How to beat the recession

According to Mervyn King, the Governor of The Bank of England, a recession is already here and if we're going to beat it, we'll need to employ a number of carefully planned strategies. On a personal level, we will need to get tactical too.

Dig yourself out of debt

Bad debt is what was responsible for the credit crunch. Irresponsible lending of 'sub-prime' loans to people who couldn't afford them turned the world upside down and shook it. So, with that in mind clearing your debts should be a priority both for your finances and for the world economy. If you have on-going borrowing and always use your credit card or overdraft, you should consider paying it off by a set date and form a strategic plan. One good first move is to secure a 0% balance transfer deal on your credit card, but if you don't have a good credit rating you won't qualify for one of those. Another idea is setting out a monthly budget and fitting in repayments. You'll feel much better knowing your debt is reducing each month, even if it's only by £25 or £50.

Set up savings

ISAs are essential for anyone who is thinking of getting a savings account because you can keep up to £7,200 in one and the tax man won't take a penny. With other high interest savings accounts the government will tax your interest. However, if you want to save above and beyond the £7,200 threshold it's still a good idea to open an ordinary taxable savings account. This is another monthly expense which you can add to your budget. Paying money into a savings account can offer great peace of mind. For those wanting to save up a deposit for their first home, Abbey is currently offering an excellent saver, which is still being offered at 5.5% APR, even after the Bank of England recently lowered the base rate.

Shop smarter

Bargain hunting is the new black, everyone's doing it. In order to get more people buying their stock, hundreds of household brands and high street stores are offering special deals and discounts on their items. Then there's the mysupermaket.com website from the people behind moneysupermarket.com which compares the price of goods in a trolley with four major supermarket chains and then lets you buy the trolley which is the least expensive. You can sign up for discount alerts with a number of money saving websites and even use voucher code sites to get money off items by entering a code on the web store's checkout page.

Spend less

It sounds obvious but spending less is actually a great way to save money. Thinking creatively about where to splurge and where to buy cheaper items or even go without can save you hundreds of pounds in the long term. It might mean forgoing the Starbucks and making coffee in the office instead, or taking a packed lunch to work. It could mean doing some jobs yourself like washing the car by hand or even growing your own vegetables in the back garden. But being frugal can really pay off and end up being quite satisfying too.