Surviving Hard Times - How to do it

by Steve Gillman,

Surviving hard times is about careful planning and self control.

1. Start Stocking Up

You may not have the money to go out right now and buy two months worth of food and household necessities. But what you can almost certainly do is buy a little bit more than normal each time you go shopping. In this way you can stock up on everything from toilet paper to canned peas. Have enough food and other items stashed away to survive a loss of income for a couple months if possible.

2. Start Saving Money

This is the time to start saving money (okay, maybe it's always the time). Build that savings account up until you have enough to live on for at least several months without falling behind on any bills. And though it may sound extreme to some, having a few hundred dollars of that in cash - perhaps hidden in your basement - is not such a bad idea. Bank failures have happened before, and it can take a few weeks for the FDIC to sort things out.

3. Reduce Your Expenses

This is one of the most important steps you can take. Suppose you are living on $2,500 per month, and after losing your job you have to take a $7 per hour fast food position for a while? What would happen? Not too much if you had cut your basic expenses in half before you lost the job.

First, pay down any debt you have as fast as you can. Start with the highest-interest debt - most likely your credit cards. I normally would not recommend rolling such debts into a home-refinance (you essentially convert short-term debt into long-term debt and pay far more in interest as a result). But if it seems likely that you will be losing your job, you may want to reduce your monthly payments by converting them into a lower house payment.

Look at every single thing that you regularly spend money on and find ways to reduce the cost of each. It might be the right time to refinance your home. You can install fluorescent bulbs all over the house to cut electrical costs, turn down the thermostat when you are out, buy a low-flow shower head. Maybe you will even decide to cut back to one car instead of two.

Surviving Hard Times - A Review

Make yourself indispensable at work. Explore other job possibilities. Learn new skills if necessary for other employment. Have a contingency plan or two. These are the steps to take so you'll be one of those who stay employed.

Start setting aside some money for hard times. Pay down debts. Find a way to live on less and make it a habit. These are the steps to take so that even if you lose your job you'll be okay until you find the next one.

By the way, this isn't just a recipe for surviving hard times. It will also make you more financially secure in any economic circumstances. In fact, if your job seems secure, and you have taken the steps outlined above, you may find that you have enough excess income to take a nice vacation.