The sudden economic crisis that is sweeping through America is proof that even the strongest and the supposedly best plans can go wrong. The impact on the world market and the boomerang effect that caused an almost total collapse of the stock markets and depreciated bullion value tells but one thing: nothing is for sure at any time. Least of all, money matters.

What you, as an individual can do about it? How can you safeguard your financial interests in the face of such an event? Is there a way out? The answer to all these three questions is one: good financial management. Good financial management consists with two steps: (1) credit repair, (2) savings.

(1)Credit repair – you cannot think of saving without credit repair. At first sight, you might not agree to this statement, but take a closer look. Let us suppose you have less than the preferred score and yet you feel you need not take any steps to improve it. Eventually you would need to avail of some type of credit. Your eligibility judged on the strength of your score, would offer you less than the best interest rates, which over the years would sum up to a neat extra amount, that could have otherwise ended as your bank balance rather than payment of a loan.

Are you still not convinced? Just try to find out what is the difference per year of your mortgage if the interest was decreased by just one per cent. Be prepared to be shocked by the results.

(2)Savings – no matter what you earn there are two reasons for which you must make it a habit to put some money aside. One is charity and the other is savings. While ideally, you would be required to pledge 10 per cent of your income to charity, any amount you choose would do. However, for savings the best would be to earmark about 15-35 per cent of your total income. This means that your daily budget should be based on only about 60 per cent of your income. Are you able to do this? If not, you are not managing your money well enough.

How can ECRA help you achieve this goal?

Most people when faced with financial crisis panic and rush to the first credit repair company or consultant they find in the hope that would help to manage their debts. Beware! This is the last thing you should do. Panic would cloud your thinking and will push you into choosing the wrong credit repair company.

Whenever you need credit repair ensure that you use not only the best, but also that your credit repair is done ethically and within the legal framework. Use credit repair companies that are affiliated to ECRA (Ethical Credit Repair Alliance) and be sure that you are always protected. Be careful, be safe. All companies that are affiliated to ECRA are run through the microscope to ensure that they not only are genuine and have your best interests at heart, but also that they apply themselves to the task of credit using legally correct methods.

What is recession and why are people panicking today? This is a situation where the GDP or the gross domestic product steadily reduces for about six consecutive months. When this happens prices fall abruptly and there are major losses in the market. Those individuals and companies who are not strong enough would be literally wiped out by an economic recession, unless they are prepared.

Why credit matters at this time?

Credit matters because when the economy is in SOS mode, the banks and other financial institutions would tighten their reigns on their customers in their desperation to monetize as many assets as they can, and thereby would become very strict with those who default or have poor credit score. The wise would ensure that they not only save, but are able to use such savings to make high paying-low risk investments.

A poor score for any reason would always be boosted by the presence of savings and investments of your income. Engage a financial advisor or credit repair company and stay attuned to their advice regarding saving and investing money. You will know you are on the safe side, when you have stashed away within our immediate reach (even though it is in the bank or anywhere else) an amount that would sustain you (and your family) for at least 6-8 months. This is a reasonable time to wait out the recession or seek another engagement.

Another reason why your credit score should be good when recession hits the market is that the banks would be likely to lower their interest rates, making it the best time to borrow funds for buying a home, car or whatever you have in your mind. If your score were poor, you would not be able to avail of this opportunity and in the process losing an exceptional opportunity to save a small fortune through such loans.

How do you ensure good credit all the time?

Inculcate good habits – when someone tells you to nurture good financial habits your thoughts would first go to savings. However, there is much more you could do when it comes to best financial practices. A few of the most important are briefly listed below:

1.Consolidate your loans if you find you are struggling to pay them on time or in full
2.Always lookout for means to reduce not only your outstanding loans, but also the interested charged. This is where credit repair becomes invaluable as higher scores offer better terms and conditions while applying for a loan.
3.Ensure that the amount you have to pay against loans should never exceed 25 per cent of your income.
4.Never resort to paying only the minimum due payment on your credit card bill.
5.Avoid using credit cards unless it is strictly necessary; instead use debit cards. In this way you would always be watchful of how much you are spending.
6.At the beginning of every month draw up a budget and have it consolidated every day, at the end of a week, month, and year. This would provide you with an amazingly revealing mapping of your expenses. This is your first step towards real financial self-management.
7.Be prepared – 'make hay when the sun shines' is a wonderful adage. You need to insure yourself and your family for health, and related insurance. This would be great savings, plus would ensure that in any unfortunate event, you are ever ready. Insurance is a must if you want to breathe easy during a recession.

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