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Posted on July 09, 2008

Money Management International (MMI), the nation's largest nonprofit credit and debt counseling and education firm, announced today the results of a survey designed to measure consumer sentiment and coping mechanisms in light of the current economic instability.

While experts are hesitant to define the current economic situation as a recession, 86 percent of respondents are feeling the effects of an economic downturn. Coping mechanisms for financial hardship vary widely, from eating out less to dipping into savings accounts or relying on credit cards. Interestingly, when asked about the most extreme sacrifice they'd make if the economic downturn continues, nearly half of respondents (41 percent) indicated they would take on an additional job.

Unfortunately, a second job may not be a viable option for many consumers. According to the Bureau of Labor Statistics, the unemployment rate shot up in May by the highest amount in over 20 years, and has remained steady at 5.5 percent, up from 4.6 percent a year ago. Even more troubling, the number of people out of work for more than six months has increased by 37 percent since June of 2007.

With many Americans struggling to find employment, it's clear that looking for a second job may not provide the relief many consumers are looking for. The experts at Money Management International offer the following tips if money becomes tight and a second job isn't available, or isn't an option, for your family:

  • Work with what you have. If making extra money isn't an option, cut your current expenses so you can live within your means. Compare your spending to your actual financial commitments, so you know where your money is going. Make sure you're covering necessities like food and bills first, putting extra towards savings if possible.
  • Get creative. Gas prices are a significant burden for Americans, yet according to MMI's survey, only seven percent of respondents would use public transportation or carpool to work each day cut down on gas expenditures. Consider ways of cutting down that you haven't before, like carpooling or doing something local for your summer vacation.
  • Be realistic. 23 percent of survey respondents said they won't do anything differently, even if the economy continues to weaken. Hoping for the best isn't a strategy; planning ahead is the best way to protect your family and build a strong financial future.

"Most importantly, realize that it's not too late," said Cate Williams, vice president of financial literacy for MMI. "Half of our survey respondents would have prepared for these hard times by saving more and indulging less in luxury items. Hindsight is always 20/20, but the small steps you take now will have a positive impact on your financial situation, and will insulate your family against future financial hardship."