When the recession hit in 2008, my husband's employer began laying people off. There were several rounds of permanent layoffs, which my husband was lucky enough to escape; however, he couldn't escape the two-week rolling layoffs or the reduction in hours. Things got really tight for us financially, but we managed to come through it all intact. Though, I did learn a few financial lessons along the way. Here are three things I learned from the recession.
Build an emergency fund
I have to admit that I never took an emergency fund seriously until we faced the recession. I knew we should have money set aside to cover our expenses in case something happen financially, but I felt so secure that I ignored it. However, when things got tight at the height of the recession, I found myself wishing we had done more to protect ourselves. That is one mistake I will not make again. At this moment our emergency fund isn't where it should be, but we are working hard to build it up.
Reduce monthly payments
When money was tight I took a good look at the money we had coming in and what was going out. I knew there was room for improvement so I began deciding which services I could and couldn't live out. For example, we opted out of things like data on our wireless phone plan, which freed up some money for other things. It worked so well that I continue to look for ways to reduce our monthly payments.
At the time, I was desperate to eliminate expenses, but we just didn't have the financial means necessary to close out any of our debts. Luckily, we were able to stay afloat, though I'm still not sure how given all that we faced. Since that time I have worked hard to free up as much money as I can. We have paid off one of our credit cards, and plan to pay off another within the next six months. I now know that I shouldn't take on expenses just because we can afford them.
Since the economy started to recover, the threat of layoff seems to have faded in people's mind, many have returned to their old way of living. That is something I will not allow my family to do. I continue to apply the lessons I've learned every day in the hopes that my family will be more prepared if another crisis strikes.
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