Lately, we've all been pummelled by the market and some investors are tempted to make up for their losses by taking on more risk. Not clever. Losing money should not make you less risk-averse. In fact, your ability to absorb losses has been diminished and you should be careful not to concentrate your investments in one or a few shares.

You might get lucky by placing all or most of your eggs in what'll hopefully be a winning basket, but it's way more likely that you would've increased the possibility of more losses without increasing the chance of better returns.

Back in the day when the residential property market was booming many South Africans accessed their mortgages to buy cars, computers, holidays, you name it. Doing so was OK, because home values were skyrocketing. Now, however, values are declining and for many the spectre of negative equity (owing more on your home than its worth) is looming large.

Like you, stores are struggling. Many are offering mind bogglingly good prices on recession-sale items. Don't fall for it! During a recession you should do everything you can to increase your savings. Just because it's cheap it doesn't mean it's a good idea to buy it!

Paradoxically, people who are deeply mired in debt often throw all caution to the wind and spend even more. Don't fall into this trap! Retail therapy might make you feel better in the short term, but you're digging your own grave. Cut your credit cards into a million pieces — it's harder to part with cold, hard cash than to simply swipe.

Economists predict that interest rates have far to fall, but you shouldn't rely on it as there can never be any guarantees.

Likewise, your year-end bonus or annual pay increase might not materialise as many companies are freezing these to save jobs.

If you're selling, whether property or your car, be realistic about what you can expect to get and wait until you have the cash in hand before making plans about what you're going to do with it.

It might be harder to borrow than before, but if you've got a good credit rating you'll still receive credit card and loan offers. Don't be tempted! Having access to 'untaken' credit is very bad for your rating and it's easy to see extra credit as an extension of your income instead of the debt that it is.

Failing to answer telephone calls or emails from the store or your bank won't make them give up and go away. Don't make an already bad situation worse. You need to communicate openly with your creditors; you're not the only one struggling and they're bound to be flexible if they're certain of your intention to repay them.

Many people are under the impression that if they get into financial difficulty they can simply declare insolvency (the correct term is sequestration) and start with a clean slate. Nothing could be further from the truth.

You must apply for a sequestration order and it will not necessarily be granted. It depends on whether or not you own assets that can be sold to repay the creditors. There are costs associated with sequestration and if your assets aren't valuable enough to cover them and bring in at least some money to the creditors it will not be worth it.

By declaring insolvency you'll lose your assets, have no control over how much they are sold for and you get none of the proceeds.

Before even considering sequestration you should try debt counselling.

Your debt won't be written off, but it'll be restructured to allow for payment over a far longer time period, thereby decreasing the monthly instalment required.

By opting for debt counselling you avoid losing everything you own.

By declaring insolvency you won't be able to get more credit and you will have to apply to be rehabilitated later, which isn’t that easy. It usually takes at least four years, meaning that for four years you cannot qualify for a loan or enter into any credit or financial agreements. Even once you have been rehabilitated, you will battle to get credit for another five years (so that’s nine years all in total!) as the notice of rehabilitation which gets added to your credit record will discourage creditors from lending to you even though they are now allowed to. Also, you must first persuade your creditors that sequestration is the best option for them too.

Debt counselling or administration means you keep your assets. However, someone else will decide how much you repay your creditors every month and they will only leave you with enough to live on. Stretching out your repayments in this way makes them more affordable and helps you stay afloat. If you choose this route, try and find a way to reduce your monthly expenses so you can repay the debts faster. Consider moving in with family and renting out your house, sell your new car and buy an older one, sell as many possessions as you can (as long as they will bring in reasonable sums of money), etc.