Worried about stagnation?  8 Money Moves To Take Now To Protect Your Money

Worried about stagnation? 8 Money Moves To Take Now To Protect Your Money

What is happening

With the latest GDP report showing another consecutive quarterly decline in economic activity, the country is likely to be in a technical recession.

why does it matter

Previous recessions saw widespread layoffs, higher borrowing costs and a turbulent stock market.

What’s Next

Focus on what you can control, gather the facts and take steps to protect your money.

The state of the economy is a concern today. News of another quarterly drop in gross domestic product, or gross domestic product, indicates that the US economy is now likely to go through a technical recession. The National Bureau of Economic Research is making an official call about whether the country is in a recession (and it hasn’t yet).

At CNET Money, we are committed to supporting your financial health with accurate, timely, and honest advice that takes into account the pressing and challenging financial issues of our time. Whether we can call this a Recession Or not, to us, it seems like a game of semantics.

The bottom line is that for ordinary Americans, it has undoubtedly become difficult to make ends meet. At least one new poll from June showed that a majority of Americans – or 58% – think we are in a recession. Inflation continues to rise And it shows no signs of stopping, despite four interest rates hikes from the Federal Reserve. And with the recent interest rate hikes by the Fed and more to come, many are concerned that the Fed’s attempts to calm rising rates could push us into tougher financial times.

An increase in layoffs – another key indicator of the recession – is also being felt across the country as many companies – particularly in the tech sector – have layoffs announced in the past months. Layoffs.fyi, a website that tracks downsizing tech startups, reported nearly 37,000 layoffs in the second quarter, more than triple compared to the same period last year.

That’s why we launched the Recession Help Desk, a destination where you’ll get the latest and best advice and action steps to navigate these turbulent times.

To get started, we have a segment below on how to prepare for tough times ahead.

First, a quick look at the US economy

Since the Great Depression, the United States has gone through about a dozen economic downturns that lasted anywhere from a few months to more than a year. In some ways, there is Always slack in sightEconomies are cyclical, with ups and downs. We can’t predict what’s going to happen in advance, and sometimes we can’t even know what’s going on while we’re in the middle of it. Morgan Housell, author of The Psychology of Money, may have said it better when he said Tweet in April: “We are definitely heading into a recession. The only thing that is uncertain is the timing, location, duration, scale and political response.”

Trying to discover the details of the recession is a guessing game. Anyone who tells you differently is likely to try to sell you something. The best we can do now is rely on history to build context, and get more proactive about Money movements we can control Resist the urge to panic. This includes reviewing what happened in previous downturns and taking a close look at our financial goals to see what leverages to pull to stay on track.

Here are eight specific steps you can take Create more financial stability and resilience in a turbulent economy.

Read more: Bear Markets: Stock Market Expert Advice for Investors

1. Plan more, panic less

The bright side of the current recession forecast is that it is still only Forecasting. There is time to put together a plan without the real stresses and challenges that come with an economic slowdown. Over the next couple of months, review your financial plan and identify some worst-case scenarios when your adrenaline isn’t high.

Some questions to keep in mind: If you lose your job later this year or early 2023, what is your plan? How can you fortify your money now to bypass layoffs? (Keep reading for related tips.)

2. Accumulate your cash reserves

The key to getting out of a recession relatively unscathed is having cash in the bank. We learned that the steep unemployment rate of 10% during the Great Recession of 2009. On average, it took eight to nine months for those affected to land on their feet. Those lucky enough to have solid contingency accounts were able to keep paying for housing and buy time to figure out the next steps with less stress.

Consider retooling your budget to allocate more savings now to get closer to the recommended six to nine months for a rainy day. It may make sense to disconnect recurring subscriptions, but a better strategy that won’t feel disadvantaged might be to contact your billers (from utility companies to cable to car insurance) and ask for discounts and promotions. Speak specifically with customer retention departments to see what offers they can offer to prevent you from canceling your plans.

3. Find a second source of income

Web searches for “side business” have always been popular, but especially now, as many are looking to diversify their sources of income in the run-up to a possible recession. Just as it helps diversify investments, Diversify your sources of income It can reduce the income fluctuations that come with a job loss. For inspiration on easy, low-profile side chores you might be able to do from home, check out my story.

4. Resist impulsive investment moves

It’s hard not to be Worried about your wallet After all the recent red arrows in the stock market. If you have more than 10 or 15 years to retire, history proves it’s best to stick with market volatility. According to Fidelity, those who remained invested in target-date funds, which include mutual funds and ETFs typically associated with a retirement date, during the financial crisis from 2008 to 2009 had higher account balances by 2011 than those who reduced or discontinued their contributions.

If you haven’t yet signed up for automatic rebalancing, definitely look into this with your portfolio manager or online broker. This feature can ensure that your instruments remain properly weighted and aligned with your risk tolerance and investment objectives, even with market fluctuations.

5. Lock interest rates now

as policy makers Raising interest rates to reduce inflation levels, interest rates will increase. This is likely to portend bad news for anyone with an adjustable loan. It’s also a challenge for them Holds a balance on a credit card.

While federal student loan borrowers don’t have to worry about their rates going up, private loan holders Variable interest rate loans You may want to consider options for consolidation or refinancing through an existing lender or other banks, such as SoFi, that can combine the debt into a single fixed rate loan. This will prevent your monthly payments from unexpectedly increasing when the Federal Reserve raises interest rates again this year, as expected.

6. Protect your credit score

Borrowers may struggle to get credit in recessions, as interest rates jump and banks impose stricter lending rules. To qualify for the best loan terms and rates, Aim for a strong credit score In the seventies or higher. You can usually check your credit score for free with your current bank or lender, and you can also get Free weekly credit reports From each of the three major credit bureaus through the end of the year from AnnualCreditReport.com.

To improve your credit score, work towards Pay high balancesand review and dispute any errors that may be listed on your credit report or consider incorporating higher interest credit card debt into Low interest debt consolidation loan or 0% Introductory APR Balance Transfer Card.

7. Press to pause when buying a house

It’s already a file Competitive housing market With a few homes to go around. if Mortgage rates rise Adding more stress to your ability to buy a home on budget, consider renting for a little longer. If you’re also worried about your job security in the event of a possible recession, that’s all the more reason to stop. Renting isn’t cheap at the moment, but it can give you more flexibility and mobility. Without having to park your cash for a down payment and closing costs, renting can also provide you with more cash during a potentially difficult economy.

8. Take care of your valuables

The advice that arose from the period of high inflation in the late 1970s is still valid now: “If it ain’t broken, don’t fix it.”

with Ongoing supply chain issuesMany of us face price hikes and delays in acquiring new cars, tech products, furniture, household items, and even contact lenses. This includes spare parts as well. If the product comes with a free warranty, be sure to sign up. And if the insurance extension is a nominal fee, it may be worth it during a period of high prices.

For example, my car has been in the repair shop for more than three months, waiting for parts from abroad to arrive. So, in addition to making my monthly car payments, I have car rental fees that are increasing. If nothing else, I’d be heading into a potential slump as a more cautious driver.

Read more: Smaller packages, same prices: deflation is misleading

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