How to Survive a Recession 

It seems that everywhere you turn, you hear talk of a recession. What is a recession? Well, it is defined as two or more quarters of negative GDP growth. Experts disagree whether we are already in a recession right now, but they all do agree that the U.S. economy is experiencing a slow-down.

Whether it is here now or later, your best bet to surviving an economic downturn is to plan ahead. You should plan on building up an emergency fund of three to six months of living expenses. This will help protect you if you face a job loss, which is more common during a recession. With an emergency fund, you will be able to weather a temporary loss of income without having to raid your 401k or use your credit cards.

If you have investments, you should be careful not to sell off your stocks because of a drop in stock prices. If anything, realize that you will be buying more stock for the money, due to lower prices. Diversifying your investments is a good way to ride the downturns in the market, as you will not have all your investments in the same basket. Having stocks, bonds, and cash helps insulate you from changes in the market.

If you are able, now is the time to cut back on unnecessary expenses. Can you do without that 700-channel cable package? Can you eat out one night a week less? Can you cancel some magazine subscriptions? Looking at your extra expenses may lead you to see ways to trim your budget. You can also shop around for cheaper insurance rates for your home and car, and can lower your thermostat to save on heating bills. Any extra money you can squeeze out of your budget should be used to fund your emergency fund and to pay down debt.

These simple steps will help you weather any economic storm that comes our way. You will have a safety net in the case of a job layoff and can ride out the downturn. Then, once things get back on track, you will be in an even better financial situation than before.

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Tom Kile and Darrell Nipp are your Amarillo real estate experts!
Tom Kile & Darrell Nipp
3440 Bell, Suite 100
Amarillo, TX 79109
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