Avoid further debt, credit score damage, and bankruptcy during an economic slowdown
When news sources as varied as The Wall Street Journal and the blogosphere are presenting “what if,” worst-case scenarios for the current United States economy, you should begin worrying about slowdown. Act as if an economic recession is, indeed, in the works: Closely evaluate your lifestyle, debt management plan, and credit score in the event of economic stagnation. Consider this a plan-of-action form of insurance against crippling debt, and even bankruptcy.
In mid-2007, the US economy experienced a credit crunch, and the housing bubble finally burst. Individuals who had purchased enormous, expensive homes had mortgages in foreclosure. Some were, and still are, grappling with bankruptcy. The 2007-2008 holiday shopping season posted a lousy retail sales record. And in January 2008, the stock market encountered a precipitous decline. The jury's still out on whether there will be an economic recession in America in the near future. But act as though recession is already upon us, and you'll emerge from this period of economic activity without racking up more debt, ruining your credit score, or filing for bankruptcy.
Assess your skills, and reach for the top
In a period of recession, layoffs are rampant throughout the corporate sector. Small businesses suffer just as much, if not more – raises might be minuscule, bonuses might not come. You don't want to be the person who is made redundant at your job, whether you work for a Fortune 500 company or a mom-and-pop publishing house. Now is the time to strengthen the skills and assets you bring to the work place.
Update your resume. Make certain it reflects your latest accomplishments, and showcases all of your strengths. Keep it handy, and keep an eye on job search sites. This is a great time to strengthen contacts within your professional network, too. Give your colleagues a call, or shoot over an e-mail periodically to remind them of your work. Then, if that dreaded time when you are out of work does come, you can benefit from name recognition. In the American economy of the 21 st century, it is important to be knowledgeable of opportunities in your industry at all times.
Polish the skills you already have. Tech, legal, and medical fields, to name but a few examples, are arenas where knowledge is always changing. Being at the forefront of these changes is a powerful career potion, and whether you need to read industry periodicals, jot down notes from professional journals, or take a (free, or community-based) refresher class or two in a particular subject area, do it. In addition, consider developing a talent or skill that no one else in your company has. This is a great extra step to ensure your continuing workplace value.
Change your spending habits
During an economic slowdown, credit card debt or other debts can really weigh you down. This is a good time to make more than the minimum payment on loans or other types of debt and to absolutely avoid increasing any debts you do currently hold. You should devote any additional income you have, as well as some savings, to paying off debts. If this means that you need to cut back on additional expenditures, now is the time to do it. If you've been thinking about buying a new house or car, but don't really need to, wait. Housing prices are sure to drop lower, and new cars are luxury items that depreciate in value the moment you drive them off the lot.
Racking up additional debt during an economic downturn will be your worst nightmare. If you are laid off, or the cost of living continues to balloon beyond your current salary, you'll be in trouble – and possibly, headed for bankruptcy. You might want to visit a financial planner or a credit counseling service for help in managing your debts and formulating savings plans.
If you seek professional debt management advice, you will probably be asked to make a budget and itemize your expenses. You might need to forgo vacations this year, or you might need to shun salon-brand shampoos and soaps in favor of generics. New clothes, jewelry, and stereo equipment should be put on hold, as well as lavish nights out on the town or constant movie-going. You will notice at first, but once you get used to cutting luxuries (and they are really luxuries – most Americans live better than 90-plus percent of people on Earth), you won't miss them.
If you need further assistance with formulating a debt management plan, contact Advantage CCS. We want to help you get the debt monkey off your back during hard times.