Equifax Pays $65K To The State Of Indiana For Violating Security Freeze Law
How Will The Recession, The Mortgage Mess, and The Financial Crisis Affect Identity Theft?

9 Good Habits For Consumers To Survive A Deep Recession

This blog is about empowering consumers. Since the economy and the recession are clearly on everyone's minds, I'd like to deviate slightly from the usual ID-theft and data breach content to discuss how to survive a deep economic recession.

I also wanted to address this topic since this is the first recession for younger adults; you were a kid or teenager during the last recession and you probably didn't care or didn't notice. Plus, the news media delivers several doses daily about the economy, how bad it is, people who are losing their jobs, and companies that are closing or laying off workers. It can all seem very scary.

There's a good post at the Consumerist blog about 9 good habits to survive a deep recession. Some of the good habits:

  1. Keep a cool head
  2. Learn to dislike debt and pay it off
  3. Know where your money is going
  4. Eliminate waste
  5. Buy smart
  6. Buy used

You can read the rest of the list at the Consumerist blog. The only addition I would make to the list is: continue to practice good data security habits. Company data breaches will continue through the recession. Fraudsters and identity thieves aren't going on vacation just because there's a recession. Now is not the time to get lazy about protecting your sensitive personal data. How consumers protect their sensitive personal data, and how consumers safely use credit and debit cards should not change.

I always feel more secure during a recession when I've put my personal finances in order before the recession. The fact is, recessions happen. After the 1973 oil crisis, the U.S. has had recessions in 1981-82, 1990-91, 2001, and now. So, it seems wise to plan accordingly.

Having things in order means several things. When times are good, I live well within my means and save at least 10% of my pay, besides saving for retirement. We've all heard the saying: save for a rainy day. Well, the rainy day is here (e.g., recession, layoffs, reduced access to credit by consumers, home foreclosures, personal bankruptcies up, etc.).

How much to save? Common wisdom is at least 6 months of after-tax pay. I realize this is difficult for many people, but it is a good goal to have. During my work career, I have lived through several recessions and three company layoff events. I believe that my work experience is not unique. So, it seems wise for consumers to plan accordingly.

I consider myself a smart shopper. I research larger purchases and don't buy on impulse. Buying on impulse creates wasteful spending. My habit: don't buy stuff just because the retail store or television ad says the item is on sale. Buy stuff when you actually need it -- when it's worn out.

A few years ago, I paid off all of my debt, including credit cards. So as banks and credit-card issuers have tightened access to credit and reduced consumers' credit card limits, I haven't experienced any of this pain.

My wife and I share a car since I use mass transit to commute to and from work. And, we bought our car used. Why? It was cheaper and we didn't want monthly car payments. Sure, I'd like a shiny new car just like everyone else, but I'd rather spend my hard-earned money elsewhere. Plus, I remember the oil crisis of 1973 and the long lines at gas stations. So, the $4.00 per gallon prices we all paid this summer was not a surprise for me. And, it shouldn't have been a surprise for anyone (including the auto companies) who has paid attention to the news during the last decade.

To me, a new car is a questionable purchase. Why? First, new car prices are high. Second, the price of gas is largely unpredictable. Who wants to buy something if you don't know how much it'll cost to operate it? Third, my guess is that the price of gas has to go up; and drive up all costs associated with maintaining an auto.

Fourth, most of the USA hasn't adequately maintained our infrastructure: bridges, roads, tunnels, dams, power grid, and waterways. (I encourage all voters to read the ASCE Infrastructure Report Card, and then tell your elected officials that you demand better maintenance.) To me, it seems crazy to drive a $40,000 car through pothole-infested roads and crumbling bridges or tunnels.

Fifth, I like to walk since there is clear proof of the health benefits of walking. We made the decision to live in a city with access to a good mass-transit system.

Sixth, I prefer an all-electric car to reduce our dependence on fossil fuels. You may remember that General Motors produced an all-electric car in California in the 1990's. Through politics, selfishness, and reliance on the oil industry, GM destroyed its electric car and the supporting charging system, while EV-1 drivers begged GM not to. So, it's hard for me to have sympathy today for an auto bailout when GM had an all-electric car, had a huge lead on its competition, and then blew it with some bone-headed and myopic decisions back in the 1990s. When gas hit $4 a gallon last summer, GM could have owned the marketplace because consumers want fuel-efficient and affordable cars.

As bad and scary as it seems today, you will through this recession. As a wise person once told me, "this too shall pass." Just learn from today's events, make good decision about your purchases and lifestyle, and move forward with confidence. And, buy green products.

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