Use Bankrate’s tools to calculate a debt-payoff plan or take advantage of balance-transfer credit cards with zero percent intro APRs. These offers disappeared in 2008, Anastasio says, so they’re likely not going to be around when the next downturn comes.
2. Boost emergency savings
Job loss can also make it difficult for Americans to pay their day-to-day expenses.
Beefing up your emergency fund — that is, the pool of cash that you reserve specifically for events like downturns — can make it possible for you to still afford your necessities while you search for a new position.
Even if you’re paying down debt, it’s important that you prioritize saving. Focus first on loading up your emergency fund with one month’s worth of living expenses. After that, pay off your debt, and then focus on building up a reserve of three-to-six months worth of funds, Anastasio says.
“Everyone needs to have a cash cushion, even while they’re attempting to pay off high-interest rate debt,” Anastasio says. “It’s imperative because, if an emergency arises and you’re putting every dollar toward eliminating debt, you have no choice but to go back to credit cards to cover the expense.”
A high-yield savings account can help you earn more on the money you stash away. Shop around for the best account that suits your needs and lifestyle.
3. Identify ways to cut back
It’s always a good idea to go through your monthly expenses and identify which items are discretionary — services or items you don’t need — and which items are a necessity. The discretionary items are most likely ones that you can either eliminate now or in the future, McBride says.
“Certainly your starting point would be the discretionary items — subscription services or even just spending patterns,” McBride says. “Dinners out or nights out at the bar with friends can seriously add up over time.”