1. Cut your spending. Make this a priority. Weigh whether you really need that new flat-screen TV, and maybe going on a luxurious overseas vacation can wait one more year. Making sacrifices this year and living on a tighter budget will leave you much better off in the long run.
2. Reduce your debts. Pay a lump sum on your credit card, and reduce any loan repayments. Make sure that you are paying the lowest rate possible on any loans you have including student loans.
3. Slash your household bills. Make sure you have the cheapest deals for your gas and electricity. If you have a cell phone see if there are cheaper options available. Chances are if you have been under the same contract for more than two years there might be a better deal out there for you.
4. Put money away for a rainy day and make sure you have a cushion of cash savings. Try to have 6 months worth of total monthly expenses saved.
Normally, when a recession strikes, interest rates are cut. This can be good news for homeowners as it means the price of mortgages will fall.
There are some good mortgage rates available, but don’t take the risk if you cannot afford to. Taking a fix rate might mean that you miss out on a possible rate cut, but it does give you the peace of mind of knowing what your monthly mortgage payment will be.
5. If your budget gets really tight then there are some drastic options available for reducing your monthly repayments. You could move some of your loan to interest only for a short time. Or increase your mortgage term from 25 years, to 30 or 40. Don’t skip mortgage repayments.
6. Don’t change jobs. Companies make cutbacks when their profits get hit and staff is usually the first to be axed from the balance sheet. New employees can often be first in the firing line.