The Scouse Economist's Recession Survival Guide, pt. 1/4

In these times of economic woe, some of us might need a helping hand in order to keep our heads above the water, so to speak. For this very reason I, the Scouse Economist have come up with a set of 10 helpful tips that if followed properly might actually leave you better off after the recession has passed.

May I introduce, the recession survival guide…

One: Pay by cash, not by card

It is fairly well documented that people can often lose their heads whilst shopping with their ‘magical cards that bring them money’. Not that I imply that these people are idiots, for anybody can fall under the bank’s seductive spell.

Now, let’s not get in to the politics of the matter (I’m saving that for the extended version of this article). For the moment, let us explain the principle of this point.

When you have money in your hand, you can count it to the penny and you have only that much to spend. With a card, it is all too easy to overspend, going overdrawn, in to an expensive overdraft or fall foul to the ‘credit-card-crunch’.

Here is my advice. Every time you buy something, take the time to visit a cash machine and take enough money out. Each time you take money out, print off a balance slip and keep hold of it. These balance slips are a great way to keep an eye on how much you’re spending. You will soon notice if you’re spending too much.

This will keep you out of trouble with the bank, and will also put a stop to those impulse buys that we all feel guilty about later. Well… sometimes.

Two: Stay in the black

As was suggested before, running out of cash and going in to the red is really something that most people want to avoid, if at all possible. This is not always so, and almost always hard to achieve.

Here is my suggested method. Yes, it does involve that dreaded word… ‘Budget!’.

Each month spend a single night with all of your records, statements and bills, along with a calculator and do the following:

- Work out all of your income and costs for the coming month, to the best of your knowledge. (Bills and payment sonly. Don’t count food budget and other constant costs at this point). There will always be a nasty surprise to bite you, but fear not, this is dealt with

- Assuming that once you do this there is a positive number (if not, skip to the last point), halve that number. The idea is to put half of your disposable income towards your living costs, and the other half in to some kind of saving scheme, just in case. (This need not be half and half. In fact, it is likely that half of your disposable income is not a liveable sum. If so, it is fine to use more money on living costs. Just try to put something away.)

- If you find that your disposable income is actually a negative number, you have a serious cash flow problem. Either you are making too many payments that you cannot afford, or you’re boss is screwing you out of money. Either way, this is the only circumstance where I will suggest that a person goes to a ‘Debt Consolidation Firm’. Usually, I hate the things… you end up paying more than double what you originally owed, but if you are running further and further in to the red, this may be the only option for you… but please, do not take this decision lightly. Before signing anything, seek professional advice.