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These three steps helped me pay off $300,000 in debt in three years and give me peace of mind about my money despite the impending recession.

In 2008, I was a 23-year-old HR representative for a Fortune 100 company, flying around the country closing offices and laying off employees who, like many people, had no idea what the Great Recession was about to happen.

In a small office in Columbus, Ohio, a man in his 50s looked at me and said, “I’ve been with this company probably longer than you’ve been alive. Why do you have a job and I don’t?’ I only realized later that it wasn’t a personal attack on me, but a response based on fear of one’s own stability.

That experience became the foundation of the mission of my financial education company. I wanted to guide people to financial independence in good times, but especially during a possible recession.

In addition to the loss of income, being fired can feel extremely personal and difficult to manage your emotions. Not only is it important to evaluate the math of your financial plan before you lose your job, but also the potential effects on your mental health.

Address your major financial stresses if you’ve lost your income

You don’t need to know all the answers, but to help clarify some unknown details, get your biggest worries out of your head and onto paper. These may be technical questions on which you should ask for expert advice, or personal questions that you should plan for yourself, such as:

  • How much should I pay for health insurance?
  • What are the steps if I need to withdraw money from my retirement accounts?
  • How long can I cover my basic living expenses with my current savings?
  • What will my plan be for daycare if I don’t work?
  • Should I refinance any of my current debt?

It’s better to write down all the questions you don’t know the answers to and then narrow down to the top five. Then commit to finding the answers to these questions first before going into analysis paralysis with too many questions.

Don’t know what to do? This is a great time to get re-education from trusted, proven sources, including financial experts and peers who may have been through similar situations in the past.

Schedule meetings with your human resources representatives for answers about your benefits and review your budget and net worth with a colleague to determine your contingency plan.

Taking detailed notes, especially by hand, can not only help you better remember what you’ve learned, but it can also help reduce distractions that follow you as you plan your plan.

Set a schedule around your big financial goals

According to a recent survey, nearly 70% of Americans feel stressed about their finances due to inflation, economic uncertainty and rising interest rates. And 58% of Americans now live paycheck to paycheck.

With a possible recession, you’ll want to reevaluate more than just the order of your big financial goals. Also consider whether schedules should be interrupted or extended based not only on current market conditions, but also where you have the flexibility to make changes.

For example, if buying a home was one of your current goals, you may decide to wait until the real estate market cools down to pay off debt instead. I meet many students who invest up to their company 401(k) match even though they don’t have enough savings for an emergency fund or have high interest credit card debt to pay off.

For many students I’ve coached after being laid off, losing their job is often more emotional because it feels like the failure of all of their financial goals. A helpful way to reframe your mental approach is to simply add the word “yet” to your statements as you shift your priorities.

Instead of saying, “I can’t save for retirement,” you can say, “I can’t save for retirement.” “I still can’t save for retirement.” This helps remind you that the changes you may need to make to your money goals are temporary, and you can always come back to them once you stabilize your finances again.

Budget for every expense you can control before worrying about what you can’t

If you’re starting to panic about your income, you can ease your stress by budgeting your expenses for the next month. In addition to your regular monthly bills, here are some expenses to consider paying ahead of time or planning ahead:

  • Getting early estimates from your tax planner so you know how much you’ll owe or receive a refund
  • Paying off your home or car insurance in full over the next quarter or six months to deduct it from your monthly expenses
  • Scheduling doctor appointments while you have health insurance
  • Invest your personal retirement plans to the maximum while you have the funds
  • Prepaying children’s education or day care expenses

Having a clear, documented budget for my household expenses and also my business helped me stay calm during the Covid-19 pandemic, even when my business income dropped to $0.

You’ll either realize you’ll still be fine, or if your expenses start to exceed what you can afford, you give yourself extra time to take preventative measures.

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