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How could the next recession affect my life?

There are a lot of rumblings among various market watchers that we are on the brink of yet another recession. Indeed, one CNBC headline recently blared "A recession worse than 2008 is coming."

While the tone of that banner surely captured the attention of readers in Illinois and the rest of the country, and the body of the story attempted to back up the statement, there was a certain amount of backpedaling, too. The story noted that recessions have hit about every five years and so we are about due. What the story did seek to stress is that when the next one hits, it will be worse than the last.

Many market observers disagree that another recession is imminent. At the same time, they do agree that there will be another at some point. When it comes many individual consumers will find themselves in need of debt relief.

So, what might the effects of recession be? Here are some observations from WalletPop.com.

  • Retirees or near-retirees could be hit hard. Recession often means stock asset declines. One expert recommends being prepared to preserve existing values. At the same time, if the long-term horizon is still 10 or more years away, the general advice is to stay the course on stock holdings. That same advice goes for 401(k) holders.
  • Businesses could flounder. Hunkering down and pulling back on marketing is a common business reaction in a recession. Observers say maintaining ad spending but making sure it's focused on channels that deliver is wise.
  • Debt consolidation might be unwise. The thinking here is that if you bundle everything together under a mortgage refinance and rates go up, covering payments could become harder.
  • Credit card debt could be a millstone. If you sense the recession wave coming, focus on paying off credit card balances. Pay more than the minimum each month, find ways to lower interest rates and cut up cards you really don't need.

Anticipation is a good thing. Sometimes, though, the wave comes too quickly and is too high to deal with. In those instances, the protections afforded by bankruptcy or some other form of debt relief may be required. Speak to an experienced attorney to find out what will work best for you.

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