The last recession seen in the U.S. was in 1991, a decade ago. As a nation we've done so well for so long it's sometimes hard to remember that prices can fall, people who don't work for dot-coms can get laid-off, and the world is a dangerous place.

What to do? Now is the time to pull out the checkbook, credit card bills, and account records to see where you stand -- and to consider what you can do in the recession which is now upon us. Here a few suggestions for riding out slow times.

• Reduce credit card balances. Credit card interest is magically immune from declining interest levels, but that doesn't have to be the case. Pay down bloated balances to cut costs and reduce monthly obligations.

• Check your mortgage. Interest rates have fallen for the past year and may continue to fall. Many lenders now allow refinancing with now dollars from your pocket. This is not "cash-free" or "no-cost" refinancing, this is merely refinancing where the costs have been added to the mortgage balance or placed in a higher rate. The important point is this: Refinancing can lead to reduced monthly costs. The dollars saved on mortgage payments can then be used for other purposes -- such as paying down high-cost credit card bills.

• Switch from high-cost debt to low-cost obligations. This is a suggestion to replace credit cards -- with certain caveats -- with home equity financing. What are the caveats? First, if you do not re-pay a home equity loan you can lose your home. Second, there is no sense in getting a home equity loan if credit card spending continues. Such a strategy will merely result in both credit card bills and home equity debt.

• Switch to fuel-efficient cars. The cost of energy and the availability of fuel are serious potential issues. Maximize fuel usage and cut costs by purchasing cars that get 30, 40, or more miles per gallon. Such vehicles are out there and they make more sense than at any time in the past decade.

• Reduce personal spending. Whatever you now spend, there are people who live well and spend less. Small economies count, add up over time, and can be applied to current debts. Save just $2 a day and you have more than $700 after-tax dollars at the end of the year.

• Increase business spending. At first this seems counter-intuitive, why increase spending if the economy is contracting? The answer is that the economy is contracting, it's not stopping. There is business to be had and there are growth opportunities. Who will get the business that must be done? The most visible and aggressive players. Who will lose business? The folks moaning about tough times and marketplace changes.

The U.S. has been through recessions in 1973 (the Arab oil embargo -- the "moral equivalent of war" according to Jimmy Carter), 1980 (remember when the prime rate hit 20 percent), and 1990-91 (the Gulf War). Recessions happen, they're uncomfortable, but once finished the usual pattern has been strong periods of growth and expansion.

For more articles by Peter G. Miller, please press here.

Published: September 27, 2001

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .