Drastic Steps For Surviving A Recession
When thinking about how to prepare for a recession there are drastic steps that nobody wants to take but may be necessary. If you plan ahead, have a clear realistic strategy, then you should not have to take drastic steps to take in order to survive a recession. But, just in case the worst case scenario does occur you need to think about these drastic measures that may be necessary to financially survive a recession. I would do everything possible to avoid implementing these drastic measures. If you have to use any of these measures to survive a recession you will be hurting your financial future.
Drastic Measures For Surviving A Recession That Should Be Avoided
1. Withdrawing money from your retirement account. This is one of the easiest tactics used to survive a recession. It is so easy after a layoff or other crisis to view retirement accounts as a means of surviving a recession. Don’t do it. Not only are there serious tax implications but you could literally be delaying your retirement for as much as five, ten or even an extra fifteen years. One way for leveraging your retirement accounts as a strategy for surviving a recession is to borrow against them. Many retirement accounts allow for short term loans. There are limitations on how this can be accomplished. Short term here means the money has to be paid back within six to twelve months.
2. Never look at your children’s college funds as money to be used to survive a recession. You may be able to get away with it. But, you are setting yourself up for huge expenses later on. And what if you are never able to put the money back in. I don’t know about you but I would feel awfully guilty. If you have to just stop funding their college funds until you are able to increase your income to a point where you can start funding them again.
3. Avoid selling your house as a strategy for surviving a recession. Most of the time when you sell a house during a recession you will not get the best return. Your house is one of the biggest investments that you will make in your life, taking a loss on it could be devastating to the bottom line for many years to come. If the house is too expensive try leasing it out at a small loss and get an apartment. Not only will you get the bulk of the mortgage paid but you may be able to take a tax write off on the loss.
4. Do not borrow money from your home equity as a strategy for surviving a recession. This really puts you in jeopardy of loosing your home. If you cannot make your current bills now how do you plan on paying the extra mortgage payment? Get an extra job; pull Johnny out of private school, or whatever, before you do this. If the economy does not turn around soon enough then this strategy for surviving a recession could literally wipe you out financially.
Avoid these four drastic steps and you will be in a much better financial position when the recession passes. These steps usually only result in temporary cash flow fixes, but have long term financial consequences that will take years to recover from. Use any alternative measure to survive the recession, but avoid taking these steps if at all possible. Surviving a recession can be accomplished through proper planning, budgeting and realistic thinking about your funds.
Prepare now for a recession before it affects you. Being prepared, having a plan is one of the best ways to make sure you survive financially. Being prepared for the recession if and when it comes is one of the best ways to maintain your current lifestyle during bad economic times. Prepare and prosper. Don’t prepare at your own peril.
