How to Prepare for a Recession

recession and economic uncertainty $100 bill tied in red cord

It was sobering news this summer when Bank of America economists put out projections of a “mild” recession to take place this year. That projection has since been pushed back slightly, but the fact remains that economists believe a recession is very likely in the near future. 

What does that mean to regular people, as opposed to economists? Well, record inflation rates coupled with high personal debt loads and a waffling jobs market has put many people on edge. So far, unemployment has remained low, and job openings have remained high, but some sectors (such as tech) have had increasing layoffs of late. 

Also: the Federal Reserve has aggressively raised interest rates in its last few meetings, and more increases are expected in order to try to put the brakes on continued inflation. Unfortunately, sometimes those moves by the Central Bank can push a teetering economy into a recession zone.

Prepare Now in Case a Recession Happens

When a recession is potentially looming, it is prudent to make sure your finances are fully prepared to deal with any economic conditions that may come along. Here are some steps to take to secure your financial situation, no matter what the economic weather may bring.

1) Save as Much as You Can

The primary concern in a recession is that the economy is contracting: companies hire fewer people, wages stagnate, and the possibility of losing your job can increase. That is why your number-one move right now is to set aside as much money as you can in savings or in an emergency fund. If you can, save at least a few months’ worth of income into your bank account. That way you can keep yourself afloat in the event of a job loss during the recession. 

2) Take Down Risky Investments

Right now is the time to reduce your exposure to risky or speculative investments. There may be a time and place for these investments in certain economic climates, but you want to be as far away from them as you can get when things start to get dicey. This is why it is highly recommended that you consider what you have your money in right now and perhaps cash out those positions that are overly speculative. 

3) Look for a Stable Career or a Side Hustle

If you already work in an industry that is stable, then great; count yourself among the lucky ones. But as the economy destabilizes, jobs that aren’t very secure — hospitality, retail, restaurants, entertainment, manufacturing are among the sectors that feel the punch first — are the first place where contractions take place. 

It’s not always possible to rethink an entire career, but now might be the perfect time to spread yourself a little thin and start your own side hustle. Pursue any small-business idea you have, or create an always-in-need service business, whether housecleaning, babysitting, driving and delivery or security. 

4) Reduce or Eliminate Debt Pre-Recession

It is a major problem to try to deal with debt when a recession hits. We may feel comfortable carrying a certain amount of credit card debt when we are safely employed and the economy is simmering. But debt quickly becomes a noose that tightens around your neck when interest rates are climbing, inflation is driving prices up and your job security wavers.

Now is the time to consider a debt consolidation loan or paying off all your debt in another way. You can always try the “snowball method” of paying the smallest debts first, or the “avalanche method” of paying the highest-interest debts first. But if you already feel squeezed, those methods might not work for you. Look into whether you qualify for a debt consolidation loan, which can usually offer you a lower interest rate than what you are paying now — and you can wipe out your debt in one fell swoop with the loan. 

5) Speak with a Financial Advisor

Sometimes the best thing to do is to speak with an expert. If you have a financial advisor that you trust, then you should consider speaking with that person about your current state of affairs. He or she can provide guidance about which steps are most prudent for you to take at a time like this. 

If you’re struggling with credit card debt, take action now, and speak with an advisor at Funding Hawk. Ask if they can help you get rid of your high-interest credit card debt, before we find ourselves in the middle of a recession.

Credit Card Debt, Student Loans, and Homeownership: My Goals For Sustainability in 2021

Brice Capital

Although the pandemic knocked me off track a bit, this year, I plan to continue with my efforts to live a more sustainable life. As I became consciously aware of the human impact on the environment, I was encouraged to reduce my carbon footprint. I wanted to do more to conserve natural resources and save the planet. Upon further research, I concluded that this started with my finances. 

Not So Sustainable Household

I was presently living with my parents, whose practices were far from environmentally-friendly. Despite my best efforts to make changes around the house, it barely made an impact. For every bottle, jar, or can I recycled, they threw ten times that in the trash. I’d turn off a light in the house, and my parents would turn on five. Not to mention, I was so far away from my job that I had to take two buses and a cab to get to work. 

Homeownership

As much as I loved my parents, I knew it was time to get a place of my own. I had some money saved up and figured it was best to buy a house. After carefully reviewing my finances, I realized that my debt was out of control. Between student loans and credit cards, my debt to income ratio and credit utilization percentages were so high that it impacted my credit score. Essentially, if I was going to become a homeowner and live a more sustainable lifestyle, I had to get my finances in order. 

Debt Consolidation

My credit cards had high balances and high-interest rates, which made them difficult to manage. If I was ever going to get them under control, I needed a viable solution. So, I visited BriceCapital.com for credit card debt relief. They offered low-interest rate loans to eligible applicants. The loan would enable you to pay off all your credit cards, leaving you with one affordable monthly payment to manage. The representative from Brice Capital assisted me in finding the best consolidation loan and repayment plan. It saved me a lot of money and helped me get on track with my credit card debt. 

Tackling Student Loans

The only other significant debt I had on my credit report was student loans. I’d deferred them for years creating higher balances and interest rates through the roof. I figured if Brice Capital helped me get my credit card debt in order, there had to be a similar solution for my student loans. So, I found an agency that allowed me to consolidate my student loans and essentially save more money. 

On The Right Track

It’s only been a few months since I consolidated my credit card and student loan debt, but I’ve already seen a difference. My debt to income ratio and credit utilization rates improved, causing my credit score to improve. I took the money I saved by working with Brice Capital and put it into an account to ante up the money I needed for a down payment on my new home. As long as I continue to be a responsible borrower, I should be able to start looking for a home in no time. 

Light At The End Of The Tunnel

I’ve started looking at the available properties within my price range just to see what was out there. Wanting to live a more sustainable life, I wanted to look for a place close to my job. That way, I could park my car and walk to conserve gas and help the environment. Believe it or not, I found several starter homes in neighborhoods with high walkability rates. They were also in communities that were dedicated to sustainability, which was a plus. 

Living a sustainable lifestyle isn’t easy when you live with others that don’t support the cause. As much as I adore my parents, embarking on my journey towards homeownership would enable me to reduce my carbon footprint. Brice Capital and other debt reduction opportunities allowed me to improve my finances and boost my savings to afford a home and lifestyle of my choice.