- Credit Crunch: How to Survive the Recession
- 15 Real Ways to Conserve (and save money!)
- 20 Ways to Live On Almost Nothing
- Putting Old Clothes To New Use
- Ways to Live On Almost Nothing - 2
- Ways to Live On Almost Nothing - 3
- It's Better Than Cheap... It's Free!
- Ways to Live On Almost Nothing - 4
- Craig's List: Great Resource or Scary Place?
- Vacationing on a Shoestring Budget
Credit Crunch: How to Survive the Recession
September 10th, 2007
The news is bad. The “housing bubble” has burst, job growth has become job loss, and the cost of credit is going nowhere but through the roof. It looks like the ’shoestring’ some of us have been living on for awhile now just got a little more frayed.
While there is lots of moaning and groaning about how bad things are getting out in the real world of trying to make do, there’s not a whole lot of good advice about how the middle class can hope to survive the crunch. I’ve surfed around a bit and found a few pages offering real help and analysis, and have linked those at the bottom of this entry.
First and foremost, it’s going to be important for middle class homeowners to hold on to their property through the duration of the coming recession. Though easy credit in the recent past has saddled many homeowners with second mortgages, the interest rates have been at record lows for those with pretty good credit ratings. Many homeowners used that money to pay down other debts (cars, credit cards, other high interest consumer loans, etc.) rather than to add physical value to their homes (new roofing, siding, windows, etc.), so now is not the time to try and sell.
So the best advice is to hang on - rearrange your family’s spending habits and learn to do without a lot of the consumerist ‘extras’ you may have become used to buying on a regular basis. In other words, people need to change their habits as well as their expectations. And perhaps in the process discover that life really isn’t just a game of ’stuff’ collecting… that happiness doesn’t come with a hefty price tag.
If you’ve paid down other debt with a second mortgage, you’re in good shape if you didn’t get one of those adjustable rate scams. The 6-8% interest rate on mortgages is not only a tax deduction for those who itemize, it’s one of the cheapest forms of credit overall. Paying off that car is always a good idea, as auto loans are ridiculously expensive, and gas prices aren’t going to be going down any time soon - it costs us more and more just to get to and from work these days. Credit cards are also expensive, and about to get more expensive as companies make use of the contract fine print to raise the rates to whatever they like, and card holders have nothing to say about it.
Best advice on that is to cut up those cards now and make up your mind to either pay cash for purchases or do without. In this effort, the adventure of Thrifting for clothes and other household items can become a fun pastime for couples and families without breaking the budget. Should you find yourself in sudden need of a major appliance, there is a whole world of second-hand recycling out there that might surprise the average American consumer used to always buying things brand new and on credit.
We’ve probably purchased a total of maybe 4 or 5 major appliances new in the entire course of our 38-year marriage. Mostly long ago, when we were relatively ‘rich’ by middle class standards. Usually when the washing machine or dryer or refrigerator or hot water heater gives up its last gasp, we go looking in the local “SuperShopper” style newsprints prevalent in most good-sized cities and towns.
One of the consequences of our modern ‘mobile’ society and burgeoning divorce rates is that there is always someone selling nearly new furniture and appliances at a small fraction of their original price. I’ve bought fine matched washer-dryer duos for less than $200, working refrigerators for less than $100, and a practically new water heater for $25 cash. Given that such appliances can cost well over a thousand dollars new - which requires an extension of credit and at least a doubling of actual price due to interest rates in usury range - what’s wrong with “Brand New Used?”
Capitalism has its charms, as does consumerism. But mostly for the wealthy, and the wealthy get a seat at the law and policy making table that the rest of us don’t get. The “trickle-down” does occur, however different that really works from how past Reaganites described it when gifting themselves and their wealthy friends with big tax cuts the rest of us never saw.
One of the best things about new ’stuff’ is that it costs way too much, loses much of its actual value the moment it’s purchased, yet is manufactured to last a reasonable length of time. This is true of automobiles and trucks, furniture, and major and minor appliances. I bought that nice nearly-new avacado washer-dryer set for $150 when a rich person decided they wanted gold instead. They got what they wanted - and could easily afford, I got what I needed for a heck of a good price.
