Advance planning could mean you'll cope better if the worst happens and will help you to ride out the recession even if your job survives.



Do a debt audit

That means knowing exactly what you owe and how much your debt is costing you. Write down everything you've borrowed, from the £100 your mum lent you when you needed unexpected repairs to the outstanding amount on each credit card, any loans and your mortgage. Don't forget your overdraft – it's a form of credit too and, if you exceed your limit without the bank's agreement, it can be expensive. By the end of this exercise you should know which debts are most expensive, so you can target them first.

Raid your savings

Now that interest rates are lower it could make sense to pay off your most expensive debts rather than keeping spare money in savings accounts. This could mean clearing your credit card or overdraft. If you're coming up to the end of a fixed rate mortgage or you won't be penalised for overpaying, you may want to pay off a lump of capital. In general, the less you owe when you want to look for a new credit deal or loan, the more likely you are to get a good offer.

Look for better deals

You may not be able to clear everything you owe, either because you don't have the money or a loan is for a fixed term and you'd incur penalties – but you can look around for better value. Do your research and use price comparison sites to identify the best deals for your circumstances, such as a low interest credit card or zero per cent balance transfer offer. Remember to factor in any costs associated with switching, such as application and transfer fees.

Check your credit report before you apply

This is the personal history of your credit accounts, such as loans, cards and your mortgage. Lenders look at it when you apply to them, so it's important to ensure that it's up to date and accurate – any mistakes could mean you don't get the deals that you want. Online credit monitoring services such as Experian's CreditExpert offer a free trial that allows you to see your credit report as often as you like.

Don't commit to long-term expenditure

Digital or satellite television subscriptions, gym membership, a new car loan – these can all seem like essentials but not only is this a bad time to take on new debts, they can lock you in for an extended period and swallow a big chunk of your take-home pay every month. If you must sign up, look for deals that don't tie you in for long. Ideally, you should be able to opt out within a month or two.

Live as if it's already happened

Many of us know that our lifestyles must change, at least for a while. Start now by cutting back on everything you can, from clothes and leisure to the cost of food and utilities. It may be tough but it should mean that your borrowing doesn't spiral and any future low points may not be quite as low. If your new regime means you can clear debts, then put any spare cash aside instead of spending it – it could cushion you through tougher times to come.

Treat yourself – credit crunch-style

It's human nature to resent deprivation, especially when you're used to enjoying yourself, so don't cut out all treats – be sensible and opt for credit crunch pleasures instead of good life extravagances. For example, you could stay with friends or family instead of taking an expensive foreign holiday, swap DVDs instead of going to the cinema, get together with friends to cook a cut-price feast instead of going out to dinner or take a Sunday afternoon walk in the park instead of a trip to the shops. Make sure you have something to look forward to and you'll find day-to-day budgeting less of a trial.

Benefit from benefits

Tax credits and benefits are more widely available than many people think – you might already be eligible for some support. From housing to childcare and heating to food, there's a lot of help that many people ignore because they feel there's a stigma attached to claiming. Think again if you feel this way – go to www.direct.gov.uk for a simple guide and see if you qualify now or would do if your hours were cut or your job was lost.

Ask for advice

If your head is spinning at the to do list or you're worried your maths isn't up to all the calculations, there's help out there. Many websites provide calculators that do the hard work for you, whether you need to work out how much interest you're paying on your mortgage, what you would save by switching credit cards or simply want to create a new budget. The Financial Services Authority's Money Made Clear consumer advice site is a good place to start – go to www.moneymadeclear.fsa.gov.uk. If you are in financial difficulty you can get free money advice and debt counselling from Citizen's Advice at www. citizensadvice.org.uk, the Consumer Credit Counselling Service (CCCS) at www.cccs.co.uk or National Debtline at www.nationaldebtline.co.uk.

Keep checking your credit report

Lenders usually check your credit report when they're deciding whether to make you an offer and what conditions to set, such as the rate of interest. If it shows that you aren't overburdened with debt and make your repayments on time and in full, you stand a better chance of qualifying for the deals you need. That's why you should keep an eye on it regularly – a clerical error or misunderstanding could knock your credit status and mean that you end up paying more. You can see your Experian credit report for free online with CreditExpert and reassure yourself that everything is up to date and accurate – or set the record straight.