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If my media mates will that we must shove the R-word down Australian’s throats, prematurely, then my job has to be to help my fellow citizens survive this serious economic downturn, as well as the negativity that goes with recession-talk.

Let’s cut the panic stuff from the outset. The consensus of economists is that the recession, when it officially turns up, will be a “mild” one.

So, what does that mean? A harsh one came in the 1990s — the famous Keating “recession we had to have” — where unemployment dragged on for years topping out at 10.9%!

Safety first

The credible guesses on future unemployment range from 7-8% and that’s probably a pretty fair call. If Wall Street had bounced and business confidence had improved, I reckon the jobless rate would have gone to the 5 or 6% plus region.

Your first job is to ensure your job is safe. If you are vulnerable, then start putting your house in order.
GST your life

Businesses are looking at every cost line by line and households should do the same thing. List every expense and ask yourself the question: Can I cut down this expense? In the past, I have suggested GST’ing your life by imposing a 10% ‘tax’ on yourself. If you spend $30,000 a year and you slug yourself 10%, you find $3000.

Get the whole family on board because there’s nothing more likely to cause a fight than one person skimping and another splurging.

Make a few lifestyle changes
A related strategy might call on you to change who you are, but it’s for a good cause — your bank balance.

Do a complete budget with all of your income and costs. Ask yourself could there be another way to live your life and save? For example, if your take away food bills are high, start doing a lot more cooking at home.

If you go to the movies and the bill is high, then maybe a Foxtel subscription could actually save you money. Also think about doing cheap stuff like reading books and having picnics in parks by the harbour, a river or down at the beach.

These lifestyle changes not only save you money, it could save a relationship or even your life. (I know I am getting a bit deep but a change can be as good, if not better, than a holiday).

Look at job opportunities

Next, see if there are any part-time jobs out there. Lots of part-time jobs are done by backpackers and other less reliable types, who like to come and go. For example, a local hotelier might like a local who wants to do some permanent part-time work to get ahead. Put your name down in places where you would like to work part-time.

Find extra cash

Check out all of your loans and make sure they are at the best rate possible. Remember, you’re on the hunt for cash you have been ignoring. You need to become fanatical and professional in finding money inside and outside of your life.

It’s a good idea to seek professional help with your loans. Mortgage brokers could help you find the best loan but make sure they are trustworthy.

I would go to a couple of banks and a few brokers to see what is the best deal out there.

One word of warning: don’t get sucked in by the advertised rate of interest. You must ask for the comparison rate of interest, which adds in all other charges and fees that can come with a home loan.

Think about hiding the credit card until the job and recession threats have passed. Get a debit card and only spend what you have. By the way, use only your own bank’s ATM to save on the $2 slugs that have been introduced lately.

This might be a challenge to many people, but don’t be afraid to go into St Vincent de Paul and SALVO’s shops. Lots of people throw great stuff out because they have no room, they are going overseas or they might have kids that have grown up.

Look out for deductions

Also, look after your stuff. Many people fail to look after their car and end up with big repair bills and a very depreciated car. On the subject of cars, if things are really tight and your job looks shaky, it might be worthwhile examining whether you can live without a car. Your motor vehicle is an enormous drain on your hip pocket.

To be more positive, see if there are little, self-employed jobs you can do with your car, which not only might help with income, but could give some tax deductions.

Go to the tax office website — www.ato.gov.au — and see what deductions you are entitled to. If you have never had tax advice, maybe it’s time to invest in information that could reduce your tax bill. Some people have ignored legitimate tax deductions that can be back-claimed.

Act quickly

One last thing. If you lose your job, talk to your lender ASAP. Don’t let a bad situation get worse. Sometimes a lender can cut you some slack while you look for work, but if you turn up when the you know what is hitting the fans, it could be curtains for you, your credit rating and your home.

The preparation you do to prepare for tighter times will make you into a more professional money manager for when the economy picks up. And this will help you build wealth over the better years ahead.

Published on: Wednesday, March 11, 2009

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