Market Downturns are Inevitable
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Market Downturns are Inevitable
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Belt Tightening Tips

With the economy in the midst of a historic downturn and more than 22 million people out of work, a level of unemployment the United States has not witnessed since the Great Depression, it’s more important than ever for Americans to find ways to tighten their budgets, reduce excess spending and identify opportunities to do more with less. To help with that critical effort, we’ve rounded up tips from experts across the country covering everything from day-to-day personal finances, to housekeeping, investing, and even small business operations. Here are 50 tips to prepare yourself for a recession. (Wondering how to shop these days? See what Americans Are Really Shopping for During the Pandemic.)

1. Take Stock of Your Current Financial Situation
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1. Take Stock of Your Current Financial Situation

When it comes to prepping for a recession, the first step should be taking a detailed look at your current financial picture, says R.J. Weiss, a certified financial planner and founder of the personal finance site The Ways to Wealth. “Start by analyzing your income and expenses, as well as creating a personal balance sheet of your assets and liabilities,” explains Weiss. “From there, you'll be able to identify the strengths and weaknesses of your current financial situation, and then, clearly see what you might do to improve.”

2. Create an Emergency Version of Your Budget
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2. Create an Emergency Version of Your Budget

It’s a good idea to have an emergency version of your household budget already developed and ready to go in case you’re laid off, says Heather Albrecht, financial coach, and founder of Balance Financial Coaching. “This will help you ensure you do not need to make big decisions when you’re already under stress from losing your job,” explains Albrecht. “Plan how you will reduce your regular spending, what areas you will cut altogether, and where you can shuffle money around. Doing this with your partner (if applicable) will help you have less stress and be able to put more care into your mental health.”

3. Get Clear on Needs Versus Wants
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3. Get Clear on Needs Versus Wants

Sorting out your true needs versus the nice-to-have wants is another important element of developing an emergency version of your budget, says Albrecht of Balance Financial Coaching. “Get really granular on what you need. Reading some minimalism blogs or books can help with this idea,” says Albrecht. “My own journey toward a more minimalist, low consumer lifestyle has certainly helped prepare our family budget for hard times, and put our savings on hyperdrive during good times.”

Maintain a Six-Month Emergency Fund
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4. Start Building an Emergency Fund

Jeff Rose, a certified financial planner, founder of Good Financial Cents, says there are many things individuals can do right now to get control of their finances. Chief among his tips is to start building up an emergency fund if you’re able to. “Unexpected expenses can happen any time, but they’re more common and can hurt worse during a recession, especially if you lose your job,” says Rose. “Having some money set aside for these types of things can help put your mind at ease during an already stressful time.”

5. Transfer Debt to Zero-Interest Credit Cards
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5. Transfer Debt to Zero-Interest Credit Cards

If you have credit card debt, considering transferring your debt to a zero percent balance transfer card, says Rose of Good Financial Cents. “Also, you may want to consider refinancing your mortgage and see if you can get a lower interest rate,” Rose adds.

6. Spend Like You've Already Lost Your Job
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6. Spend Like You've Already Lost Your Job

Essentially, this means eliminating discretionary spending and even reducing your spending on essentials as much as possible, says Anna Barker, personal finance expert and founder of LogicalDollar. “There may be some difficult financial times ahead for you and your family, so it's best to start limiting your expenses now to get your finances ready, just in case. Sure, the thought of cutting Netflix while in lockdown at home may not be ideal. But there are plenty of free entertainment options out there that have the added bonus of helping to secure yourself financially.”

Related: 100 Top Money-Saving Tips for 2020

7. Lower Your Health Insurance Costs If You’re on a Subsidized Plan
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7. Lower Your Health Insurance Costs If You’re on a Subsidized Plan

Often people who obtain health insurance through one of the state healthcare marketplaces established under the Affordable Care Act receive a subsidy to help minimize the cost of monthly out-of-pocket payments for insurance coverage. The subsidies are based on household income. If that income has suddenly changed because you’ve lost a job or your salary has been reduced in some way, it may be a good time to call your state’s healthcare marketplace back and let them know about the income change, says Janice Lintz, a consumer education writer who has been quoted by Forbes, Yahoo Finance, and other publications. “See if you’re eligible for a subsidy if your financial circumstances changed from last year,” Lintz explains. “They can rerun your application with updated income estimates. You may find out that you are eligible for higher subsidies or Medicaid.”

