7 Ingenious (And Obvious) Tips to Prepare for a Recession

With recession looming over Australia like an inescapable smog, there are many methods and resources you can utilize to help you keep your head above water.

Some are no brainers which are good reminders, while some are techniques which may not have crossed your mind.

1. Reduce your Credit Card Debt

As a general rule of thumb, cut out anything that you spend on your credit card which loses value in time, or doesn’t increase. Cutting out clothes, leisure, accessories, and possibly an expensive restaurant you enjoy dining at are examples.

If you cut these out, while still using your credit card for necessities such as petrol and bills, you’ll find your balance tipping closer to $0 in no time.

2. Consider a Balance Transfer to Reduce your Debt

High balances or simply maxed out on your credit card(s)? The solution is a simple balance transfer to consolidate your debt and pay it all off at either 0% for 6 months, 2.9% for a year, or 7.9% for the life of your balance.

3. Consolidate your Debts Elsewhere

If you’re multi-tasking between paying off a few to several different lines of credit, it can be a headache when an interest rate change affects one, or you’re hit with some form of penalty fee for another. By bundling your credit into one singular source, you can easily become familiar with the Terms & Conditions and remember all the nooks and fine print associated.

4. Open a High Interest Savings Account as Insurance for the Unexpected

Find a High Interest Savings Account which has as many penalties as possible – it sounds off-putting, but accounts which incur withdrawal fees and other various penalties are typically the ones which offer the highest interest. Also, by incurring penalties on your account, you will be less inclined to withdraw your money.

5. Steer Clear of Third Party Financial Lenders

While in times of desperation you may turn anywhere, try to avoid the tempting advertisements of money for people with ‘no to bad credit’. In the short term, you’ll get the funds you need, but months or a year down the track, you may be hit with rates as ridiculous as 500%.

6. Reduce your Level of Insurance (Completely Subjective)

If you own more than 1 car with comprehensive insurance, you can save a bundle by reducing one of them to third party can drastically reduce your bills. It’s noted as ‘completely subjective’ as many simply can’t afford the risk of reducing their insurance levels and types.

7. Live Below Your Means

When it comes down to it, those worse affected by a financial crisis will simply have to bite the bullet and cut their leisure and expensive lifestyle choices. It’s a simple case, which is best reinforced: spend less money, and you’ll save more money.

• For the next 6 months for instance, buy the 150g ‘Home Brand’ Fruit Salad for $1.74 as opposed to the 150g ‘Named Brand’ Fruit Salad for $2.38.
• Cut the $1.47 p/l premium unleaded to $1.41 p/l standard unleaded.
• Enjoy a night out on the town spending big on bar alcohol? If possible, save money by drinking beforehand, with store-bought liquor.

You get the idea. A few changes won’t make a world of change for your pocket, but when your whole lifestyle adopts a frugal outlook, you’ll enjoy the new resource of funds.

Not all debt is bad. Bad debt, is the problem. If you can still plan your budget and credit cards appropriately, there’s lots of space for bad debt to be avoided. If you need help in strategising and budgeting, see our free credit card debt calculator.

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