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This article has been cross posted at as part of the America’s Top Financial Bloggers Series

People all over are scrambling to make ends meet in one way or another across income brackets.  Virtually everyone is feeling the pinch of the recession and they are surely thinking about next steps.  There are no more HELOCs or credit cards to fill the gaps as banks are cutting limits like a lumber jack wading through the forest.  Jobs are also scant as businesses are cutting back in critical areas to stay afloat.

So what’s a well intentioned person to do?  

Check out the following tips to learn how to make smart financial choices amidst a deepening recession.  You’ve probably heard of these before, but now more than ever is the time to apply them to your lives.

Track Spending, Eliminate Bad Habits And Determine Priorities

What are your current goals?  How are your financial actions and choices aligned with said goals?  Are you saving towards an 8 month emergency fund but splurging on weekend shopping sprees and coming home with nothing to show for it?  How about that $500/month car payment?  Is it all really necessary?  Can you trade it in or sell it in order to lower the monthly payment?  If you’re living on the edge or are close to it then look at your spending and determine based on your goals and priorities if your spending habits are aligned.  If not, you have a problem and the two need to be in harmony, fast.

  • Action:  Use to track your spending for 30-60 days.  Review all transactions for the first 30 days then use the second thirty days to make adjustments.  Open an ING Direct account for savings not easily accessed and use a Paypal debit card or separate bank card to keep “play money” separate from bills.

Also review each of your monthly bills and determine where you can cut back.  This includes: 

  • Electricity:  Lights off if no one is in a room.  Plug out appliances overnight and during the day when you aren’t home.  Check windows for energy efficiency. 
  • Gas:  Cook weekly meals on Sunday to avoid more usage in the week.  Also, plan errands instead of making multiple trips during the week. 
  • Insurance: Do you really drive that much in a recession?  Live near public transportation?  Use it and tell the insurance to reduce your mileage for the year which in turn reduces your monthly premium.   You save on gas and insurance
  • Credit Cards:  Call your bank or credit union and try to secure a personal loan to consolidate your debts if the personal loan rate is lower than your current credit card interest rates.  Once secured, pay off the debts, and you now have one lower monthly payment.

Understand Your Weak Points

What’s the saying?  Squeaky wheel gets the most grease?  Well, the same thing applies here.  My weaknesses are beauty products gadgets.  Right now I am eyeing a very expensive WIFI Sony Cybershot camera but know that I don’t absolutely need it right now, but photography is a hobby of mine.  Still, it can wait till Christmas or until Ive made all of my financial goals for the year.

  • Action:  Look over your Yodlee 30-60 day transaction charts.  Where are you the weakest?  Lunch?  Dining out too much?  Too many trips to the grocery store or the mall?  Where are you weakest in your finances? Address those immediately and watch how much you can save which pushes you even farther towards your goals.

Protect Yourself: Set up Life Insurance and Stack 8 Months In An Emergency Fund

What happens to your loved ones if you’re no longer here?  If you lose your job tomorrow are you prepared to support yourself until your next job?  Suze Orman recommends stacking an 8 month emergency fund before paying down debt.  

In the event of the unthinkable, are you prepared?  I know that we can’t prepare for everything that may come our way but we can do the best we can with what we have.  An insurance policy protects you and your children in the event of your passing.  

  • Action:  Please consider at the very least looking into and sitting down with a life insurance agent to discuss your options.  Term life policies cost less and provides coverage for the essentials upon your passing.

Pay Down Old Debt/Refuse New Debt

Need I say more?  Make a plan to pay down old debts and refuse to take on new ones.  If you can’t pay for it in cash then you cannot afford it.  

  • Action:  Check out the Snowball Method of paying down debt and see how it can work for you.

Consider Multiple Income Streams

I hate to beat the horse to death but if you lose your job, how would you make ends meet?  Do you have a side hustle or business?  Work on making yourself immune to the recession by having a back up second source of income.  If you do-bravo!  If not, consider making a hobby profitable by turning it into a business.  The ladies of the Girls Just Wanna Have Funds group in DC are getting together to showcase their side hustles to inspire and motivate each other to create second streams of incomes.  In some cases, these businesses have been lucrative enough so that if laid off they did not have to seek employment. 

  • Action:  Consider making a hobby profitable by turning it into a business


  • Be realistic about your goals: If you’re down to one income, pay the essentials and work out the rest with your debtors or let it work itself out.  Your survival is paramount
  • Couples: Discuss Goals, adjust your spending accordingly.  Discuss new spending limits if needed due to layoff or job loss.  Be honest with each other about your financial limits and honor them.
  • Families:  Discuss new financial changes with your children and help them to understand that due to current economical conditions, you may need to start tightening belts.  However, instead of taking certain luxuries away, replace them with cheap/free options as you have the discussion with your children.  This helps them understand that while they may not be able to go away on an expensive family vacation this year, a closer to home staycation may be in order.
The recession may be here, but you don’t have to participate in it if you’re adequately prepared.  Think about the worse that could happen and prepare yourself.  In the mean time, live your life while making smart adjustments to your finances.
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