Recession Ready Your Credit and Benefits

A few days ago I wrote that the financial markets are pricing in a substantial likelihood of a recession. If that were to materialize, it would have negative consequences for works and investors alike. But I don't think we are headed there, and I think the markets and the economy will slowly improve. But that doesn't mean folks shouldn't plan and be prepared. So here are a few more thoughts on that...

Get Credit While You're Worthy
Remember the old expression that credit is easier to get when you don't need it. If you don't already have a credit card, get one. If you have one, request to increase limit. And shop around for a low rate credit card. Also, if you own a home worth more than your mortgage, establish a home-equity line of credit. Do so while you are employed because the lender will want to verify your employment and pay.

Make Your Benefits Portable
The loss of a job also can mean the loss of important benefits. It can also mean the loss of your retirement savings and a nasty tax trap.

A job loss can disrupt critical health coverage. If your spouse is also employed, check with their employers plan to see what is required to get covered under their plan. If this is not an option, look into your employer's policy for health insurance continuation coverage. Most employers are required by law to allow you to pay for and continue coverage in their plan for up to 18 months. Also look into switching to a health plan with a high deductible: these will usually be the lowest cost options.

Don't forget to replace any employer provided life insurance that you rely upon. Low cost term life insurance quotes are easy to get online. In addition to being portable, getting a personal term life insurance policy can be much less expensive than coverage under most employers' plans.

Make Yourself Portable
Update your resume and include a list of recent accomplishments and responsibilities. Do not simply list your positions; instead spell out your professional experience that highlights your range of talents and abilities. Also, update your list of contacts at other companies that you would use as a network if seeking employment.

Remember that the best offense can be a good defense. Being prepared financially will lessen the blow if a recession affects your money.

Ray Martin

View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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