As we gear up for what might be the next big recession, we need to get our homes, family, and finances ready to weather the worst of an economic downturn. Today’s tips can help you save money, make smarter buying decisions, and protect your assets.
Promote your business now.
If you’re one of the millions of Americans that opened a business during the pandemic, you may be getting comfortable in your new role. But, if you have not yet expanded, now’s the time to promote your business.
Invest in a home warranty.
Home repairs are expensive, but a home warranty (a yearly contract that covers many of your home’s major components) can help reduce your expenses in case something happens with your plumbing, electrical, or HVAC system. Keep in mind that your home insurance only offers financial compensation for issues that affect your home, such as structural damage; it doesn’t do anything for your appliances or systems if they break down or fail. The best choice for a home warranty company is one that’s affordable and allows you to renew each year.
Make smarter purchasing decisions.
You know that you have to spend money, but make a point to be intentional in your purchases. Read product reviews, check ratings, and talk to people that you know before you make any purchasing decisions.
Get a grip on your budget.
Do you know how much money you spend on housing, bills, vacations, and debt repayment? If not, it’s time to make a budget. The What To Expect blog explains that this starts by knowing how much you make. You should also create a budget tracking system and, if you find that you’re cutting it close each month, trim unnecessary expenses, like eating out.
Refinance or recast your home loan.
Your home is your largest expense, but it’s also one that you do have some control over. If you currently have an interest rate that’s more than one or two points higher than the current interest rate, refinancing is an option that can save you hundreds of thousands of dollars in the long run. But, if you’re comfortable with your interest rate (or if the current interest rates are much higher) and you have cash handy, consider recasting your loan. Recasting keeps your current mortgage terms, such as your interest rate and payment length. What it does is apply a lump sum to your balance so that you can pay less each month.
Establish an assistance network.
If you think there’s a chance that you’ll be laid off from your job if the recession hits, consider creating a babysitting co-op. This is a group of other parents that swap childcare. If you’re in a high-income area, such as New York or Los Angeles, you may be able to save $30,000 per year or more on childcare by simply creating a co-op.
Pay down your debt.
Paying down debt is important, especially if you think your income may take a hit in the future. Fulton Bank explains that reducing your debt load can help improve your credit score while also reducing a mental burden.
Nobody knows for sure that a recession is around the corner. But, to assuage fears of taking a significant financial hit, now is the time to prepare yourself. Having a home warranty to offset repair costs, establishing a childcare co-op, and the other tips listed above can help you hold on tight throughout what might be a wild ride.
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