(when you have high debt and low income)
There are many creative ways to improve your mindset regarding an economic recession, but I will only go over nine; don’t panic, see what you can sell, lower debt, start a small business, increase income with another job, start a hobby, learn a new skill, cut down on subscriptions, and build a budget. I have used or am using each of these items daily to overcome the stress of the volatile economic environment. My husband owns a business that is highly dependent on the economy, and I know too well the stress of managing the family finances when there are so many unknowns. Below are a few creative things that work for us in overcoming the panic of the unknown.
Step 1: Do not Panic- take a deep breath:
I do not know about you, but when panicking, everything seemed complicated and impossible, and there seemed to be no solution to the problem. When we hear the word “recession,” the first thing people think of is I will lose everything, so I might as well give up. However, before the fight or flight mode kicks in, take a breath. Calm yourself down and start to think about it logically. What can I logically do to improve my situation? Everyone is affected by the economy in one way or another. As a full-time corporate worker, mom, and wife, I feel stressed about making ends meet when the price of eggs and milk has skyrocketed due to inflation and now the “new” bird flu. However, panicking or giving up is not the way out. Take a deep breath and start looking at creative ways to save and support your family.
Both Forbes and Investopedia mention that there are better ways to manage the recession blues than stress, even if you are in a place of high debt and low income. Both Forbes and Investopedia mention that you should not panic; it’s part of the economic cycle. How about creatively tackling the volatile economy and boosting your financial standing? However, the key is don’t panic.
“As stressful as the thought of a recession is, you mustn’t panic. This is just part of the economic cycle.” (Forbes,2022)
“There’s no need to panic in response to an economic slowdown (…). Even amid an economic downturn, you can take many positive steps to improve your situation and recession-proof your life.” (Investopedia, 2022)
Step 2: Look around your house and see what you can sell:
This could be your story or not, but I know I have items that could have a new home. The garage, cabinets, and bedrooms overflow with stuff that is no longer needed or used. If you think about it, how much do you use that extra blender or old phone that, at this point, is just in the back of the cupboard, taking up space? Why not sell it and get that desperately needed extra cash? Investopedia mentions that it’s never a bad idea to have another source of additional income, such as selling items on eBay. So many apps now offer the option to resale used things like Offer Up, Facebook Marketplace, and even Amazon.
“Even if you have a great full-time job, it’s not a bad idea to have a source of extra income on the side, whether it’s some consulting work or selling collectibles on eBay. With job security so nonexistent, more jobs mean more job security. Diversifying your income streams is at least as important as diversifying your investments.” (Investopedia, 2022)
Step 3: Consolidation debt with a low-interest loan or pay down high-interest credit cards first:
Another way is to investigate debt consolidation. Such as looking into what low-interest loan you can get or paying off those small credit card balances so you can have fewer bills and reinvest that money into savings, investing, or paying off other debt. However, as Dena Landon from Bankrate.com mentions shuffling debt around might not be the wisest move. However, take advantage of a 0% APR introductory promotion or a personal loan with a fixed rate. You can save some money on the regular interest rate to reinvest into lowering other debt. However, even though this is an excellent idea regarding a creative way to manage debt, it might not be the wisest course of action if it will not help lower your debt eventually.
“However, you must stop piling on new debt when trying to pay down debt. Don’t open new credit cards or apply for loans unless you have strategic reasons and freeze all unnecessary spending.” (Landon, 2022)
Step 4: Start a small side business or a “side hustle”:
I am sure quite a bit of you have seen the “side hustle” videos on ticktock, Instagram reels, and others. Though some of them might be fraudulent, there are some natural options to investigate. Look into opportunities that can give you that extra cash flow. It’s true that having one source of income no longer works in our society. Therefore, when there is job uncertainty, it puts significant stress on the family. Getting creative with some side businesses or other sources of income will help elevate some of that stress.
See the list below for “side hustle” examples:
- Writing
- YouTube
- Ecommerce
- Dropshipping
Small businesses ideas could also include:
- Arts & crafts
- Software sales
- Fashion and makeup
Step 5: Investigate another job or income stream:
This is like the items listed in step 4, but this is more like a part-time job like driving for Uber or other jobs in your industry.
