How to recession proof your life in times of economic uncertainty

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NEW YORK (AP) — Gasoline, food and rent prices are skyrocketing. The Federal Reserve raised interest rates to the highest level since 2018. The US economy has contracted for two straight quarters.

Economists are divided on whether a recession is looming. What is clear is that economic uncertainty is not going away anytime soon. But there are steps you can take now to be ready for whatever lies ahead.

Yiming Ma, an assistant professor at Columbia University, says it’s not a question of if but when a recession will occur. People need to prepare but not panic, she said.


If you think a recession could destabilize your finances, here are some things you can do to prepare.

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KNOW YOUR EXPENSES AND MAKE A BUDGET

Knowing how much you spend each month is essential. Ma recommends sitting down and writing down how much you spend day to day. This will help you see what’s coming in, what’s going out, and what unnecessary expenses you could cut.

Budgets often reveal expenses that can be eliminated entirely or impulse expenses that can be avoided through planning.

To guide you through creating a budget, free courses such as “Create a Budget (and Stick to It)” by CT Dollars and Sense, a partnership of Connecticut state agencies, and the Budget Calculator of Nerd Wallet can be good starting points.

SAVE WHILE YOU CAN

The more you can reduce non-essential expenses, the more you can save.

Programs such as America Saves, a nonprofit campaign of the Consumer Federation of America, can help create a roadmap.

And if you have a savings account, it’s important to check if your bank offers you a good interest rate and shop around if not, Ma said.

CONSOLIDATE YOUR LOANS, AND TAKE NO MORE

As interest rates rise, experts recommend consolidating your loans into one fixed-rate loan and, if you can, paying off as much of your debt as possible. The Federal Trade Commission’s consumer advice guide to getting out of debt can help you develop a plan.

With high interest rates, now is also not the best time to take out new loans for big expenses like cars, although experts recommend that if you need durable goods like vacuum cleaners, stoves or dishwashers, you buy them as soon as possible to avoid future price increases.

VISIT SECOND-HAND STORES AND GARAGE SALES

Allen Galeon, an at-home caregiver in California, has been affected for months by rising prices for basics like groceries, paper towels and gas for commuting.

One of the choices he’s made is to buy second-hand items like clothes or electronics whenever possible, whether it’s from Goodwill, pawnshops or Craigslist. And Craigslist lets you search by area, reducing driving, which means less gas and less inconvenience.

NEGOTIATE YOUR MONTHLY BILLS

Since the pandemic, many companies have updated their relief policies and become more flexible with users, according to Kia McCallister-Young, director of America Saves.

Calling monthly service providers to negotiate bills — whether it’s utility, phone, cable, Internet or car insurance — can lead to significant savings, McCallister-Young said. Individuals can ask for the best rate, any available discounts, rebates or coupons may result in a reduction in the monthly fee. If a supplier competes with other businesses, there’s an even greater chance of getting a discount, she added.

Check out federal programs such as the Low-Income Home Energy Assistance Program, which helps cover bills, and Lifeline, which can help pay phone bills. If you are unsure whether you qualify for a federal or state program, you can call 211, which will connect you with a local specialist who can help you.

CHANGE YOUR GROCERY

Grocery shopping with a meal plan, buying generic rather than branded products, or buying in bulk are some of the Consumer Federation of America’s recommendations.

“A lot of stores have price matches, so if you show them a competitor is selling the same product at a lower price, they’ll match that,” McCallister-Young said. “You also want to look at the stores closest to you, so you don’t spend the extra money you would save on gas.”

Another way to save money on groceries is to check out food-sharing apps like Olio, which connects people in their community to share extra grocery items, and Too Good to Go, where customers can buy surplus food from companies at reduced prices.

SEE GOVERNMENT ASSISTANCE PROGRAMS

Even with these saving and spending practices, a month’s salary isn’t always enough to cover major expenses. If this is your case, programs across the country are available to help you.

To use these resources, check to see if you qualify for the Emergency Rental Assistance Program, Supplemental Nutrition Assistance Program, Farmers Market Nutrition Program, or Homeowners Assistance Fund. All of these programs are federal programs coordinated by state governments. Some states offer additional local programs for their residents.

SEEK COMMUNITY HELP

If you are food or housing insecure, look for nonprofits or community organizations near you. From housing assistance and food banks to help with utilities, nonprofits across the country can help. National organizations such as Feeding America host food banks in all 50 states.

Food aid organizations such as Ample Harvest, Hunger Free America, and Food Rescue US offer maps that allow users to find a nearby food bank by typing in their zip code.

TAKE CARE OF YOUR MENTAL HEALTH

Between worrying about bills and not knowing what your financial future might look like, your stress levels can explode.

Most health insurance covers some type of mental health assistance. If you don’t have health insurance, you can search for sliding scale therapists nationwide, including through FindTreatment.gov and the Anxiety and Depression Association of America directory.

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The Associated Press receives support from the Charles Schwab Foundation for educational and explanatory reports aimed at improving financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

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