It's April 2008 and it seems "recession" is talked about everywhere you go. News networks, cable TV outlets, papers, magazines, websites and blogs all claim that high gas and food prices have driven America into a recession, and they have plenty of anecdotal evidence of struggling Americans to prove it. Not only that, they claim the recession is going global, and given the fact it's also an election year, it's fairly predictable that we'll be hearing the term "recession" in plenty of blame-game TV ads, debates, town halls and other such forums.

But are we really in a recession? What IS a recession, anyway?

A "recession" is defined as two quarters in a row of negative growth in GDP (gross domestic product). Since the GDP in the fourth quarter of 2007 and first quarter of 2008 was 0.6 and 0.6, respectively, it's obvious our current economy doesn't meet the definition of "recession".

Surprising, eh? Guess you can't always believe what you read.

Let me make a controversial statement that may ease your mind a bit the next time you hear the "R" word: it doesn't matter whether or not the country is in a recession. What matters is whether or not your finances are in a recession. Have you experienced negative growth the last two quarters? In other words, is your net worth increasing or decreasing?

When a nation is in recession, there are plenty of citizens who prosper. At the same time, there are plenty of citizens who suffer. Much depends on location, occupation, education, timing, opportunity, and more. But I would also venture to guess that those who prosper are those who took steps to make sure their own personal economies do just fine, quarter after quarter.

Your goal should be to organize your home finances to the point where it just doesn't matter whether the country is experiencing recession or not. This is often called "recession-proofing". You can make it as complicated as you like, but it really boils down to three things: budgeting, saving and reducing debt.

Budgeting allows you to know exactly what you earn and exactly where it goes. Your goal should be a budget bottom-line of zero. Why not a surplus, you ask? You should have a surplus after deducting expenses, but that surplus must be allocated somewhere (hopefully to savings, investments or debt reduction). This leaves you with a bottom line of zero. If your bottom line is positive, chances are you aren't saving enough or you're frittering away a budget surplus. If it's negative, you're increasing your debt each month. So work up a budget (it isn't hard), keep it fluid, and keep it to zero.

Savings is essential for creating the margin you need to meet unexpected expenses. Yes, there needs to be a balance between saving and paying off high-interest credit cards, and you'll find experts on both sides of the argument. You definitely shouldn't have large savings accounts along with high credit card balances. But I think it's wise to have some sort of margin waiting to pay for those never-planned car repairs, home repairs, medical emergencies, and so on.

Paying off debt is perhaps the most important thing you can do to recession-proof yourself. If you don't have oppressive debt, it's pretty easy to budget and pretty easy to save. Debt tends to be a fixed expense, versus variable expenses that are easier to control. Should your income go down, prices go up, or you lose your job altogether, variable expenses can be manipulated to make ends meet, whereas debt payments usually cannot.

If the nation should plunge into a recession, how will it most likely affect you and your family? Your income may drop if it's tied to consumer spending, business investment or cyclical markets such as real estate. You may even lose your job, although with unemployment around 5%, it's not as likely as it used to be. Prices may rise. But that doesn't mean your finances have to go into recession. You can still increase your net worth quarter by quarter, or at the very least, hold steady.

There's a saying that goes "all politics is local". I think the same can be said for recessions. A national recession doesn't mean everyone's in financial trouble; conversely, there are plenty of folks in financial trouble when the economy is booming. If you continue to budget and spend wisely, slowly (or quickly) build savings and rapidly pay down debt, you can enjoy financial security and peace of mind in the midst of any national or global recession.

So don't let all the hand-wringing and prognosticating over financial doom get you down. Start "recession-proofing" yourself today!