I’m not necessarily convinced that we’re on the precipice of a massive and prolonged economic downturn.  I don’t think I’m going to be wearing a barrel for clothing and selling apples for nickels to guys in the soup line in a few months.  We might be walking around in the first part of a recession, but I’m betting against Great Depression v. 2.0.

At the same time, it would take a brand of optimism bordering on insanity to pretend like everything is AOK.  There are good reasons not to stay up all night worrying about the economy, but there are just as many reasons to spend a little time thinking about the possible repercussions of a recession on your life.

So, it seems like a good time to go over a few things you can do to insulate yourself from the impacts of an economic recession.  It never hurts to be prepared and if we’re lucky enough to avoid a full-bore recession, you’ll still be money ahead after following these recommendations.  We’re going to start going over core recession preparation with three basics today.  We’ll follow up with a few others tomorrow.

Fixed Expense Avoidance. Spending money on one-off propositions is one thing, locking yourself into recurring fixed expenses is another.  You can manage those isolated expenditures with discipline and perspective or out of sheer necessity if things get ugly.  As the good folks at Wisebread have said, however, “high fixed expenses will wreck your finances very quickly if the income stream dries up. This means reduce debt and avoid new obligations (fitness center memberships, burglar alarm contracts, etc.).”

Debt Reduction. You don’t just want to avoid new obligations.  You also want to reduce your current obligations in case you begin to lose income as a result of a recession.  Make every effort possible to pay down debts.  The Dollar Stretcher argues that “It’s easier to survive a job loss if you don’t have a lot of bills each month.”  I’d go a step further and remind you that it’s easier to deal with any situation when you’re tied to fewer bills.

Reconsider Priorities. If there’s an upside to a possible recession, it might be its power to force us to rethink our lifestyles and priorities.  Let’s be honest, most of us are fully grounded in the consumer culture mindset.  We want things and we want a lot of them.  That perspective is relatively painless when the economy is cruising and the cash is pouring into our pockets, but it’s nothing short of untenable when things take a nosedive.  Our spending habits are rooted in our psychology and changing our perspectives on what we value can radically alter our financial futures.

Additionally, reconsidering our motivations can actually improve the overall quality of our lives.  It might be painless to live with a consumption-based concept of happiness at some times, but it’s never really that fulfilling.  A recent Suite101 article on recession preparation summed this point up nicely:

“What really matters to you and your family? And is your current income really necessary in order for you all to enjoy life? The looming recession is a great opportunity to really think about your priorities in life. Perhaps you would prefer to spend more time together as a family? Or spending more time enjoying the natural world could be as fun as movies and restaurant meals?”

These three ideas–avoiding new fixed expenses, buying down debt and refocusing priorities–are all great parts of a recession preparation plan.  They aren’t the only things you can do, however.  Tomorrow, we’ll cover a few more options for anyone who wants to be ready for a prolonged economic downturn.