With all the talk of a recession these days, I'm not surprised that most people believe the U.S. is experiencing a catastrophic economic crisis. But that is not true. The U.S. economy is not in a recession.

A recession, by definition, occurs when the U.S. gross national product declines for two calendar quarters in a row. We have not experienced a decline for even one quarter for nearly seven years running. So let me repeat: We are not in a recession.

The economy does appear to be slowing, however, so the possibility of a declining quarter is likely. Since the 1940s, the U.S. has gone through only 10 recessions, averaging 10 months in length.

A recession is the way that a free market economy corrects its mistakes. Think back to the mid-1980s, when the stock market lost more than 30 percent of its value. The Dow Jones industrial average dropped more than 500 points in one day and went from about 2,600 to 1,600 before it stopped its freefall. You would have thought the world had come to an end.

But guess what? The economy corrected itself. And 26 years later, the Dow hit 14,000. Just imagine if you would have had $10,000 to invest when the Dow hit 1,600 and then added another $1,000 each year. Today you would be wealthy.

Without a doubt, the U.S. will go through a recession in the future, but that doesn't have to mean doom and gloom. Both the U.S. economy and your personal economy are wise when they anticipate an economic slowdown.

And that is where the U.S. is right now.

How to prepare for a financial downturn:

-- Live below your means. I said it again, and believe me; it won't be the last time. Do not buy stuff you cannot afford.

-- Control your spending. Stay away from malls, online shopping sites or other places that allow you to overspend with ease.

-- Reduce your expenses. Everything from the water you use to the gasoline you burn. Start tracking your expenses, then employ every possible tactic to cut some from every area.

-- Pay off your credit cards every month. If you are carrying balances, get those cards out of your possession so you are not tempted to use them. Once paid in full, carry only one card with you, and clear it every month as if your life depended on it.

-- Save. Save. Save. Set aside a good, healthy cushion of cash to carry you through the unknown that lies ahead.

-- Pay off your home mortgage as quickly as possible. Once your unsecured debts are paid, tackle the home mortgage with a vengeance. This is the only assurance you ever will have for a rent-free retirement.

If you do all six of those things, you will be so well-prepared that you will be able not only to survive but also to thrive during any coming recession.

Mary Hunt is the founder of www.DebtProofLiving.com and author of 17 books, including "Debt-Proof Living." You can e-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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