Recycling of durable consumer goods is a valuable form of recycling, and certainly nothing to be ashamed of. If during this coming credit crunch a family can manage to keep their home and put food on the table, they will come out the other side of the cycle with their real assets intact. And may have learned along the way that thrifting and recycling are every bit as much fun as conspicuous consumerism. Maybe more fun! I have friends who claim bragging rights on their recycling or thrifting “find of the month,” and who are noted for their skill in refinishing bargains or turning someone else’s junk into the best gifts and decorations anyone has ever seen.
The next few years are going to be difficult for a lot of people, and many are going to lose everything they have. Don’t let it be you!
First-rate thinking on second-hand goods
MSNBC: Voodoo debt and the coming recession
Coming: recession, stagflation, trade wars and oil shock
Advice for recession-scarred job seekers
15 Responses to “Credit Crunch: How to Survive the Recession”
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[...] posted an outline of how to save a bundle on home appliances, transportation, health maintenance, clothing and incidentals, and exploiting alternative means of [...]
Great article!
I also recommend buying some gold & silver (both physical & through exchange traded funds), since inflation is killing the value of our savings everyday.
If you’re interested in learning more, check out http://www.surviverecession.com
This article’s content is good even if we are not in the midst of a recession. There is such a thing as overabundance–it translates to waste. I, a mother of 5, am trying to cut down on the waste. The recession may be a blessing in disguise. Things we would normally toss aside as garbage we may find a way to extend the life of.
Thanks for sharing.
[...] Credit Crunch: How to Survive the Recession 15 Real Ways to Conserve (and save money!) Living On Less: The Alternative Economies Putting Old Clothes to New Use Thrifting: It’s an Art Form! Craig’s List: Great Resource or Scary Place? The Payoff: Thrifting and Re-Selling It’s Better Than Cheap… It’s Free! [...]
I like your article until you bash wealthy people.
Not all government officials are rich and many frugal people are. I coupon, rebate etc and dont have to its a choice, fun hobby, smart and teaches good life choices and values for our children regardless of our high income. Vent aside I did enjoy most of the article thank you. It was insightful along with ticking me off a bit
[...] Ways to Live On Almost Nothing15 Real Ways to Conserve (and save money!)Credit Crunch: How to Survive the RecessionPutting Old Clothes To New UseWays to Live On Almost Nothing - 2Ways to Live On Almost Nothing - [...]
Great advice overall. I also recommend “investing” in things like energy efficient appliances and weatherproofing one’s house to help protect from rising energy costs.
Andrea
Just a thought, what do you think of borrowing money from 401K to pay off all your debt
Hello dear,
your articulated guide is very well thought, and as well very helpful, it is excellent and profecient as i have also read on http://financialfitnez.blogspot.com and am very happy reading them.
thanks dear
I enjoyed reading this article. Also the comments, the only people that would get “ticked off” after reading this article are theone that make enough money to get what ever they want when ever they want. I found very reassuring that other people have to buy used things to make ends meet. I shop at Saver’s (kind of like a good will) and i get comments all the time about my decor. When you read the paper or go to thrift shops it is fun becuase you feel like you are on a tresure hunt. Just dont forget have fun in life and ONLY buy what you NEED.
My mom taught me to ask my self ” Do i need it or do i want it” after i pick up anything at a store. if i want it i should put it back down and next time i am at that store buy it. You are less likely to impluse but then. if you need it ask your self “can it wait till next time” This works for me and 90% of the time i dont go abck and buy the items that i set down.
If you want to be a winner of the Recession, than you should check us out.
Btw: Our “How to survive the economic recession” ebook is on sale! 5$ only
http://careout.net/product/3
I found a fantastic 17-step guide for surviving the depression…made for individuals, investors and small business…
I’ve saved thousands so far, just by following a couple steps in the guide:
http://www.planbeconomics.com/profit-and-win
I found this great e-book on how to survive a recession. Highly recommend, it helped me put money back into my bank account!!!!
Great that you are doing this. I’ve started a Facebook group called SURVIVE RECESSION http://www.facebook.com/group.php?gid=56461425777 which might interest you. Your ideas, links and comments are very welcome.
Nice tips to survice the recession. Thanx.