Tips for Surviving the Recession

No matter how positive your outlook may be our country and the world is feeling the effects of the recession we're experiencing right now. Everywhere you turn it's rearing its ugly head. Businesses are closing down, jobs are being lost in record numbers, and the jobs that are available are hardly worth the help-wanted ad they're written on.

What can you do to survive these tough economic times? Well, it all depends on your current situation. If you are one of the many people in foreclosure I have this advice for you: Do not cash out your 401K to pay the back payments, unless you know for sure you're going to be able to stay current once you're caught up. Let's say you've fallen 3 or more months behind on your mortgage, but either one or both wage earners are out of work. What is the point of cashing out your 401K to pay the back payments? First, you're going to be hit with huge penalties and interest from the IRS for cashing out your plan early and secondly, you'll be in arrears again very soon with no job(s).

Instead, just stay in the home "rent free" until the home is taken from you. While you're living there put away as much money as you can, so you'll have something to live off of eventually when the foreclosure process is complete. Also, by not touching your 401K you'll have this money to turn to in an emergency down the road, rather than just throwing good money out to bad.

Foreclosures, even in a good economy can take 9 months or longer. There are stories now about foreclosures taking 12 or more months to be completed. If at least one adult in the house hold is working, this can give you a fair amount of time to stockpile some money for later (side note: Please don't destroy the home out of spite. This will not change your situation, and it's not really going to help your Karma).

If you are facing foreclosure you may want to try and get the terms of your loan modified. Be careful when choosing someone to help you with your home loan modification. Never give these people money up front. Pretty much anyone can hang a "shingle" outside and say they do home loan modifications. Instead of dealing with a potential unscrupulous company, you may want to look for an attorney to handle your situation. Attorneys are regulated by the bar association, and most attorneys don't want to get disbarred, so you're much safer turning to them for assistance.

Maybe you're not facing foreclosure, but you've lost one of the incomes that were coming into your home or your hours were reduced. Now is a good time to re-evaluate the "wants" from the "needs." Make a list of all your outgoing expenses. List everything from eating out to the gym to the utility bills. Once you have the list figure out which is a "need" and which is a "want."

If you're paying $40 per month to the gym for a membership you never use, now is the time to finally admit "defeat" (at least temporarily) and cancel that membership. After all, isn't that $480 per year better in your pocket than in the pocket of your local gym? This is especially true if the only thing getting a workout is your wallet. On the other hand, if you really use that gym membership good for you! Now is a good time to check with them about getting a better rate or do a little shopping around. I know a local gym in my area that's "not a big name" that has all the same equipment as the chain guys, but only charges $10.00 per month with no contracts. If you find a place like that in your area you've just saved yourself $30.00 per month.

How about that cable or satellite bill. Do you really need every channel that's on planet earth? When was the last time you watched that Indie movie or Australian soccer game? You could probably cut your bill in half if you loose those so-called "movie channels." How many times can you watch the same movie in a month? If you really need a movie fix, get Netflix or some other online movie rental plan. Personally my favorite is Netflix. They have a great selection and fast service. Now you can even stream a lot of movies right to your computer. They have plans starting at only $4.99 per month. Cheaper than cable and cheaper than going to a movie theater.

How about manicures and pedicures? I was a person who used to get a pedicure every 2 weeks, religiously. I found out that toenails for some reason are a lot different than fingernails. My toenails will stay looking good for an entire month. If the polish starts to look a little dull I just put a coat of clear polish on them and they look fresh as if I just came from the salon. I'm lucky. My nail salon only charges $13.00 for a spa pedicure, but still this little trick cut my salon bill in half. So whether you spend $20, $30 or$40 for a pedicure by cutting back to only once per month you'll be saving 50% on your pedicure costs.

Do you have a spare room that's just holding "junk"? Why not rent it out? You can put an ad in your local paper or a service online like Roommates.com to find a renter. This can bring you an additional $500 or more per month depending on where you live. I have done this many times in the past and not only did it help me make ends meet, but I also got an opportunity to meet some very interesting people.

Change your shopping habits. There's no reason to buy brand names for most products. Actually many "generic" brands are manufactured by the brand name companies only they don't have their name plastered all over the product. This true for many products from soups, to cleaning supplies appliances. For example many of the Sears Kenmore refrigerators are manufactured by Whirlpool. So, why pay the higher price just to get the "Whirlpool" name. Peter Pan Peanut Butter and Wal-Mart's generic "Great Value" peanut butter is the same. Bounty Classic Paper Towels and Food Lion (generic) towels are the same, as well.

Another way to cut costs is to shop at .99 Cent Only stores, Dollar Tree or Dollar General. I've been shopping at these stores for years, and the other day I needed some aspirin. I happen to be at a name brand drug store. I nearly had a heart attack when I saw what a bottle of aspirin was selling for at the drug store. I mean, isn't that what they specialize in: drugs? The cost was over $3.00. Needless to say, I high-tailed it out of that store and went about 2 blocks up the road to my local .99 Cent Only store where I could get a bottle with 250 aspirin for only .99 cents. I'm just shocked when I see people spending 2, 3 or 4 times as much on an item that can be found at the .99 cent store for, well, 99 cents.

Ebay is another great way to save money. It's great for finding everything from clothing to coupons to cars. If you can think of it, it's most likely for sale somewhere on Ebay and it's mostly likely cheaper than at any store. I have purchased clothing, coupons for pet food and even coupons to a famous name brand coffee house all for a fraction of what I would have paid elsewhere. Actually the pet coupons, to my knowledge could only be found in a newspaper. I have no idea how someone could sell me twenty $1.00 off coupons for only $1.75, but that's not really my concern. My concern is they were selling the coupons, I bought them and they were legitimate coupons that have saved me quite a bit from my pet food bill.

If you like reading you know how expensive books can be to buy. Instead of going to your favorite bookseller and buying books, go there to research which books you want to buy. Copy down the title and author, the ISBN and the retail price of the book, then go home and shop on Half.com. Half.com is an Ebay company, and while the name implies you'll get books, videos, and music and more at half price you'll actually save a lot more in most cases. I've bought books for as little as .25 cents, plus shipping which is usually less than $3.00. This means even with shipping I've spent less than what I would have spent at the bookstore. The books are usually used, but the sellers tell you the condition of the books they are selling. I've received books that were sold as "used" and looked as good as new.

Half.com is also a great way to sell your unwanted books, videos and music. I know at my place I think paperback novels procreate while I'm asleep (they're like wire coat hangers). They just "appear" overnight like mushrooms. I may not get rich selling my paperbacks online, but it clears away the ones I'm done with and makes room for new ones.

This recession is no fun for anyone, but it can be survived. All you need to do is think out of the box a little and be a little creative. You may find that you'll actually like your new found lifestyle.

Sources:

http://www.the-appliance-clinic.com/Searsref.html

http://sensetosave.com/2008/02/28/some-generics-are-brand-name-products-in-disguise/

http://iamfacingforeclosure.com/blog/2008/02/02/understanding-the-foreclosure-process/