The best time to create strategies for thriving in a recession is during the boom that precedes it. This proactive approach can also strengthen your ability to take advantage of opportunities for growth at a time when others with reactive strategies are scrambling to recover.

Recessions and significant economic downturns can be invisible until we're clearly in them, so waiting until you're sure there is a recession can be a risky approach. Since economic slowdowns, weaknesses and slower growth do not affect everyone equally, preparing for specific impacts on your income, real estate, investments and lifestyle is crucial:

Financial literacy is the place to start since what you do know and what you do not know about real estate and finances will respectively represent your strengths and weaknesses. Do you appreciate the significance of changes in the inflation rate and the cost of living index? Do you understand why a drop in interest rates does not necessarily mean mortgage relief? These and other distinctions form the basis for well-thought-out strategies. For more see PJ's column "Financial Literacy & Wealth-building: It's About How Much You Keep".

Financial independence does not always mean never having to work again, but it does refer to how long you can last before your lifestyle is eroded if income ends or is severely restricted. What income-back-up strategies do you have in place to protect you against lay-off, job loss, accident or employer bankruptcy? Disability insurance, savings, home-based business and a well-planned emergency account are key ingredients in extending the length of time you could coast without income. This financial breathing space can also be useful if you want to shift careers or start a business.

Financial vulnerability includes debt load and credit ratings, but it extends to any area where a money crunch could cost you or place your assets in jeopardy. This is the worry zone, so vulnerability can extend to your peace of mind, stress levels and health. Pay off high-interest debt and credit cards and you'll increase financial independence and lower stress. Consciously spending less and paying cash can also strengthen your position. Try this exercise for a demonstration of the rewards of reduced debt: Add up how much you paid last year in interest on credit cards and other debts. Apply that total to your mortgage balance with an online mortgage calculator to see what you'd have saved if that lost money worked for you, especially over the remaining life of the mortgage. Convinced?

Financial advisory network this fancy term reminds us that one financial planner, tax-time accountant or banking acquaintance is not enough to ensure we are kept up-to-date with today's ever-changing, globally-complex economy. In fact, if your stock broker or financial advisor has not contacted you to discuss the implications of hyper-volatile stock markets on your investment portfolio, you don't really have a financial advisor. To keep up with your local real estate market, search out a community-committed broker and select a salesperson who exemplifies your interests in property ownership and investment management. Enthusiasm for their profession and field of interest is one of the most important characteristics to look for in members of your financial advisory team.

Don't react in panic. Sweeping statements of doom made by economists or spread in the media do not necessarily describe your current situation nor predict your future. There is little that affects all sectors, all communities, or all families equally. One person's bad news may be another person's opportunity. That's why knowing how to interpret economic shifts from your point of view, or having advisors you trust to do that for you, is essential to success, security and peace of mind.

Ask any real estate professional about the question they hear most these days and they'll probably answer, "What's going to happen to the real estate market?" They'll be the first to tell you that they do not know. Those who closely follow particular neighbourhoods or property types may have detected patterns in buyer activity or pricing strategies, but real estate is definitely a rear-view-mirror industry, that is clarity in hindsight.

Your real estate strategies should protect you against the issues or shifts that would be most destructive to you and the future of your choice. At the same time, they should help you transcend even unfavourable conditions to achieve your goals. For instance, media reports of dropping prices or slowing sales can cause property owners to hunker down and abandon plans to move to a new area or to up-size their home.

A knowledgeable professional will know whether this is the best financial strategy or not. Many times, one neighbourhood or local market may be down while another is up. Or, both may be down but one has more product for sale, so sellers are more flexible. Higher priced properties often experience market slowdowns before mid range real estate does. If you move from an area where values have flattened to one where prices have markedly declined, you may still come out on top, particularly if the latter area is a better location which may bounce back strongly at the first upswing of the market.

The knowledge you accumulate and the advisory network you build contribute significantly to the flexibility that makes real estate strategies -- and you -- successful whatever economic shifts life ahead.

Published: January 29, 2008

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Strategist and Futurist is The Catalyst -- intent on "Helping The Best Get Better." An internationally-recognized "new retirement" authority, PJ's research, writing and speaking programs focus on decisions Baby Boomers face to achieve a successful future. Author of 6 books, PJ knows that, since home is headquarters for the "new retirement," professionals and consumers need relevant knowledge and insights, along with solid decision-making skills, to protect and enhance this private oasis. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more, visit TheCatalyst.com.