8. Consider a Roth IRA
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8. Consider a Roth IRA

If you're contemplating stopping 401(k) contributions to help build your emergency fund, an alternative is to contribute to a Roth IRA, says Weiss of The Ways to Wealth. “Roth IRAs have very flexible withdrawal limits. For example, you can withdraw contributions at any time without paying taxes or a 10 percent penalty,” explains Weiss. “It's still important to invest up to your employer match in your 401(k), however, putting additional contributions inside of a Roth IRA gives you more flexibility.”

9. Take Courses to Align Your Skill-Set With a Recession-Proof Job
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9. Take Courses to Align Your Skill-Set With a Recession-Proof Job

No matter what happens to the economy, nurses, police officers, pharmacists, doctors, firefighters, and receptionists are almost always going to have work, says Freya Kuka, owner of the personal finance blog Collecting Cents. “Your best bet when it comes to a recession period is becoming an invaluable asset yourself,” suggests Kuka.

Related: 15 Industries That Would Benefit From a Recession

10. Establish a Side Hustle
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10. Establish a Side Hustle

Establishing a secondary source of income is always a good idea, but perhaps never more so than during a recession. “Consider getting yourself involved in a side hustle like freelancing, starting your own business or working as a coach,” says Kuka of Collecting Cents. “This extra source of income can serve you well if times get tough.”

Related: 22 Tips for a Successful Side Hustle

Stick to Your Investment Strategy
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11. Stick to Your Investment Strategy

There’s no doubt that it can be scary to read articles about the stock market crashing, but if your retirement is still decades away, the best thing you can do right now is nothing at all, says Barker, founder of Logical Dollar. “History has shown that those who sell when the market is going down and then try to buy back in when the market is recovering consistently end up worse off than those who simply keep their funds in the market and wait out the dip,” says Barker. “This means that you shouldn't be tempted to sell and you definitely shouldn't consider timing the market. Instead, hold on, continue investing in line with your usual strategy and remember: This too shall pass.”

12. Review Your Bank Statements
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12. Review Your Bank Statements

Now is the time to look through your bank statements and cut the fat, says Morgan Taylor of LetMeBank. “You aren’t giving these things up for ever, but right now you need to plan for a worst-case scenario, and eliminate any wasteful spending,” Taylor explains. “Think of it as a bucket of water. Your outgoing spending represents holes in the bucket, your incoming funds equate to water added. Plug as many leaks as you can.”

Relying on Only One Form of Communication
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13. Build Your Customer List Now

If you’re self-employed, work on expanding your customer list as much as possible before the recession hits. “If you have a solid base of regulars that you can contact, keeping your business going is a lot easier,” says Taylor of LetMeBank. “Fighting for new clients or customers is difficult in a recession as people tend to stick with what they know.”

14. Improve Your Credit Score While You Can
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14. Improve Your Credit Score While You Can

It’s a good idea to work on improving your credit score before a recession hits, so that when times of struggle arrive, you have the ability to apply for a new credit card, or to use a high-limit credit card to keep you afloat, says Mason Miranda, credit industry specialist for Credit Card Insider. “If you’re using a credit card to pay for necessities, ensure that you have or will soon have the ability to pay at least the minimum amount due, in addition to the required payments for your other debts,” says Miranda. “Damaged credit scores can make it much more difficult to borrow in the future.”

Related: 14 Ways to Improve a Bad Credit Score

15. Create an Annuity Service for Your Business
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15. Create an Annuity Service for Your Business

Business owner Deborah Sweeney, CEO of MyCorporation, says the best approach to making a business recession-proof is to create what she calls an annuity service. In other words, create “ongoing, regular services or products that also offer a great customer experience,” explains Sweeney, whose company helps entrepreneurs and small business owners to incorporate or form LLCs. “Our company has grown and thrived in each economy type. The reason for that is because we focus on awesome customer service and a recurring revenue stream that helps the businesses we support. We believe that when you provide great service and offer invaluable support to business owners, you're far more likely to survive a recession than when you're competing on price.”

16. Start Networking
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16. Start Networking

You know all those business cards in your desk? Think of genuine ways to reach out and connect to each of those people, says Kari Lorz, creator of Money for the Mamas. “Get your name and face back in front of people,” says Lorz. “Better yet, make sure they know your skillset (again, don't be sales, be real). You may be in position to help them, and they may be in a position to help you if you find yourself without a job.”

Related: 22 Things to Do Now to Land a Job in a Recession

17. Go to the Doctor Now While You’re Still Employed
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17. Go to the Doctor Now While You’re Still Employed

Take the time now to see your various health-care providers while you’re still covered by employer provided health insurance, says Lorz of Money for the Mamas. While you’re at it, get your prescriptions filled, too, she adds. “If you use a health-care flexible spending account (FSA), this is a good time to study up on how long it covers you after employment ends,” says Lorz.

