The March 2008 issue of Money has an article by Stephen Gandel about how to recession-proof your life. “We may or may not be entering an official recession,” he writes, “but either way 2008 has gotten off to a scarier start than most anyone predicted.”
To lower your anxiety level Gandel recommends that you first learn the facts. Educate yourself about past recessions. Try to avoid the media hype — it will cloud your perspective.
Next, shore up your balance sheet. When times are tough, it’s even more important to cut spending, trim debt, and bolster your emergency fund. During a recession, you want to be especially prepared for unexpected financial setbacks.
Gandel also suggests that it’s time to shore up your portfolio. If you’re really scared, consider putting more money in bonds. Otherwise, just keep a balanced portfolio with some overseas investment. (I haven’t covered any of these topics yet at Get Rich Slowly — someday, someday.)
Finally, work harder and smarter. “The best way to blunt a recession’s impact on your family is to keep your job,” writes Gandel. To the extent that you can, make yourself valuable at the office. If you’ve been telecommuting, consider spending more time actually in the office. You want your boss to view you as an important part of her team.
Basically, Gandel is saying that tough financial times require getting “back to the basics”. When the economy is good — especially your personal economy — it’s easier to slip into bad habits because there’s a greater margin for error. But when times get tough, it’s especially important to practice smart personal finance.
[CNN/Money: Survival strategies: Recession-proof your life]
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