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These are tough times for everyone.  This only means you need to be smart with your personal and business finances.  From personal experience, I’d like to walk through four main themes that can help you get ahead of your peers during these times.

Reduce Your Cost of Living

When I say reduce your cost of living, I am not referring to what you eat or the clothes you buy.  Those are important (learn to cook), but I am specifically referring to WHERE you live.  Almost everyone’s largest expense is their rent or mortgage.

There are hundreds of ways to reduce this cost of living right now.  I’m covering two sections, mortgages and rent.

Mortgages:

1. Re-mod – If you have any sort of Adjustable Rate Mortgage, you should call your mortgage broker or bank and see if you can get into something more stable, like a 30-year fixed rate mortgage.  The government and banks are keen to get people out of these foreclosure traps and will work with you to improve your situation.
2. Taxes- Call your city Tax Assessor.  Unless your property taxes were last assessed more than 5-8 years ago, there is a decent chance that a reassessment will decrease your property taxes.  Do the due diligence prior by checking out valuations of neighborhood sales, but as a rule of thumb, this should lower your property taxes.

Rent:

1. Ask for a Rent Reduction – First thing to do is approach your current landlord and ask for a reduction in your rental rate.  Prepare yourself with comps in your area.  Trust me, unless you just moved into a new place, there are similar places availble for cheaper than what you are paying now.
2. Move – If your landlord will not come down, another will.  Show lower bids on a few places.  I’ve seen firsthand in the last week how desperate owners are to find tenants.  They will compete for your lease.  It is still possible to upgrade in quality, while paying less.
3. Request Additional Features – When moving, ask for the extra features.  Landlords are eager to get tenants, so you have the power to ask.  Examples include: pets, a lower security deposit, monthly cleaners or gardeners paid for, an extra roommate, or even a week or two of free rent if you move in mid-month

Credit Cards

Reducing your debt is the most important thing you can do prior to, or during, a recession.  After a mortgage, usually the credit card is the next largest personal debt.  The key is cleaning it up and optimizing your rates.

Do a refresh on all of your credit cards.  Do you have any outstanding balances?  Find out what the rate is on all of your cards.  They may have changed…credit card companies try and sneak those rate hikes in with the rest of the junk mail they send you.  Once you find the lowest card, consolidate your debt to that one.

Next, set up automated recurring billing.  Even if it is the monthly minimum, this will help.

The most important thing is to try to pay off the whole card.  There are very few credit cards out there that will get you any sort of fair rate for short term cash.  In fact, there is no fair rate for short term cash right now, other than zero.  Considering your savings account interest rate is practically zero, clean out that account to pay off your credit card bill.  Your next step after that is to start saving to rebuild that savings, but at least you will not be losing money on a monthly basis.

Market Your Business

Studies have shown that increasing your marketing during a recession is one of the best ways to gain market share.  If you own your own business, this is the time to be adding customers.  There are other expenses that you can cut back on, but your marketing budget should not be one of them.

The key is not only for your business to survive the recession, but for it also to come out in a much better position.  This means as a lean, mean, marketed machine.  Cut your excess spending.  You may even need to reduce salaries or lay people off.  However, keep marketing.  You will be able to ramp up business and raise those salaries even more after you gain significant market share.

Network with Social Media

Speaking of marketing, why make it expensive?  New social media channels are the best way to grow both your own personal network, as well as market your business.  Personal networking provides natural opportunities both financially and socially.

If you need a job you should be marketing yourself on LinkedIn.  Likewise, everyone should take advantage of learning how to use Twitter, as it (or micro-blog services like it) will provide a lot of unforeseen opportunity over the next few years. 

Start a blog for your business or your personal interests.  This will help build a network, or “tribe”, of followers and mentors who can help improve your business and personal life.

While you may dislike what you believe to be intrusiveness of Facebook, it is worth joining.  Once you join, however, use it efficiently.  Group your connections and set your privacy settings to your preference.  Then, reconnect with old acquaintances and find out what they are doing.  You’ll never know where the next opportunity will arise.

Social media networking is not free.  All it costs you is time.  Time is the one thing more people have a lot of right now.

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