Budgeting in time of recession

The year of the Ox, 2009, started with an atmosphere of depression, frustration and recession. Every news-paper, every news-channel, every nook and corner one sees one hears the word recession.

What is recession?

A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters. This is the standard definition of recession which is not well understood by the common man, so a better way to define recession is when your neighbor looses his job. And there is depression when you loose yours.

A recession has many attributes that can occur simultaneously and can include declines in coincident measures of activity such as employment, investment, and corporate profits.

The reasons of recession also vary from Currency crisis, Energy crisis, War, Overproduction, Under-consumption, Prices of fuel.

Now the big question is how does one survive the impact of recession?

These are the following measures if one uses them as a thumb rule, recession can  be avoided and the great depression also could be at bay.

1. Stitch on time saves nine-the very old proverb implies that reduce the unnecessary costs. Set up savings funds that you can get to immediately on your rainy day.

2. Penny wise pound foolish- In recession, you need every penny to work for you. And using hard earned money to pay X amount of percent interest on your credit cards is not wise. So the more you can reduce your credit card debt now, the better shape you'll be in if times toughen. Whenever possible, try to pay off your card balance in full each month.

Certainly, work hard to pay more than the minimum.

3. Open your eyes and ears wide- As the recession has hit, mostly all the financial companies and banks have announced reduction in interests rates on mortgages and car loans. Consider refinancing the mortgage and car loans.

4. Be Prudent in spending-Most of us enjoy buying things and find it difficult to break habits, like that daily Starbucks Venti Cappuccino or the weekly restaurant splurge. You needn't take a vow of penance, but chances are there are ways you can trim your spending.

5. Check your insurance coverage-This is the time to review your homeowners' or renters' insurance, life insurance, health insurance, disability insurance, and auto insurance coverage. As you want to know that if your household has a financial calamity (someone loses a job or gets sick...your home gets damaged...your car is in an accident), you'll have protection. If you can't bear the thought of wading through your policies, call your insurance agents or employer's benefits' department and have them check your coverage for you. Who knows? You may find that circumstances have changed since you bought the policies and you don't need as much coverage today. This could save you a few bucks that you could then stash in your emergency savings fund.

6. Be Suave and Smart-Hard economic times mean more layoffs. So update your résumé now, to be sure it's current in case you need to apply for a new job. Try to contain the résumé to one page and avoid making it flashy or frilly. You want your work experience to stand out, not the document describing it.