftovers.
    Do your own oil changes.
    Brown-bag your workday lunches.
    Lower the thermostat.
    Line-dry your clothes.
    Stock up on groceries when prices drop and buy produce in season, when it's cheapest.
    Avoid being sucked in by slick advertising.
    Remember how your parents/grandparents, who survived the Great Depression, would squeeze more life out of everything.
  4. Grow a vegetable garden.
  5. Negotiate prices. Everything's negotiable, from doctors' fees to your next Home Depot purchase.