Americans will soon face a recession that few are prepared to endure. In fact, if you're under age 45, you haven't seen a severe recession in your entire working life.

While there was a moderate recession in 1990-'91, the last truly deep and lasting recession occurred in 1981-'82, when most of today's workers were still in school.

As a reminder, back then we had double-digit unemployment in the industrial heartland of America. The slowdown was triggered when the Fed pushed the prime rate to 21 percent to curb inflation. The savings rate doubled as people got the message that the situation was dire, and they'd better prepare for a long period of economic weakness.

Now we're starting to see announcements of layoffs that precede another deep recession. But this time, we enter into recession with a negative savings rate, and consumers buried in debt.

There is now nearly $1 trillion of consumer debt revolving on credit cards — not the amount charged each month and paid off at the end of the month. Nearly half of those cardholders are making only minimum monthly payments.

Those interest charges can really pile up. At www.LowCards.com, its index reveals the average rate charged by more than 1,000 card issuers is 12.03 percent for new purchases. It is an astounding 20.70 percent on cash advances. And if you're behind on your payments, the default rate could be as high as 29.99 percent!

A recent report by Innovest predicts credit card charge-offs will reach $18.6 billion in the first quarter of 2009, and more than $96 billion by the end of next year! Those charge-offs typically happen when consumers file for bankruptcy. Credit-card debt is the next bubble to burst, and it will be another hit for the banks.

What can you do? Start talking about your money, now! In America, we talk politics and sex without thinking it's too personal. But we never talk about money issues. It's the first step toward facing the truth.

If your mom runs out of money, or is buried in credit-card debt, she'll turn to you for help. Same thing with that college grad who never took a course in money management but who did receive a credit card in the mail. They might even wind up living in your guest room! So make money talk a family priority.

Here are the questions to ask — and answer:

How much debt do I really have? Make a list of current balances, minimum, monthly payments and the interest rate. Then prioritize the highest rate cards, while still making minimum payments on the others.

How can I earn more? This is the most positive step you can take — far easier than cutting back (which is the next challenge). But if you could work a weekend or evening job for the next few months, or if a stay-at-home mom could baby-sit for her working neighbor, you could bring in extra cash to apply to those bills

Where can I cut back? Find at least one thing to give up — before you're forced to do it. Maybe it's a cell phone or your cable TV, or an evening out at the movies. If you've done those, maybe it's changing another habit, such as doing more coupon clipping at the grocery store, or buying bargain food even if your kids hate Brussels sprouts! Every little bit will help.

Speaking of kids, they're not too young to understand that times are tough. Don't try to put on a brave front. If they understand, they'll gladly join in the sacrifices that will be made this holiday season.

Don't wait until Turkey Day to bring up the subject. Start now, so you won't be jumping up from Thanksgiving dinner to camp out at the mall, seeking bargains. They're only a good deal if you can afford to pay for them now, not after all the interest charges pile up. And that's the Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. Her new book, "The Savage Number: How Much Money Do You Make?" has just been published. To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.

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