Tuesday, 17 August 2010

How to survive a recession

"We are not participating in the recession" read the sign in the shop window. The owner had decided that in spite of the recession, it was "business as usual".
Difficult economic times provide a measure of new opportunities. Business opportunities to provide services needed to cope with hard times abound. Repair services are in greater demand as people repair rather than replace. Second-hand goods - furniture, books, even clothes - become more attractive as disposable incomes diminish. Demand for child-care services will grow as more mothers are forced to work to supplement the household income.
The sub-prime crises landed the world in a major recession followed by a slow and tentative recovery. Almost everyone had to cut back in some way to survive.
But while the majority were tightening their belts, some were not suffering.  Some have capitalised on others’ misfortunes. Investing in cheap homes was one way of making money.
A recession means that many investments have become cheap. If you have some cash or are able to raise finance, then now is the ideal time to invest.
The banks now have a massive stock of re-possessed homes that must be sold. These homes are going for a song! If you are in a position to buy, then buy now. These houses will prove to be an excellent investment in the longer term.
It is possible to improve the way you live by changing your spending habits. Cut out fast foods and eating out. Replace these with quality home cooked meals. Discover your artistic abilities in the kitchen. Cut back on driving, use a bicycle instead and get fit.
If you smoke, now is an excellent time to give up. Smokers usually underestimate the cost of smoking, but the savings produced by quitting could provide much needed resources to spend elsewhere.   
Debt can be a drain on your finances, even during good times. When things get tough, debt could be the last straw.
Make a plan to eliminate debt. Cut back on living costs for a few months and use all available resources to eliminate debt. Getting rid of debt requires a major short-term sacrifice. Cut your expenses to the bone plough every spare penny into reducing debt. The short term sacrifice will pay huge dividends when you are able to live a debt-free life-style.
Taking on a second job or starting a business is always a viable option. Perhaps you can find a way to transform your hobby into cash. This can take time, but once your second and third incomes become more established you will have some extra income to fall back on. A new business could just be the vehicle to ride out the difficult times and propel you into an era of wealth and prosperity once the economy turns.
Remember, you don't have to participate in the recession!

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