How to protect yourself in a recession
Here are some things you can do to protect yourself in a recession:
Debt: The government, and Americans as a whole are carrying large sums of debt. The fact is that you can't get to prosperity by borrowing. However, that has not stopped the federal government from increasing their spending from 3.7 trillion to 9.3 trillion. It does not stop consumers from living off credit cards, and maxing out their available credit. It leads to many of the problems we are seeing, such as having to borrow from other countries, having to lose homes to foreclosure, and more. So, what can you learn and apply to your personal finances? You can learn that debt leads to downward cycles, not upward. Buying things you can't afford, and living beyond your means does not mean happiness, it means burdens you sometimes can't overcome.
Because debt is one of the largest contributors to our economic decline you can take note and get yourself out of debt. You should stop spending, cut those credit cards up, close accounts that are inactive, and make paying your debts off your biggest focus. Aggressively paying off your debts is going to help you be in the best financial position possible. If you do not owe money on your car, it can't be repossessed. If you do not owe large sums on credit cards, then if the creditor calls in the debt, you won't be in a pinch trying to find a way to pay it. The best plan of action is to start by paying off your highest interest debt first. Apply as large of a payment as you can to it, and when it is paid off, transfer that sum, plus whatever you are already paying, to another debt until it is paid off, and on and on. If you do this, you will get out of debt faster. Never pay minimum payments, instead pay at least double. And, while working to get out of debt, do not add to your debt load. Set a firm rule, "If you can't pay cash, you can't have it."
Relying too heavily on others: Our government and economy have relied too long on resources coming from other countries.
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