Do you know that a recession can severely impact your life when business ethics goes a rye, the dow Jones goes down, along with increased unemployment? During these events bank accounts, investments, mortgages, car purchases, business cash flow and employment can hamper your efforts to get things done. This is surely the time to be frugal.

Capitalism is an economic system in which land, capital goods, and other resources, are owned, operated and traded by private individuals or corporations for the purpose of profit. But this system has its own flaws.

These downturns are contraction phases of the business cycle. The business cycle or economic cycle refers to the fluctuations of economic activity and about its long-term growth trend.

The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), and periods of relative stagnation or decline (contraction or recession).

These fluctuations are often measured using the real gross domestic product (GDP). Despite being named cycles, these fluctuations in economic growth and decline do not follow a purely mechanical or predictable periodic pattern.

The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” A sustained one may become a depression.

You will see increases in claims for unemployment insurance benefits, mortgage foreclosures will skyrocket and reduced access to business funding or credit. We are in for some terrible times.

In the past weeks we have experienced an episode of such a downturn in our economy, due to liquidity problems in our financial markets. We have also recently experienced large bank failures and rescues by our federal government.

In this latest financial crisis our president swiftly sent a proposal to the U.S. congress to take the pressure off the overly burdened economy and financial markets; urging them to pass his 700 billion dollar rescue measure to avoid an economic collapse (depression).

During this slowly developing recession, financial institution failures are the precursors of other maladies that we are expecting in the coming days and months to come.

If you are interested, there are things you can do to recession proof your life.

1.If you are use to using credit cards to make your purchases, start using debit cards or cash.

2.Start a budget. (Sample budget)(Ref. article)

3.Start a savings account. If you have multiple savings accounts never keep those accounts over the FDIC limits. That way your deposits will be totally secured against any bank failure.

4.If you have consumer debt, keep your accounts current, never be late making payments.

5.When available seek a lower interest rate and/or adjust the terms.

6.Seek information about entrepreneurship.

The bottom line is that until we take care of the fundamental problem of fixing the foreclosure problem, we are headed to the worst one in U.S. history.

Written by Mrs Chris Morgan