How to Survive in an Economic Down Turn

We have been facing an economic downturn, but don't let that scare you. There are ways to not only survive but actually thrive in such an environment. Just follow a basic rule that generations before us mastered: "Live within your Means."

It's also important to have a positive attitude and avoid giving in to fear. If you don't believe in yourself, no one else will. Here are some more tips:

Increase Cash Flow

- Take all entitled withholdings on your W-4.

- Use company benefits that might increase cash flow, e.g. a deferred medical program.

- Increase any insurance deductibles.

- Have a garage sale; it unloads your clutter and you can bring in some cash.

Reduce Expenses

- Create a budget.

- Prepare your weekly grocery shopping keeping your budgeted food allowance in mind. Keep that discipline by using a list and sticking to it.

- Get creative by looking for ways to reduce major day to day expenses. For example; you can car pool to save on your gas expense - with clothes for your teenagers, you can have a swap clothes among their friends allowing them to have a different outfit without the cost.

- Go to garage sales and recycle; rather than consume.

- Start making your meals at home; brown bag lunches. It's easy when you make extra helpings for supper the night before and use them for your lunch the next day.

- Reduce your debt. If you don't have the discipline, then write down every charge you do on a daily basis and add it up weekly. You will visually see where you money is being wasted.

- Reduce utility bills by conserving energy.

- Reduce entertainment expenses by, for example, socializing with friends or neighbors and having monthly theme parties where everyone brings a dish related to the theme.

Job Insecurity

- If you're afraid of losing your job, then update that resume and start networking.

- Improve job skills by taking courses.

- Don't be afraid to ask how your company is surviving in this economic down turn. It could give you a heads up on what action to take.

Protect your Retirement Nest Egg

- Today's stock market is more of a trader's market. It's important, even as a long-term investor, to understand when to buy a stock or fund and when to sell. This is no longer your father's stock market, where "buy and hold" works. The perfect example is large-cap stock funds and stocks in general-they've hardly risen at all in nearly 10 years.

- Dollar cost averaging works when share prices are rising. If the market is in a downtrend, however, put your deposits in a money-market account and manage the deposits that go into your funds.

- Manage your risk by educating yourself on what is going on with the Economy. In a recesssion, consumer staples, biotechnology, and defensive stocks usually hold up well because of the needs of consumers . If you lack confidence on knowing what to invest in, then hire a financial planner to steer you in the right direction. Make sure you find one that is fee-based, not commissioned, to avoid conflicts of interests. In the beginning of 2008, I wrote an article about how 2008 was going to be a tough year for stocks and it involved a technique on how to manage your risk and get through this economic storm. Click "Here" to read more about this.

- Have an emergency fund equal to 6 months of living expenses.

If you simplify your life and learn from the past--when we didn't have all the toys we do today--you might be pleasantly surprised to find how much more control you can have over your life and destiny.