18. Request Lower Interest Rates on Existing Credit Cards
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18. Request Lower Interest Rates on Existing Credit Cards

Call your credit card companies and ask them to decrease your interest rate, says Lorz of Money for the Mamas. “It’s relatively easy, (you just call them) and ask, sometimes they say yes and sometimes, no,” she explains. “It’s absolutely worth the five to 10 minutes of your time.”

19. Clear Clutter
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19. Clear Clutter

Start looking for ways to scale-back your family's clutter and sell your formerly loved clothing, handbags, accessories, and even consumer electronics or entertainment such as video games, and books, says Anna De Souza, consumer lifestyle and shopping expert for the e-commerce site Mercari. “Right now, with people unable to shop in stores and staying in, sales of all kinds of items on Mercari are actually skyrocketing, and it's a good way to make cash to pay bills or start saving for harder times ahead,” says De Souza.

Utilize Community Programs
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20. Develop a Habit of Secondhand Shopping

Rather than automatically shopping for new, full-price, items, consider searching thrift stores or consignment shops first. “It's easier than ever to find top-quality, almost new, or even new, items for sale at a much lower price from others than to pay full-price at a regular retailer right now,” says De Souza of Mercari.

Related: Buy These 24 Things Secondhand to Save Big

21. Download Coupon-Finding Browser Extensions
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21. Download Coupon-Finding Browser Extensions

Saving money while shopping online is made a whole lot easier when you install browser extensions that search for applicable coupons for you. Browser extensions from platforms like Rakuten, for instance, will find coupons and deals at more than 2,500 stores while you're shopping at the store online and then apply the coupons when you check-out. RetailMeNot offers a similar service. “These scan the web every time you're about to checkout when making an online purchase to find any available and applicable coupon codes,” says De Souza. “You can often get an easy 10 percent to 20 percent off or free shipping without doing a thing.”

Related: 22 Insider Hacks and Secrets for Shopping on Amazon

22. Reassess Vehicle Needs
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22. Reassess Vehicle Needs

In preparation for an economic downturn, it’s a good idea to re-examine the costs of some of your biggest household expenses, such as your vehicles, and consider downsizing. “Revisit your car or truck needs. If your payment is above 10 percent of your income, you may be overextended,” says Todd Christensen of MoneyFit.

23. Hold Off on Job Changes
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23. Hold Off on Job Changes

Sure, career progression and continually challenging yourself with new opportunities is important, but job hopping on the brink of a recession may not be the wisest idea. “Now is not the time to be changing jobs — the last ones hired are the first ones fired during a recession,” says Christensen of MoneyFit.

24. Redirect Savings Efforts
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24. Redirect Savings Efforts

Continuing to squirrel away money for non-essential goals should cease to be a top priority when a recession is looming. “Suspend your savings for long-term goals such as vacations and large, non-critical purchases and redirect those savings to your emergency fund,” says Christensen.

25. Get the Whole Team or Family on Board
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25. Get the Whole Team or Family on Board

Any type of budget change requires buy-in from your team of employees or family members to succeed, otherwise, not everyone will be motivated to learn the new process right away, says Jonathan Slain, a national recession expert and author of "Rock the Recession." “To convince employees to participate in your initiative, you need to make it clear why you're doing what you're doing,” says Slain.

26. Start Shopping for Deals But Don't Pull the Trigger
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26. Start Shopping for Deals But Don't Pull the Trigger

If you have any purchases that you’ve planned and saved for, it would be wise to wait a few weeks before taking any action, says Adam Sanders, who spent a decade working in finance for large financial software companies and now runs the company Successful Release. “As the economy slows down more and more businesses will be either lowering their prices of having major sales. Waiting a little now could net you big savings in the long-run,” says Sanders.

Call a Hotel and Book Directly
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27. Negotiate Everything

As the economy goes downward your buying power increases, says Sanders. “The worse things become the more likely you are to be able to negotiate discounts for just about anything,” says Sanders. “Don't be afraid to ask for discounts or additional services for most of your regular expenses and you'll be surprised by how many are willing to work with you. Businesses don't hesitate to raise their prices on you so you shouldn't be hesitant to ask for a discount when you can.”

