Brent Baker: A recession is simply a decline in business activity. The United States has been experiencing economic growth over the last few years, so a slowdown in growth or an eventual decline in business activity is inevitable.

BB: During a short and mild recession, many people might not be affected at all. But if the business activity continued to slow down, declining sales might require companies to lay off workers. The resulting feeling of uncertainty could cause people to lose confidence in the economy and postpone spending on non-necessary items. Even though they might have the money, they would save it in case things were to get worse.

BB: Yes, and it is not rocket science. Many people spend everything they earn (or even more than they earn by using credit) and have nothing left to save for a reserve. To minimize the effect of recession on our families, I recommend getting your personal financial situations under control and planning to build sufficient reserves.

BB: Financial planners generally recommend having enough savings to meet three to six months of family expenses. That way, if something unexpected happens or if you lose your job, you will have a reserve to help get you through. The idea of saving enough money to cover three to six months of expenses may sound unrealistic, but it can be achieved using discipline and creativity. Try writing down everything you spend for one month. Chances are you will find that you are spending money on several items or services that you can do without. You can use that extra money to start your savings plan. For example, if you are spending $3 a day on a drink or snacks at work or school, cutting out just that one expense could result in $60 of extra money to invest or save over the course of one month, or $720 a year!

BB: That’s a good question, and one that many people never ask. Most people "qualify" for much more debt than they should realistically take on. Just because you are told you qualify for a loan or credit card does not mean it would be wise for you to actually get them. Generally, you should keep your monthly debt payments, including mortgage, below 30 percent of your gross income (before taxes and deductions). When you get beyond that level you may find that you don’t have enough left over to save, invest or even to meet some basic needs. Many people get into trouble with their credit cards by spending more than they can pay off each month. If you aren’t able to limit your spending, then consider using a debit card instead or paying with cash. Ideally, you should strive to have enough savings on hand to cover all purchases, including your vehicles.

BB: A responsible approach is to manage our own finances to have enough reserves to meet your obligations even during an economic downturn. If you believe that a recession is coming, it might be wise to hold off on major purchases until you feel comfortable that your income will be stable. But a recession can also be a great time to purchase items or to invest in stocks and mutual funds because prices often decline as a result of decreasing demand for goods or services. The key is to be in control of your financial situation so that you can react sensibly to the situation rather than have events overwhelm you.

BB: You have to be careful. Sometimes this can be helpful, but it can also compound the problem. Identifying the real source of your problem is very important.

For example, if people have a problem in controlling their spending and go through debt consolidation without addressing the spending problem, they probably will make matters worse. If you are in serious financial trouble, seek help from someone you trust who has financial expertise. They may be able to help you see something about your situation that you can’t see yourself. There are many reasons for financial problems: lack of sufficient skills for a decent paying job, uncontrolled spending, divorce, a serious accident or illness, or just failing to manage resources responsibly.

I like the idea of a financial management program that holds regular group sessions, as that can be cost effective, and it encourages you to make yourself accountable to the group. The resulting positive peer pressure can be a great motivator to get finances in order.

Using a reliable debt counselor may be a good choice, but be aware of deceptive credit counseling practices where there is an offer of a "quick fix" to your credit. Often they are actually working with debt-collection agencies. And most will charge for their services. Can you afford the extra expense? Your local Better Business Bureau may be able to give you some insight into the reputation of a financial planner or debt counselor.

Some companies have debt-management assistance programs for their employees. If your employer offers this, it may be free to you.

I have heard good things about the material from Crown Ministries (www.crown.org), but I do not have personal experience of them.

BB: The principle of giving is an important part of our financial plan, and we should build donations into our spending plan so we can contribute regularly and at a sustainable level. Many people wish they could give more than they are giving currently, and getting our finances in order will position us to be able to give more and to give on a consistent basis.

I would like to share a couple of thoughts in closing. If the potential for recession has caused you to consider that you need to get your finances in order, then that’s good. But really we should get our finances in order whether or not we are concerned about a recession. Also, everyone’s situation is different, so I can only offer general advice in this interview. If you have questions, it’s a good idea to seek advice from a professional who can consider the facts of your individual situation. •