Since the terrorist attacks in the United States, the economic outlook has changed.

Interest rates remain at record lows but jobs have gone and spending is falling.

A Citigroup survey says average UK household wealth fell almost ten per cent in the last year, largely because of falling share prices.

It was the largest drop since records began in the Sixties, so belt-tightening is needed from now on.

To lessen the impact of recession, take these steps:

Cut or rearrange any debts.

Most personal loans, according to Bank of Scotland research, do not go on new cars or luxury holidays but to pay off other debts.

Consolidation loans are unsecured and expensive. The Bank of Scotland, for instance, charges 20.5 per cent up to £2,999.

Moneyfacts magazine lists unsecured personal loans from around 15 per cent but the best buys, on a minimum of £1,000, are Nationwide (8.9 per cent) and Northern Rock (8.5 per cent).

Cheapest finance by far is a mortgage top-up, providing there is enough equity in your home to allow the further advance.

Loan applicants are usually credit scored and several lenders give a reduced rate to internet applicants.

Garry Ridsdale, head of personal loans at the Bank of Scotland, said customers in trouble should avoid debt management companies and approach the Citizens Advice Bureau or the lender directly.

Cut your current spending.

Lots of discretionary spending can be cut. David Hanratty, of Nelson Money Managers, said people paying £70 a month for gym membership might review it if they used it rarely. Entertain at home instead of going to the restaurant.

Protect your income.

Rob Guy, of Bradford and Bingley's MarketPlace, said: "The biggest threat for most people is loss of employment. Insure against job-loss and long-term sickness. Cover should not just be in relation to mortgage repayments."

The web site, insureyour mortgage.co.uk, promises mortgage cover at a fraction of the rate charged by lenders, £2.25 per £100 of monthly benefit. It promises monthly benefit up to £1,500, or 65 per cent of gross monthly income, after a 30-day waiting period.

Most policies cover repayments for 12 months after redundancy or illness. Payment protection insurance covers other loan or credit card payments.

If possible, build up a cash pool, ideally three to four months' normal spending money, in an easily accessible account
Mr Hanratty said people with cash in the bank often had credit card debts. Rethink the balance because money on deposit earns so little these days.

Slash credit card charges by switching to new cards with low introductory interest rates.

Some store cards charge almost 30 per cent APR, so a new card can cut that drastically. Tesco Visa offers 1.5 per cent introductory rate on balance transfers and purchases until July 1, 2002 and a standard rate thereafter of 15.9 per cent variable.

On some offers, the lower rate of interest applies only to the balance and not to new purchases.

Ray Boulger, of mortgage brokers Charcol, suggests a "three card trick", one for the balance transfer at a special low rate, a second card for current purchases paid off each month and a Nationwide card for overseas travel.

This waives the 2.75 per cent currency conversion fee and charges only 0.5 per cent on cash withdrawals.

Get a remortgage, the biggest single cost-cutter if there is not an expensive penalty fee and your present loan ends early
Mr Boulger said: "If you are paying standard variable rate with no redemption penalty, you are throwing money away."

Cut those gas, electricity and telephone bills.

Using one provider for all services can save average users up to £100 per year.

Shop around for insurance quotes on car, home contents and buildings.

Customers with the same insurer for years may pay over the odds. Find cheap cover by finding an insurer who likes your risk profile.

Maximise your return on savings.

Mr Hanratty said many people did not use the mini-ISA (individual savings account) tax shelter for £3,000 or shop around for best rates.

Best rates are listed in Moneyfacts magazine or on web sites like moneysuper market.com and moneynet. co.uk.

The best instant access accounts, charging about five per cent gross, are usually to be found on the internet.

Unless you need the cash, keep shares which are
probably near the bottom. Keep paying only into mainstream funds like Foreign and Colonial and Witan Trust.