“One of the riskiest things you can do during a recession is to rely on one source of income if your job isn’t in a recession-proof industry. This is your opportunity to try to apply for a side hustle or to diversify your income so that you have a few sources to rely on. “(Forbes, 2022)
Step 6: Start a hobby:
Yes, this might have extra costs because it requires more money to get off the ground, but you can investigate if you have options that will not require breaking the bank but can still help you feel happier and potentially turn into another source of side income. You never know how that cake, painting, or knitting hobby could take off if you do not try it.
Step 7: Learn a new skill:
What about putting on your research hat, getting out there, and learning a new skill? There are so many videos or online courses (look for free ones, of course) that could give you the push you need to learn something new, get excited about a new skill, update your resume, get that job, pursue that degree, and make the correct change for you and your family.
“This could be the perfect opportunity to work on learning a new skill or trying to switch careers. They say that the more you know, the more you earn. You could use this economic downtime to focus on a new skill that could help you increase your income-earning potential.” (Forbes, 2022)
Step 8: Cut down on subscriptions or recurring payments:
Another way to help increase financial freedom and prepare yourself better for the higher cost of living in a recession is to remove those unneeded regular bills such as subscriptions. Do you genuinely need that $10-dollar monthly subscription, or can you put that into something else and pay down that debt or save that money to help prepare you for the more challenging times? There is a tool with my bank that shows your recurring bills and can help you evaluate whether you need it or if you should cancel the subscription.
“Howard Dvorkin of Debt.com recommends looking at recurring charges such as unused gym memberships or subscriptions.”(Gravier, 2022)
Step 9: Build a budget and follow it:
Many financial advisors recommend having a budget. Many people out there use budgets and find excellent value in them. However, I am addressing the ones that put it as a new year’s resolution and then forget about it entirely or get sidetracked. But it would be best if you remembered that having a budget is one of the best ways to get out of debt. Hey, I will not say I have it all figured out, and I know how to do this right. Ask my husband. He will tell you! I am that Amazon & Target addict like the next girl, but I know it works if you stick with it. It is getting that more attractive colored budget planner (I am looking at you, girl – I feel you 😊), or it could be paying for some envelopes, splitting your income into categories, and paying for everything with cash. Click here for a great option that Amazon offers and that I am currently using. Whatever it takes to help you stay the course.
“Determine how much cash to set aside monthly for variable expenses that cannot be cut out, like groceries, and then move the remaining money for paying off debt. Put a line item in your budget for debt payments, stick to it and increase it whenever possible. You’ll need to free up cash in your spending plan to pay extra on your monthly debts and eliminate the balances faster.”(Landon, 2022)
If you are interested in learning more about budgeting check out this post here.
In conclusion,
Though this is just a small list of ways to overcome the recession blues, they are still great ways to help everyone get on the right track. What other creative ways can you think of to help improve your standing in an economic recession? Please comment below! I would love to hear your opinion.
Sources:
Movement, Q. Ai-Powering Personal Wealth. “How to Survive a Recession (Without Burning Through Savings and Selling off Investments).” Forbes, September 18, 2022, www.forbes.com/sites/qai/2022/09/18/how-to-survive-a-recession-without-burning-through-savings-and-selling-off-investments/?sh=5e8b913d2a15.
“5 Things You Shouldn’t Do During a Recession.” Investopedia, November 15, 2022, www.investopedia.com/articles/pf/09/avoid-five-recession-risks.asp.
7 Ways to Recession-Proof Your Life.” Investopedia, June 24, 2022, www.investopedia.com/articles/pf/08/recession-proof-your-life.asp.
Landon, Dena. “How to Get Out of Debt With a Low Income.” Bankrate, December 15, 2022, www.bankrate.com/personal-finance/debt/get-out-of-debt-on-low-income.
“How to Survive a Recession (Without Burning Through Savings and Selling off Investments).” Forbes, September 18, 2022, www.forbes.com/sites/qai/2022/09/18/how-to-survive-a-recession-without-burning-through-savings-and-selling-off-investments/?sh=5e8b913d2a15.
Gravier, Elizabeth. “6 Money Moves to Make When You’re Worried About a Recession.” CNBC, December 28, 2022, www.cnbc.com/select/financial-steps-to-take-worried-about-recession.
“How to Get Out of Debt With a Low Income.” Bankrate, December 15, 2022, www.bankrate.com/personal-finance/debt/get-out-of-debt-on-low-income.