How to beat the current recession and thrive? 

We are in a recession. If you don't know that, then now you know. It's not a shame not knowing, but it is a shame when you hide away hoping it will go away. 

The recession will end but you need to survive until it turns up again, be it 5 to 10 years time. Here are a few survival tactics I use to avoid being slammed by the recession. 

1) Stop accumulating debt. The less debt you have the less effect the recession has on you directly. Do not buy a new car, new clothes, new house unless you have the ability to withstand over 5% increase in prime interest rate. You can do this by putting bigger deposit or legally manipulating you finance structure to suit you even if things get worse. 

2) Increase your income. Please note that I said income. Not just wages or salaries. Find all sources you can possibly earn money from and use them to make more money.  

3) Reduce your expenses to the bare minimum. That is pay your food, water, electricity, children school fees and cheap entertainment. Avoid eating out excessively. Check your purchasing habits. 

Every month you need to do a Complete income and expenses as you would do to qualify for a mortgage loan. Its very easy, get a clean page and draw a line down the middle. Write Expenses on one side and Income on the opposite side. Fill in all your incomes as salary, rental income (if you own rental property), adsense cheques, interest earned (for the month), dividends payed to you and many forms of income. 

In the expense column list all your expenses and amounts payed (no matter how small). Your food, water, electricity, fees, subscriptions, credit cards, mortgage, all insurance premiums and credit payments. (Use the bare minimum payment needed per month as the actual expense) 

This exercise is suppose to feel painful. Don't worry it did for me and many other people. You are not alone. When you are done total up your income, expenses and minus the expenses from your income. This will give you a reasonably accurate view of how your money flows in your life.  

If you have a negative balance (your income is less than your expenses) than you know that you depend on debt to run your life and you need to do some work. If your balance is positive then you are in the green. 

Take all the expenses and scrutinize all of them carefully. Can you close some subscriptions, do you really need all those new clothes every month? Can you slow down relying on your credit cards, pay one card off at a time?  

With the extra income plus your annual increase pay off the debt with the highest interest such as credit cards and clothes credit. After you finish the high interest debts then you have to close the accounts. 

The best way to cope with the amount of debt is to work towards a snowball effect. You pay extra money into the debt with the highest interest but the lowest total while paying the minimum monthly required for the other credit cards. Once the account is paid then close it shred the card and pay the extra into the next credit card or account. The second card or account will receive the minimum from the first account plus the interest plus the minimum it used to receive while you were busy with the first account. 

You repeat with the third account and so on. You could end up out of debt in less than 10 years and own your house. 

Remember you must seek out financial counselling and legal help before embarking on any serious financial endeavour. Millionaires and Billionaires do it, why shouldn't you?