Recession Action Plan-Preparing you for the recession


Yes, You can get prepared for the recession

* As the economy tightens its belt you might have to make some changes – and it makes sense to start planning now.
* Make sure a recession doesn’t hit you hard by clearing your debts, cutting your expenses and getting as much free stuff as you can.

It’s official, the recession is upon us. We haven’t yet hit the second consecutive quarter of negative economic growth, but all the important voices in the economy are saying that there’s no escaping it: The recession has begun.

This is certainly not cause to panic. The Moneymagpies have put together an easy guide to help you protect yourself from feeling the effects of the recession.

Follow these simple steps and you should be able to sit back and enjoy the upsides of the credit crunch.

Here are our tips for dealing with a downturn:

1. Get out of debt

Getting out of debt is important in any economic climate, but in a recession getting hold of good value loans and mortgages becomes even more difficult.

Even though the Bank of England recently cut the Base Rate, Libor (the rate at which banks lend to each other) is still relatively high.

This means that it’s expensive for banks to borrow money off each other, so they make it expensive for you to borrow money off them.

We’ve already seen rates going up over the past year. Credit card and mortgage companies have also been getting much stricter about who they lend to since the credit crunch started to bite.

So – make sure you sort out your debts as much as you possibly can, as quickly as possible.

There are various things you can do to reduce your borrowing costs and pay off your debts more quickly:

* Transfer those credit cards

Try to transfer credit card balances onto 0% interest cards to give yourself a break from interest payments and help you make a dent in your actual balance. Check out the best 0% balance transfer cards here.

If you can’t get a 0% card, look for a card with a lower lifetime balance APR.

* Loans

You should also shop around if you’ve got an unsecured personal loan to see if you can get a better deal.

Unfortunately, at the moment there really aren’t many good rates on the market, so the likeliness of you finding something better than what you’ve already got is slim.

Whatever you do, don’t be tempted by a secured loan. This will put your home at risk, because if you can’t meet your payments the lender is entitled to take your house.

* Mortgages

Good value mortgages are already very tricky to get hold of. And although the base rate cut will soon be passed on to customers, many tracker mortgage products are already disappearing from the market.

So – if you are coming towards the end of your fixed term period, you’ve got to be on the ball and get started looking for a new deal straight away.

You can sign up for a new mortgage up to six months before the end of your fixed term period, so if you see a good deal, grab it. Get more tips on re-mortgaging from our article or find yourself a deal with London & Country.

We’ve got loads of other debt-busting ideas elsewhere on the site. See our articles:

* Seven ways to get out of debt quickly
* A step-by-step guide to getting out of debt
* Ditch your debt: your Christmas action plan

All our other articles in our borrowing and debt section.

If your debt situation is really frightening and you don’t know how you’re going to get out of it, there are lots of free help services out there.

Try and get in contact with:

* The CCCS
* The Citizens Advice Bureau
* The National Debt Helpline

These services are all free of charge and will help you sort yourself out so you can work towards being debt-free. Also, get free help and support from others in a similar situation on our debt messageboard.

2. Cut down on your expenses

First, cut your costs the easy way by switching your monthly bills to cheaper versions. You may think there isn’t much to save and it’s too much of a bother to do it. However, recent surveys all report that you can save between £200 and £400 just by switching.

The company you switch to takes care of all the admin. You just need to put the time in to pick the best plan for you. Go to our comparison pages to find cheaper gas, electricity, insurance, phone and other services.

Then (sorry!) you need to turn your attention to your daily spending on bits and pieces. We all love to have the things we want, whether it’s that new dress, that daily dose of Starbucks or the latest gadget. However, when money is tight these things have to be the first to go.

If you think you don’t fritter your money away, then keep a spending diary of everything you spend for a month. That way, you’ll be able to see what things you spend on that you don’t need and can cut back on.

It may sound silly as some of these items may be just a few pounds. However, it all adds up and with more expensive mortgage payments, a couple of pounds here and there could make the difference between you keeping and losing your house.

For more ideas on cost cutting, check out our cut your costs article and get 29 ideas for free living in our article – Live for Free.

3. Increase your income

What better way to combat the recession than to make a little more money? There are thousands of ways to boost your income that don’t involve taking on another job. In fact, we’ve got loads of ideas that take no work at all.

* Rent it

If you’ve got a house you can rent out a room or a driveway. Renting a room is tax-free income up to £4,250, so it’s a great way to make a bit of money and perhaps a friend or two. You have to be living in the house to be eligible for the tax break.

If you don’t want to rent in long periods you can also host a foreign student if you’ve got a spare room – always useful for helping your children with their languages homework and you can often get paid in cash.

* Get online

The internet is a great resource for making a little extra cash, although it will take a bit more effort than renting a room.

You can do online surveys, become an expert who answers questions for cash or even make money from shopping online using cashback sites.

You can even make money just by searching. See our full article on making money whilst you surf here.

* Use your skills

You can easily make money doing things you enjoy and are good at. Cake making can be lucrative if you approach it in the right way, and if you’ve got green fingers you can make around £600 a month by propagating seedlings.

If you’re a whizz on eBay you can sell things that other people can’t be bothered to sell. Do it for them and take a small commission. See our guide on how to sell on eBay here.

* Make money from the Recession

Yes, it’s possible. We’ve come up with several ideas on how to make money from these hard financial times.

Buying bankrupt stock might seem daunting, but you can make big bucks. Undercut the competition when offering services, get carbooting and if the credit crunch has really hit you badly – make money from your misery by selling your story.

See all the ideas in our Make Money from the Recession Part One and Part Two.

For more ideas on making money, and we’ve got a lot more, take a look at our making money section.

4.See how much you can get for free

* Who says there’s no such thing as a free lunch?

Little pleasures can end up costing a lot, but in fact, you can get lots of them without paying a penny.

Signing up for a mystery shopping agency means that you’ll get paid to try out products and establishments that you might pay to use normally.

The pay isn’t great, generally about a fiver a go, but you will get free products to test out and free meals in restaurants like Pizza Express. See the full article here.

* Free cosmetics

If your weakness is for cosmetics then try Cosmetic Research Online, a website that will send you free skin care products and toiletries in exchange for an evaluation of what you think of the product.

* Free accomodation

Instead of paying for hotels when you go off on holiday, why not try out doing a house swap? It gives you the experience of properly living in another country and also is completely free, helping you save funds to spend on other things.

Have a look at Home Exchange to get more information about how it works.

* Swap it

If you don’t have a house to swap, try swapping smaller things on websites like SwapitShop. This way you can get items you need by swapping them for things you don’t need, and you won’t have to spend a penny.

* Free everything

For smaller free things, we’ve got the best freebies page with loads of free stuff. You can also try sites like Snaffleup and Freecycle, where you can take your pick of the things that other people want to give away.

Also take a look at the freestuff section on Gumtree.

One of the best free things we can come up with for combatting the recession is our free newsletter with tips on all things financial as well as all the best deals on insurance, credit cards, ISAs and lots of bargains thrown in. Sign up for the free newsletter here.

5. Take advantage of the good side of a recession

“There’s a good side to a recession?’!” we hear you exclaim suspiciously. Actually there is, namely that there will be bargains to be had.

As consumers become more hesitant to spend, many shops and businesses will find it harder to meet their targets. This will put you in a position to bargain, even in high street stores.

There are already lots of restaurants with special offers on Toptable, often with 50% off food. There will be lots of other bargains in coming months too, so keep up to date with the best ones by looking at our Bag a Bargain article.

Just remember not to blow all your hard-saved cash on them – more rainy days are on the horizon, after all.

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