Preparation is Key

What to do when the economy is on shaking ground

The economy isn’t doing great and that means one thing: Time to make some adjustments. Here are some tips for preparing for the downswing, so that when/if it happens, you’ll be on solid financial ground.

Build Your Emergency Fund

A down-trending economy could bring bad news for employment. That means you should stock up your emergency funds now. Even if you can only add a small amount more each month, that extra padding will serve you well should your job suddenly dry up.

Cut Expenses

As The New York Times suggests, it’s a good time to review your budget and cut back on expenses. This doesn’t have to be a permanent thing. You can do this until you feel comfortable with the level of your emergency fund.

Pay Down Credit Card Debt

Now is a good time to pay down debt, because interest rates on credit cards are closely tied to the Fed’s interest rates moves. That means they’re likely to go up, and you’ll be paying more for any balances that you carry. The average credit card interest rate is currently 16.8 percent, but that could go up by the end of the year. Don’t wait around. Pay down the highest interest rate card first, then move on to the next highest.

Keep Saving for the End

If you’re able, continue to save for retirement. Don’t forsake retirement savings for paying down debt or building your fund. Instead, do what you can to tackle all three at the same time.

Chris O'Shea

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