When a recession hits, it is difficult to adjust to the financial effects of it. Some lucky people remain unaffected at work, but heightened costs for living expenses and necessities can present challenges. The following 10 tips explain creative ways to spend less and save more.
1. Buy Used
Most people rush out to department stores to buy clothing, shoes and household items. However, this can quickly break a budget during a recession. Consider buying used items at thrift stores, garage sales or through online auctions.
2. Pay With Cash
It is easy to lose track of spending with a debit card, credit card or checkbook. When constructing the budget, plan to take out enough cash to purchase necessities whenever possible. Leave the cards and checks at home. This will make it much more difficult to overspend.
3. Examine Auto Insurance
Car insurance is one area people commonly overlook when cutting their budget. However, changing an auto policy can save many people hundreds of dollars every year. While it is important to keep adequate coverage, drivers can find a policy that may be more affordable.
4. Research Major Purchases
Any items that are upward of $50 should be researched prior to buying. It is important to choose major appliances and small kitchen appliances that are reliable and affordable. If possible, try to find the researched and approved items used. Some retailers even offer limited warranties for used appliances.
5. Purchase Real Estate
When a recession hits, the price of real estate drops. This can be disastrous for homeowners who bought properties while values were high. However, it is an opportune time for buyers. While other investments may tank after the recession is over, a home will likely bring a property value increase.
6. Rent Out A Room
Many people bought their homes when values were higher. Whether homeowners are in an underwater mortgage situation or simply want to save some money on mortgage payments, renting out a room in the house is a good option. With foreclosures happening everywhere, more people are looking to rent.
7. Consolidate Debts
One of the biggest pitfalls people encounter during a recession is trying to keep up with interest on various debts. Since the interest amounts raise with each late payment, it is easy for debts to spiral out of control. Consider a consolidation plan that allows one monthly payment. A mediator can work with creditors to lower interest rates and establish one monthly payment for all debts.
8. Buy Everything In Bulk
Buying in bulk can save a great deal of money. Food can be divided up into individual storage bags and placed in cabinets or in the freezer. Necessities such as light bulbs, trash bags, toilet paper and paper towels only increase in cost during a recession, so it is wise to stock up on these items.
9. Avoid Borrowing Money
Do not borrow money to make any purchases. If important bills are past due, call creditors to work out payment plans before seeking a loan.
10. Buy Smart Stocks
Since stocks are cheap during a recession, that is the best time to buy them. Set aside some saved money to invest in a few industries that are known to make a strong recovery from past recessions.