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GETTING THROUGH THE TOUGH TIMES

That the recession is already a major campaign issue is no surprise to anyone. The economy is flat, unemployment is up, the national debt is deeper, major retailers are feeling the pinch.

But while the candidates harangue and government and economists look for jump-start possibilities, there is little that the average consumer can do but ride out the hard times, says Linda Golodner, president of the National Consumers League. "We can all cut corners here and there and trim the fat," she says. But most average people can't capitalize on a recession and make the hard times truly work in their favor.However, that doesn't mean you have to sit back and let the world pass you by, says the Institute of Certified Financial Planners. There are things you can do make sure you are not simply surviving but looking ahead to better times.

The two consumer education groups have some suggestions on weathering the tough times:

1. Take charge. Be sure you have a good idea of what you are spending on everything from the mortgage to meals to movies. How much is going to taxes, investments and savings? Next, write down clearly defined short-term goals and priorities for this year and longer-term goals for beyond. Do they match up with your expenditures, or are they out of whack? Look for ways to eliminate or adjust expenditures that don't fulfill your goals.

If you don't do it already (and only 40 percent of checking account holders do) start reconciling your bank statement at the end of each month. Knowing where money goes is the first step in becoming fiscally responsible.

2. Build an emergency fund. The fund, in a conservative liquid investment like a money market, should be large enough to cover three to six months of living expenses, depending on your sources of income, the stability of your job and other factors. The fund is your cushion against unemployment, sudden medical or legal expenses and other short-term financial emergencies that can disrupt efforts to achieve your financial goals. Insurance is usually more cost-effective for long-term situations such as death or disability.

3. Reduce your debt. Consumer debt is no longer tax-deductible. See related story for suggestions on cutting your debt load.

4. Consider taking advantage of lower interest rates. They may make it possible to consolidate some loans at a smaller rate. However, advises the National Center for Financial Education, you should consider a consolidation loan only if loan interest is less than the interest on the debts to be retired, and if paid-off accounts are closed and the extra cash-flow is put toward paying of the consolidation loan even faster. Otherwise, in a year or two you may be paying off a consolidation loan and new credit purchases as well, and not be ahead at all. Don't refinance or buy a new home just because rates are low. These strategies should fit into your overall plans.

5. Do tax planning all year-round. Tax deductions are getting tougher to find. One commonly overlooked strategy is to put as much money away as possible in qualified retirement plans such as 401 and Keoghs.

Another tax tip: If you have a professional prepare your taxes, you can save on preparation costs by having everything well-organized. CPAs and tax preparers sell time. Clients who arrive at a tax office with everything well in hand can cut the amount of time a professional has to spend.

6. Start or beef up investment programs. Investing for long-term goals such as college education or retirement (versus saving for short-term goals such as a new car) should be started immediately, using the appropriate investment vehicle. Even small, regular investments can grow dramatically because of compound interest.

7. Look for little, but effective, ways to cut expenses:

- Consider cashing a check once a week and using cash instead of checks and credit cards. You'd be surprised how well you can do when you know your shopping resources are finite.

- Try corresponding instead of telephoning for a change. If you can't resist the phone, look into money-saving promotions offered by long-distance carriers. A custom calling plan may suit your specific needs.

- Small steps can mean big utility savings. Turn down the heat at night and when you are away during the day. Buy a shower head that decreases the flow of water. Try cold water in the washing machine. Watch dry cleaning bills.

- Review insurance policies to see if higher deductibles can help. Discounts may be offered for safety belt use, car alarm systems, anti-lock brakes and other safety enhancements.

8. Avoid investment scams. Americans lose billions every year through unscrupulous plots and plans. And these scams surface with great regularity when times are tough. Beware of any promises of quick fixes or incredible returns.

9. Start educating family members about finances. Teenagers, as they say in corporate lingo, represent an expensive cost center for the average family. Recent surveys by American Express and the Consumer Federation of America indicate that America's next generation is financially illiterate. Don't shield your children from the hard facts of what things cost.

10. Put things in perspective. You are not the only one suffering. Everyone is cutting back, so don't feel embarrassed or disheartened that you have to let go of that great American pastime - spending money. In fact, surveys are showing that spending money is out, while spending time with family and friends and pursuing intellectual, emotional and physical goals are in. Leisure time may be the BMW of the 1990s. Financial security doesn't mean having the biggest pile of money you can make. It mean having enough money to accomplish your goals.

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Is your level of debt too high?

Recently released figures from the Federal Reserve Board show that consumer debt dropped by $6.7 billion during 1991 - that's the good news. However, consumer debt at the end of 1991 still totaled nearly $730 billion. This figure represents 18 percent of total consumers' disposable personal income.

But to question to ask yourself: is my debt level too high?

Start by figuring your debt payment burden - the portion of your income that goes to repay your consumer debts, advises the American Financial Services Association Consumer Credit Education Foundation. To do this:

- Determine your annual income (yearly take-home pay, plus other income received from bonuses, interest and dividends. Add other payments to you, such as rent or child support.)

- Divide by 12 to get your monthly disposable income.

- Add up your monthly payments on all consumer loans (not including mortgage payment).

- Divide this number by your monthly disposable income. The resulting figure is the percentage of your disposable income you're using for consumer debt repayment.

To determine whether your debt payment burden is too high, you need to analyze the state of your budget. If all your monthly income after housing and food costs is regularly being spent - whether on goods and services or on debt repayment - you need to consider cutbacks to leave room in your monthly budget for some savings.

Some experts advise that a 20 percent debt payment burden is comfortable for many people. A higher percentage may be acceptable if your housing expenses are modest and you have adequate savings and emergency funds.

If your debt burden is too high, however, you should take steps to reduce it.

A good place to start is getting control of your credit cards:

- Set your credit card limit at the beginning of each month - the amount you can responsibly charge on all your credit card accounts during the month.

- Keep track of credit spending in the same way you keep a running balance of your checking account. Subtract each amount you charge from the limit you set.

- If you draw down that "balance" to zero, that means you should stop using your credit cards that month.

- Remember that the credit limit is a ceiling, not a goal. If you still have a balance at the end of the month, don't think you have to use that; commit that amount to repayment instead.

- You may want to cut back on the number of cards you maintain. One national credit card, a gasoline card and perhaps a department store charge account are all you really need.

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Steps to help reduce indebtedness

Here are some suggestions from the National Center for Financial Education on reducing indebtedness:

- Begin immediately. (Getting started can be the biggest obstacle.)

- Make up a written plan of action.

- Take on no new debt.

- Close credit card accounts by returning charge cards to issuers.

- Maintain written accounts of all income and outgo, especially cash.

- Begin collecting receipts to raise awareness.

- Closely examine all expenses looking for ways to increase value.

- Put all extra income toward paying off debts.

- Start doing things yourself. Don't pay for services you can perform.

- Make all necessary sacrifices to eliminate debt.

- Sell items that are losing value, especially those with debt owing.

- Make getting out of debt a family affair.

- Contact creditors in writing to keep them informed and if necessary get temporary reductions in payments.

- Utilize cents-off coupons wherever possible. Send in for rebates.

- Review spending practices and habits, begin comparison shopping, etc.