28. Become a DIY Pro
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28. Become a DIY Pro

When money’s tight, it’s time to stop paying people to do things you can do yourself. “Try cooking instead of eating out, doing laundry instead of dry cleaning, cleaning your house or apartment instead of hiring service and washing your own car,” says Sylvia Edna, a personal finance expert and creator of Savvy Money Making.

29. Seek Out Assistance Programs
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29. Seek Out Assistance Programs

If you’re having trouble making ends meet, there may be assistance available in the form of financial support, meal provisions and other types of programs. “Look for financial assistance at the government and non-profit levels,” says Edna of Savvy Money Making. “There’s a lot of help for people with no income or low income.”

30. Visualize Your Future
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30. Visualize Your Future

When you find yourself amid challenging financial times, it can boost your mental health and your long-term success to think beyond the immediate, day-to-day struggle, says Edna. “Take time off to reflect. Reflect on future goals and actions, don't just focus on surviving a layoff or the immediate situation,” says Edna.

31. Identify Ways for Your Business to Cut Corners Without Impacting Quality
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31. Identify Ways for Your Business to Cut Corners Without Impacting Quality

A tip aimed at business owners, Andrea Travillian, a business coach and consultant with Aspirify, suggests reviewing expenses carefully and finding places to trim spending. “Try to make sure it does not impact the operation of your business,” explains Travillian. “It’s a great time to find new tools that have a lower cost or are more beneficial. For example, I recently switched my online meeting software to a newer company because it integrated streaming and scheduling and payment processing. I eliminated three separate services with one.”

32. Review Your Business Offerings
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32. Review Your Business Offerings

You’ll want to do this a couple of different ways, says Travillian of Aspirify. “First, will your services be needed during the recession? Some things like luxury goods are in less demand. But other items or services may be in more demand. Determine where you are so that you can either create new services, or prepare for an uptick in demand.” Second, says Travillian, determine if there’s a similar offering that you can create at a lower price. “If you normally offer one-on-one work with clients, can you move to a group? Can you create a course or write a book? Think about how you can use what you do now, in a lower cost format,” says Travillian.

33. Establish a Line of Credit for Your Business
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33. Establish a Line of Credit for Your Business

Business owners should be proactive and set-up a business line of credit to help bridge any gaps that may arise during a recession or emergency, says Jared Weitz, CEO and founder United Capital Source. “Business owners can also overfund their life insurance policies and then borrow against the fund in the event they need additional capital,” says Weitz.

34. Cash Is King
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34. Cash Is King

When a recession hits, it’s a good idea for businesses to have enough cash on hand to make ends meet or invest in new opportunities that wouldn’t otherwise be available, says Weitz of United Capital Source. “This is what will turn a recession from a struggle into a business opportunity,” says Weitz.

35. Start a Garden
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35. Start a Garden

Even if all you have is a windowsill in your apartment, you can still grow a few herbs or vegetables to save money at the grocery store. Start by growing some herbs in a pot, says Bri Bell, a registered dietitian, personal finance expert and creator of Frugal Minimalist Kitchen. “Green onions are easy to regrow from the root cuttings even in a glass of water,” she says.

Related: 22 Tips to Keep Gardening Dirt Cheap

36. Try New Recipes
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36. Try New Recipes

Cooking from home is one of the best ways to save money, says Bell of Frugal Minimalist Kitchen. “Whether you’re brand new to cooking, or just need a break from your usual set of meals, trying a new recipe will help you learn new skills and prevent you from blowing your budget on takeout.”

Related: 14 Simple Kitchen Hacks That Save Food and Money

37. Sign Up for Grocery Savings Apps
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37. Sign Up for Grocery Savings Apps

Every dollar you save on your grocery bill is a dollar you can add to your emergency savings account, says Bell. Some of the most popular grocery savings apps include Ibotta, Shopkick, and Fetch Rewards.

38. Refinance Your Home
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38. Refinance Your Home

Look at interest rates on home mortgages and determine if it would be worthwhile to refinance, ideally obtaining a lower monthly mortgage bill, says Lil Roberts, CEO and founder of Xendoo, a fintech company. The money you’d no longer be spending on a mortgage payment can be put into emergency savings or used to cover other bills.

Related: Refinancing Your Home: Should You or Shouldn't You?

Raise the Deductible
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39. Shop Around for New Insurance

Now is a good time to re-evaluate all of your bills including your monthly insurance bills, says Steve Sexton, financial consultant and CEO of Sexton Advisory Group. “This is an excellent time to shop around for auto insurance and homeowner insurance rates, which could potentially reduce your expenses in the long run,” says Sexton.

40. Continue Learning, Increase Your Skills and Become as Marketable as Possible
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40. Continue Learning, Increase Your Skills and Become as Marketable as Possible

As a result of the COVID-19 pandemic, many online learning services are providing access to their courses at no cost, which presents a rare opportunity, says attorney Leslie Tayne of Tayne Law Group, who specializes in debt and personal finance. “Visit Class Central to browse courses from humanities to graphic design to data science, all for free from top universities,” says Tayne.

Related: 37 Things to Do to Before Lockdown Ends

41. Be Proactive in Contacting Lenders When Trouble Arises
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41. Be Proactive in Contacting Lenders When Trouble Arises

If you can no longer make regular payments on your loans and other debt accounts, reach out to your lenders, says Bob Castaneda, program director for Walden University’s M.S. in Finance program. “Ask them for assistance if you’re facing financial hardship,” says Castaneda.

42. Apply for Credit Before You Need It
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42. Apply for Credit Before You Need It

If you still have a job and good credit, go ahead and apply for a zero-percent APR credit card now, especially one with no annual fee, says Tracy Odell, vice president of content for FinanceBuzz. “You've then got 12-plus months of zero percent interest to help you get through any lean months or unexpected expenses,” says Odell.

43. Opt for Liquid Investments
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43. Opt for Liquid Investments

If you're worried about losing your job or having your income reduced in the coming months, consider temporarily hitting the pause button on adding more money to long-term, non-liquid investments such as 401(k) or 529 plans. “Instead put the money that you would have invested into a high-yield savings account where you can easily access it, without penalty, in case you need it in the next year,” says Odell of FinanceBuzz. “If you don't end up tapping into that extra savings, you can still invest the money you've saved in the future when you feel more secure financially.”

44. Don't Take on New Debt
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44. Don't Take on New Debt

If at all possible, try to avoid taking on new discretionary debt, such as a new auto loan, says Trish Tetreault, financial analyst for Fit Small Business. “While there are circumstances that may necessitate taking out a loan to cover an emergency need; in general, you should avoid making purchases that require financing when you are trying to ready yourself for a recession. Now may not be the time to finance a new living room set,” says Tetreault.

45. Downsize
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45. Downsize

One of the major ways to reduce your monthly recurring expenses is to downsize your housing arrangements, says Timothy Wiedman, a retired associate professor of management and human resources at Doane University. “Downsizing could mean selling a fairly large house and buying a somewhat smaller condo that's big enough for entertaining friends and hosting overnight guests,” says Wiedman. “Or alternatively, folks might completely drop out of the ownership game and move into a large modern apartment.”

Related: 17 Mistakes to Avoid When Downsizing Your Home

46. Redo Your Resume
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46. Redo Your Resume

Be prepared for a potential layoff by getting out your old resume, finding a better online resume template, and getting to work making your work history, education, and training shine, says Lorz of Money for the Mamas. At the same time, if some of your skills or certifications are outdated, see if your current company will assist you with brushing up on those skills, potentially helping to fund continuing education or training.

47. Actively Pay Down Debt Instead of Further Investing
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47. Actively Pay Down Debt Instead of Further Investing

With the stock market rocketing up and down and a strong possibility of a further dip, it might be a good idea to redirect your money away from continued investing if you’re carrying substantial debt and instead focus on eliminating or paying down that debt, says Sanders of Successful Release. “With this strategy, you’re achieving a guaranteed return” in the form of reduced or eliminated interest payments on the debt, says Sanders.

48. Regularly Review New Government Options for Help
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48. Regularly Review New Government Options for Help

Particularly in light of the current emergency the country is going through, new assistance options are emerging regularly, says Travillian of Aspirify. Business owners should regularly invest time in staying abreast of the programs available. “I would advise business owners [to] spend some time reviewing all of the new government options for help,” suggests Travillian. “I personally have been using the U.S. Chamber of Commerce site for information. They’re doing a great job on summarizing everything.”

49. Map Out and Protect Your Income Sources
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49. Map Out and Protect Your Income Sources

Spencer Barclay, founder and CEO of Savology, suggests clearly identifying and then working to protect your income streams. This effort should ideally include working hard to demonstrate your worth to your employer to help prevent being laid off in the event the company needs to cut costs.

50. Stay Positive
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50. Stay Positive

How successfully you manage your money, your household affairs, and many other parts of your life begins with the decisions you make, says Barclay of Savology. “For this reason alone, staying positive is one of the best things you can do to make sure you survive and thrive during even the most challenging times,” adds Barclay.