Capital markets around the world have crashed over the past couple of weeks leaving investors interested at their losses. The world has changed. Incomes are falling, jobs are less secure, house prices are falling, and credit is less available. Even worse, it will probably take a lot of months, even a year or more, for the financial world to get back on track.

•  How can you survive this economic crisis? Here are top 10 tips for surviving this economic crisis:

  1. Stay calm - Don’t Panic
  Resist the tendency to respond emotionally. The Three Principles of Personal Finance haven’t changed just because Lehman Brothers made some poor financial decisions. Stick with the three principles and you will be prepared for any crisis.
  Spend less than you earn
  Make the money you have work for you
  Be prepared for the unexpected

  2. Reduce your debt
  This is critical. If you have debt, you are not in control: debt means the bank is in control. You must take immediate steps to reduce your debt. If you have a big mortgage payment, car payment, or credit card payment each month, and you lose your job, you will quickly fall behind, and risk losing your house and car. With no debt, you can weather this financial crisis.

  3. Simplify your life - Learn to live without credit 
  Living without credit means simplifying your life. Living without credit means making a budget and planning what you want to buy, and then saving money to do it. It’s a drastic change for those of us who are used to buying now and paying later, but the savings in interest payments are worth it in the long run.

  4. Your job.      You should anticipate that the boss will get bad news about her budget. That means your big raise will likely be postponed. Also, you might want to think twice about resources you manage. Start thinking about what expenses you could reduce.

  5. Self protection
  Be aware that rises in unemployment usually result in increased levels of crime. Even if you manage to keep well, civil society may deteriorate. I’d never recommend anyone own a gun, but certainly you should consider self protection in case things get really bad. I already know where to find the golf clubs just in case.

  6. Reduce your expenses - Limit Unneeded Services
  Retirees can eliminate many services, saving money. For example, take garbage service. Deposit the extra money saved into a savings account.

  7. Start Training for Additional Job Skills – The most recession-proof industries are health care, education, security, energy and the environmental sector. Whether you work in one of those industries or not, you should try to increase your “hire ability” by training for additional skills. Perhaps your company offers additional job training or there are adult education courses you could take at night.

  8. Stockpile food
  Just in case, it pays to have a reasonable supply of food handy, particularly pre-packaged food that doesn’t require cooking. Even if we don’t see anarchy, power utilities with debt burdens risk going under, so essential service provision may face disruption.

  9. Protect your insurance: Go through all your insurances and see if you can cut the cost. Check out what you are paying for life cover, because costs have fallen and you may be able to buy cheaper.

  10. Start working on Plan B
  It’s possible that your world hasn’t changed yet, but the world around you has changed, and eventually your world will change too.
  While these are not pleasant things to think about, starting thinking about them: start making a “Plan B”. You need a plan for the following:
  - If you lost your job, where would you work? Always have an up to date resume ready, and always keep your ears open for other opportunities.
  - Consider starting a home based business in your non-working hours. If you have a hobby that could become a business, consider making that a second source of income.
  - If hours are reduced at work, consider getting a part time job. That way, if you do lose your primary job, at least you will still have some income.