Recession Proof Your Finances

Are you worried about a recession? Many economists say we’re likely to have one in 2023. The Federal Reserve’s raising of interest rates to fight inflation is a recipe for slowing the economy. In other words — recession. Are you prepared for it? We’ll talk about it on Faith and Finance. 

• So far, the GDP is still in positive territory, although not by much, and the unemployment rate remains low. That’s a blessing. But higher interest rates will inevitably slow the economy, so it’s time to “recession proof” your finances. 
• The Mayday Budget helps you prioritize your spending during a financial hardship.
• Here’s how you can build one: 
• Step 1: check your credit score and get your credit reports. This will give you a base point and will allow you to accurately judge the effect of any late payments— if you’re forced to make any in the future. You can get a free credit report from each of the three bureaus, Experian, TransUnion and Equifax at AnnualCreditReport.com.
• With those reports in hand, you’ll be able to show creditors that you’ve made timely payments on your various accounts in the past. That could help you negotiate better terms if you find yourself temporarily out of work.
• Step 2: Familiarize yourself with the MayDay budget. It has only four categories. The first is food. You have to eat. But keep it simple and no eating out.
• The next Mayday budget category is housing. Make your mortgage or rent payment. Then comes utilities, and finally, transportation. So food, housing, utilities and transportation come first in the Mayday budget. With anything left over, you can pay other bills.
• Step 3: Look for other sources of help. Your unemployment benefits may run out … but other resources will probably be available.
• Check out non-profit organizations and local government agencies that may have assistance programs. You can call 2-1-1 to learn about services in your area or go online to 211.org.
• Step 4: Make a list of all your creditors and their contact information. Be ready to call them and explain in detail whatever financial situation you may be facing, and then pray you don’t have to use it. But if you do, it’s ready. If you can’t pay a bill, call your creditor before it comes due. Run toward your creditors, not away from them.
• When you call and speak to a representative, have your latest paystubs handy so you can show how your income has been reduced. Tell that person how much you have available to pay on the debt for the time being.
• Ask if you can temporarily stop payments or make partial ones. Let them know how long you expect to be in your current situation. You may not know for sure, but try to give a reasonable estimate of how long it will take for you to begin making full payments on time again.
• Make sure you get the person’s name and keep a record of what you talked about and any agreement you may have reached. Also, ask to have a copy of the agreement sent to you in writing. Creditors will usually do this anyway, but ask for it just to be sure, and hang on to that email or letter when it arrives.
• By the way, scam artists will use tough times like a recession to victimize folks who are already in dire financial circumstances, so don’t respond to emails or give out information to anyone who calls you claiming to represent one of your creditors. 
• Step 5: Get professional non-profit help for managing credit card debt. Contact our friends at Christian Credit Counselors if you’re starting to fall behind in payments or expect you’re about to. They have arrangements with many creditors to lower your interest rates. 
• You’ll make one payment that covers several creditors, making things much simpler. It’s not debt consolidation, it’s debt management that can help you pay off your creditors 80-percent faster. You can make arrangements to speak with a counselor at ChristianCreditCounselors.org.
• If you’re laid off and lose your health insurance, check out Christian Healthcare Ministries. They offer a medical cost sharing alternative to health insurance - almost always at a much lower cost.  You can find out how they do it at CHMinistries.org.
• Step 6: Save as much as possible. It’s for times like a recession that we always tell you to have 3 to 6 months living expenses in your emergency fund. There’s no better way to recession proof your finances, so start saving today.
• Step 7: Pray. Pray that God will provide wisdom for managing your finances in difficult times. James 1:5 assures us, “If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him.”
• So those are your steps to recession-proof your finances. Get all three of your credit reports free at AnnualCreditReport.com.

On this program, Rob also answers listener questions: 

• Should you use a debt consolidation firm? 
• Does it make sense for elderly farm owners to put their farm into an LLC? 
• Is it wise to invest $5,000 in I-bonds? 
• What steps should you take to improve your credit? 

RESOURCES MENTIONED:

• Christian Credit Counselors
• Treasurydirect.gov

Remember, you can call in to ask your questions most days at (800) 525-7000. Also, visit our website at FaithFi.com where you can join the FaithFi Community, and give as we expand our outreach. 

Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.