With the economy still reeling from the recession and analysts raising red flags over the threat of a “double dip recession,” there’s plenty of reason to batten down the hatches. In spite of what the Mayan calendar says, you likely don’t have to go as far as stockpiling gold coins, seeds, and firearms. Instead, take some time to consider some of these solid money-saving strategies that work well when the economy is down:
Low interest rates are perhaps the only bright side of a recession, and for many families, they provide the best opportunity for saving money by refinancing. Locking in low interest rates could save you thousands in the long run on either a mortgage refinance or auto loan refinance. Alternately, you can refinance in order to reduce your monthly payments or cash out some of your equity, both of which will help for meeting your other, more immediate financial obligations.
2. Consolidate Debt
Similar to refinancing, debt consolidation takes advantage of low interest rates by paying down high interest debt and rolling it into a single, low interest loan. The most economical way to do this is through a home equity loan or mortgage refinancing. Consolidating debt with a home loan couples the inherent advantages of a secured loan with the benefits of lower interest rates due to the recession. By eliminating outstanding debt in other accounts, you’ll also avoid late fees and have a lower monthly payment.
Ask and ye shall receive. Credit card companies, utilities, and cellular carriers are more willing to give you a break than you might imagine. There are many reasons for this. For example, cell phone companies often have secret “customer retention” packages that have less minutes and cost less per month, which are only offered if you threaten to leave or complain. Heating and electric utilities are sometimes required by law to offer “hardship” programs (particularly in colder regions where getting the heat turned off could be life threatening). Be forthcoming and authentic and the worst they can say is “I’m sorry, there’s nothing we can do”— but chances are, you can get a discount.
This applies to all facets of your finances. Diversify your income by taking on a second job, freelancing, or performing odd jobs (babysitting, handyman work, tax preparation). Diversify your savings and investments. If you have mostly CDs, open some high yield savings accounts. If you are holding mostly stocks, mutual funds, or ETFs, look into some bonds. Diversify your professional development and continuing education. Keep as many irons in the fire as possible — some just might get hot.
The key to riding out a recession is to take as many prudent measures as possible. While cutting back on takeout food or moving to a higher interest savings account won’t likely be the key determinants to your survival, the cumulative impact of taking some of these measures can keep you on firm footing even as the economy tanks.
This is a guest article by MoneyAisle, an online resource where consumers find great rates on auto loans and refinancing.