Joel Gotlib from Edmonton's CTV asked me to provide a few tips for for coping with Albertas official recession which aired on Thursday's evening news.
Jim MacDonald with The Canadian Press (and as published in the Edmonton Sun) quoted Finance Minister Iris Evan prediction that “many Albertans will have a tough year ahead. We’ve always said that we were not immune to the global recession. But we are better positioned than almost anybody else on the planet.” Here's the full article - http://www.edmontonsun.com/News/Alberta/2009/02/19/pf-8453356.html
So, you might be thinking, "what is a recession anyway?" A recession is, in economics, a term that generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters. The usual dictionary definition is "a period of reduced economic activity", a business cycle contraction. See Wikipedia for a full explanation: http://en.wikipedia.org/wiki/Recession
Now that we know what it is, what can we do about it? Here's my top 5 tips that I shared with Joel:
1. Don't panic and stay calm. As the Minister reports, we're far less affected than the rest of North America. I can personally attest to this just having returned from New York and spending quite a bit of time in Ontario recently. Albertans are weathering this global recession far better than others thus far. However, with our province's reliance on oil related jobs and the landslide cut in oil prices over the past few months, we will feel a trickle down effect eventually on some if not most industries. But think back for a moment to when oil was at an all time high - last summer for example. I recall the gripes and complaints from many Albertans that, other than their home prices skyrocketing, they didn't feel wealthier because of the boom. With prices shooting through the roof on pretty much everything in this province, most people were fed up with the Alberta "boom" and not feeling the prosperity personally.
2. Insulate yourself and protect your job. If you're employed, you might consider marching into your boss's office and asking what you can do to ensure you keep your job if your company faces tough times ahead. Consider a ship facing tough waters. A good captain will throw everything overboard until smooth waters are achieved again to protect the long-term survival of the ship. Are you absolutely necessary cargo to your company or clients you serve? How can you ensure that you aren't thrown overboard? Think of your company as your own and consider that if your industry faces the aftermath of a recession, it's likely better to keep your job, even if you face a pay cut, than to be unemployed.
3. Get your finances and debt in order. If you think that your industry might be facing layoff's in the near future, you might consider getting a line of credit now with your bank or consolidating your current debt. Why? If you're laid off and then need a cushion, it will be much more difficult to obtain credit at that point. Always best to seek credit when you don't need it. That way, if you face a temporary set back, it's in place when you do need it. By the way, it won't cost you anything to set up a line of credit if you don't use it. Interest is only charged when you use the line.
4. Hunt for deals. Now more than ever, retailers are willing to negotiate, throw in extras or even extend special pricing. It never hurts to ask! Get the family involved as well. Scour through hidden fees that might add up to big bucks in a year such as your family's cell phone plans, cable and phone bills, bank fees and more.
5. Keep spending but examine large purchases. Do you really need to remodel your kitchen this year? Could you forgo the expensive family vacation and instead explore your city with new eyes this summer and partake in the many festivals? It's true that we need to keep spending to get through this economic downturn, but keep "intelligent frugality" in mind. Examine major purchases and consider the absolute best time to spend vs. save.