The most important signs are:
- Gross Domestic Product (GDP)
- Employment
- Housing Market
- Stock Market
- Inflation
While no single indicator can predict a recession, combining several indicators can give economists a pretty good idea of whether a recession is on the horizon. When it comes to recession preparation, you can do several things to help weather the storm.
Look closely at your budget and see where you can reduce spending. You should start building up an emergency fund that will give you a cushion to fall back on if you lose your job or have other unexpected expenses. Aim to save at least three to six months of living expenses, if not more. It would help if you also thought about ways to boost your income. This could include picking up a side hustle or looking for ways to make money from home. By having a Plan B in place, you’ll be in a better position to make it through an economic downturn.
Home Equity Line Of Credit (HELOC)
A HELOC, or home equity line of credit, is a good choice during a recession for several reasons. First, it allows you to tap into the equity in your home, which you can use for various purposes, including home improvements, debt consolidation, or a rainy day fund.
Second, a HELOC typically has a lower interest rate than other loans, such as credit cards or personal loans. This can save you money on interest payments through debt consolidation, which can be helpful during a recession when every penny counts.
Finally, a HELOC can allow you to make smaller payments during times of financial hardship and more significant payments when your finances improve.
Auto Loan
If you have an auto loan, you can do a few things during a recession to ensure you maintain good credit and keep your payments as low as possible.
Make sure you keep up with your payments. This may seem obvious, but it is essential to remember during tough financial times. If you miss a payment, you could end up losing your car.
Consider refinancing. If interest rates have dropped since you took out your loan, you may be able to refinance and get a lower monthly payment.
Personal Loan
During a recession, interest rates on personal loans and credit cards are typically the most affected. Here are a few suggestions for dealing with a personal loan during a recession.
Many lenders are willing to work with borrowers with financial difficulties. They may be able to restructure your existing loan to better meet your current need. You also may want to consider consolidating your loans and using a personal loan to pay off high-interest credit card debt.
Checking
Prepare now for the possibility that your wages could decrease as companies attempt to cut cost during a recession. Keep your account balanced and make sure you have enough in your account to cover payments, so you don’t have to waste money on overdraft charges. We also offer an Overdraft Line of Credit that provides an immediate, flexible source of funds so you never overdraw on your account. Plus, you’ll only ever pay interest on what you actually borrow.
Credit Cards
In a recession, people are generally more cautious with their spending. This can lead to less use of credit cards and less revenue for card issuers. Credit card companies may respond to a recession by raising interest rates, decreasing credit limits, or charging more fees.
Having high-interest cards during a recession can be a drag on your budget. Consider opening a Classic or Platinum Visa card account with a reasonable rate and transfer your high-interest balances to the new card. Some cards offer rewards and low rates on balance transfers.