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Protect yourself from a slow economy

Gerri Willis tells you how to keep your money safe and growing in the middle of an economic slowdown.

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By Gerri Willis, CNN

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For more information on managing your largest investment, check out Gerri Willis' "Home Rich," now in bookstores.

NEW YORK (CNNMoney.com) -- You've been hearing about how bad the economy is recently. But no matter how bad the news may get, there are some things you can do to insulate yourself from the slowing economy.

Put your rebate to work

Uncle Sam is going to be mailing out rebate checks in May.

If the last two digits of your Social Security number are in the lower digits, you'll be getting your check sooner. And retailers are salivating.

Some states like Illinois, Missouri and New York City are considering sales-tax holidays for the spring. But don't be swayed.

While the government may encourage you to spend that check, your best move is to pay off your credit card bills. You may also want to make an extra mortgage or car payment.

While it may not sound like much fun, you can also put it toward your emergency fund.

Cut costs

Start with the fees you can avoid - like bank fees.

Find out if you are eligible to join a credit union where the fees and surcharges may be lower. Go to the National Credit Union Association Web site at NCUA.gov.

Congress is turning a spotlight on some of those 401(k) fees. If you're not sure what fees you're being charged, talk to your plans' administrator or someone in the HR department.

If you want to avoid balance transfer fees on your credit card, look at your credit card agreement. Look for a reference to a maximum balance transfer fee. If you don't see any dollar amount, call the credit card issuer and get the details. Balance transfer fees can add up to hundreds of dollars.

Know where to go

Knowing where to go to get cash in an emergency is half the battle already. If you have enough equity in your home - and that's a big IF nowadays - you may be able to take out a home equity line of credit.

With a home equity line, you will be approved for a specific amount of credit - depending on the equity you have in your home. And you can borrow from this line of credit when you need it. You may be allowed to deduct the interest because the debt is secured by your home.

You may also want to reach out to friends and family. You probably won't be taken advantage of and if you can keep current on payments, it could be a good solution for you.

You really don't want to tap into your 401(k) too early. You'll be taxed twice since you have to pay back the loan - with interest - and you'll be missing out on your money's ability to compound interest.

Keep the Faith

Remember, all economies have their ups and downs. And a recession is just part of a cycle.

A recent CNN Opinion Research Corp. poll finds that that 60% of respondents think economic conditions will be "good" next year. Plus, 90% of people had confidence they would be able to meet their monthly mortgage payments for the duration of the mortgage.

Whatever you do, keep the faith. If you have money in a 401(k) or a mutual fund, keep it there. There are better times ahead. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
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