Want to survive the recession? Then follow financial expert Suze Orman’s advice: Create your own financial stimulus package. Here are her suggestions, courtesy of AOL Money:
- Live on half your income. Whether you’re a two-income family – or a one-paycheck person - deposit every other paycheck in a savings account. That way, you’ll learn to live on less – which will be critical if you or your partner gets laid off. It’s also a great way to start filling your emergency fund.
- Next, keep your cash. Before the recession, Orman advised people who were laid off to use their severance packages to pay off their credit card debt. Now she recommends paying just the minimum on your cards, until you’ve saved at least 8-months worth of living expenses in your emergency fund. After that, use any extra money to get all of your credit card balances down to zero, and after that, never charge more than you can pay in full every month.
- Make your home affordable. If your home loan is backed by Fannie Mae or Freddie Mac, listen up. The Homeowner Affordability and Stability Plan can help lower your mortgage payments. It can also help families on the brink of foreclosure keep their home, and reduce their monthly payments. The website is MakingHomeAffordable.gov.
- Take advantage of the federal stimulus package. If you’ve been laid off and you qualify for COBRA health coverage, the federal government may pay 65% of your premiums for nine months. If you become a first-time home buyer in 2009, you may also qualify for an $8,000 tax credit – which means, if you owe Uncle Sam $10,000, you’ll only pay $2,000. For more information, check out the website GovBenefits.gov.