Five Pointers to Survive the Recession

These days, times are tough for every household's bottom line. The job market is getting squeezed, home values are in a free fall, and gas prices are rising. Here are five tips to get you through this difficult period.

If there's one overall message that you need to keep in mind during these turbulent financial times, it's that you can't be an ostrich. Sticking your head in the sand won't help you survive. Here are five pointers to help you survive the recession.

1. Don't jump without a net

During times when jobs are plentiful and housing markets are booming, you can take more risks. Some people quit their job without having another one lined up; others buy a new home, even if they haven't sold their current one. These days, walking these financial tightropes without a net isn't recommended. Jobs are scarce, homeowners are tentative, and there's no telling how much you could lose if your gamble doesn't pay off.

2. Build an emergency fund

Unless your furnace dies, or your car is totaled, you should redirect any large sums of money you have into a rainy day fund. Work to build up at least six months' worth of reserve cash. Even if you have a lot in savings, avoid the temptation to book that vacation in Hawaii, and save your money instead.

3. Don't count on credit cards or home equity loans

There's a knee-jerk alternative to building a rainy day fund, but it's not a good one. It requires using credit cards, or a home equity line of credit (HELOC), for emergency cash. These financial tools can provide you with easy access to large sums of cash, but the long-term ramifications can be severe. If you tap your plastic cards and HELOC, it could easily take years to pay off the balance. You could be paying thousands of dollars in interest, money that could be used to build up your retirement investments.

4. Budget your money

If the recession hits you hard and you lose your job, you're going to have to figure out a way to reduce your spending. Even if you're still gainfully employed, it's a wise idea to analyze your cash flow and determine areas where you could cut back on your monthly expenses.

5. Sell your stuff

While you're creating a budget, take some time to clean out your house, and sell items that you're not using. That old sofa that's sitting in storage might fetch you $100 in a garage sale. Clear out 10 of those types of items, and you've got a good start on your rainy day fund.

A recession may or may not be affecting you at the moment, but in virtually any part of the U.S., life can change in a New York minute. You don't want to be unprepared if tough times come your way. Burying your head in the sand might work for an ostrich, but it won't rescue you from a recession.