CHESSNOID

I correctly predicted the recession before it was even official over a year ago.  Now that it is here, you must protect yourself.  There are things in my opinion that you should do that can help you ride out these tough times.  Some of the stuff I say will go against what “experts” say you should do.

Some common sense stuff is to live below your means.  Of course that is easier said then done.  To accomplish that, you will have to change your habits and your mind set.  For me personally, I love to watch movies and I love eating take out.

Back in the day, my wife and I would watch 3 movies a day on the weekends and order the big bucket of popcorn and 2 large colas.  Even watching the matinees become costly when you watch that many movies.  Now I subscribe to Netflix and get my movie fix satisfied that way.  Of course, I don’t get to watch all the latest releases but there isn’t any movie that I must see now that I can’t wait for.  This activity saves us a ton of money and keeps our entertainment costs down.  You literally could buy a large HDTV with all the money you save if you are an avid movie watcher.

As for takeout, we basically have stopped and started to prepare our own foods or ready made foods purchased from the grocery store.  This is a little bit harder to do because sometimes there is no substitute for certain restaurant foods you crave for.  Again, this is just a little sacrifice in terms of long term survival of this ugly economic downturn.

If you have a land line and cell phone, you should really just get rid of the land line.  For a few years, I had both but eventually got rid of the land line because cell phone plans just became cheaper.  I am not a phone person so I save a ton on this utility bill.  Both my wife and I have prepaid phones which only require $15 deposits every 90 days.  The minutes do roll over and the reception is great.  It is through Virgin mobile which piggybacks its service I believe on the Sprint network.   Prior to changing over, I had a landline phone that cost about $35 month even though I didn’t make any calls and a 2 person plan through Verizon that cost about $45 a month.  The cost savings is $960 a year down to $120 a year.  Prior to Virgin I had a Tracfone and I use to buy one year service at a time.  I liked that company too but prefer the phones available at Virgin.

Now, I hear a lot of experts saying pay down your credit card bills and loans.  I think this is generally accepted as the best advice in a normal economy if you lose your job.  However, I don’t think the experts are taking into consideration how bad this current economy has become.

Personally, all my credit cards now are basically chasing down the balances. (I make a payment and they reduce my credit line by the same amount). You can read my previous posts with hundreds of comments about that situation.  In this case, I suggest you pay the very minimum and put away the cash until you have 6 months reserve in the bank.  During times of recession, the likelihood of losing your source of income dramatically increases.

You will wind up paying more interest overall by carrying a balance, but if you lose your job you will not be able to access your credit line the credit card companies are slowly taking away.  Cash is king at that point and you will have wished you didn’t give all your money to the credit card companies.

Your credit card company will not be there for you in an emergency.  Forget about all those commercials showing “they were there for me when I needed them.”  Right now, you won’t be able to get through the jammed phones lines because tons of  people are trying to figure out why their credit limits have been cut.  The post below has over 100 comments from people with perfect credit and high incomes:

Recession is forcing American Express to reduce credit lines for no reason

If you already have 6 months cash reserves and we are still in a recession, then I recommend you save up another 6 months worth of cash reserves.  Hope that helps a bit. Cheers!