Survival Tactics

Whether or not we're technically in a recession doesn't really matter. What matters is that the economy is stuck in the mud and it could get worse. What can you do about it? Take control of what you can -- your own personal finances -- and try not to worry about the rest.
Skimp on Spending

Personal spending is something everyone can control to some extent, regardless of what's going on in the broader economy. You may think you've trimmed all the expenses you can, but take another look at where your money is going. You just might find some additional opportunities to spend less.

Look at your budget and ask yourself whether each expense you identify is a "need" or a "want." Then figure out which of the "wants" you can eliminate.

Beef Up Savings

This might seem like an impossible and unreachable goal, especially if it's been a while since you've gotten a raise. But cutting out even one or two of those "wants" and saving the money instead will help bring you closer to your financial goals.

Check your investments to make sure your portfolio is appropriately diversified. Diversification is a basic defensive strategy against economic and market uncertainties. It's not just the number of investments you own that's important, it's also the types of investments and how you allocate your portfolio among the different asset classes (e.g., stocks, bonds, and cash).

Take Down Debt

If monthly loan and credit card payments are a drag on your budget, take steps to reduce your debt. That might mean having to postpone some of your plans and putting your credit cards away for a while, but that will allow you to pay off your existing card balances faster. Low mortgage rates are one of the few bright spots in this economy. You may be able to reduce your debt by refinancing your mortgage.

Don't Touch!

If cash is tight, you may be tempted to take money out of your retirement savings. But that's not a good idea. Even if you eventually replace it, you won't be able to make up for the missed opportunity for compounding. Don't put your future financial security at risk.