Most people are happy when laptops and cell phones get cheaper by the year. But deflation, a persistent decline in prices and wages across the board, is another matter; something consumers, homeowners and investors should know how to weather.

In the U.S., consumer prices fell 0.7 percent from April 2008 to April 2009, the largest such drop since 1955. Many economists forecast a period of mild deflation for the next few months, lasting perhaps until fall. But a few warn that deflation could grow into a serious problem if the recession drags on.

Deflation can be devastating to borrowers. Many homeowners are already suffering from this as they find they owe more than their homes are worth. In a true deflationary period, wages fall and assets lose value, while debts, of course, stay the same.

Deflation typically undermines stock prices as well. Companies’ sales drop as consumers postpone purchases of goods that could lose value. Managers then resort to laying off workers, further undercutting consumer spending in a vicious spiral. As companies earn less, they find it harder and harder to repay debts.

One of the key strategies for minimizing the impact of deflation, therefore, is to keep debt low. Avoid taking out a big mortgage and racking up credit card bills.

If you worry about deflation, consider postponing purchase of assets that could lose value, like a home or new car. Renting may be safer than buying a home. Not only would you avoid a loss from falling home prices, but rents could get lower as deflation wears on.

Since you could face a job loss, wage cut, furlough or other income reduction, build a good cash reserve.

To keep it safe, put it in a federally insured certificate of deposit or savings account. You won’t earn much on interest, which tends to fall during deflation, but you’ll have a government guarantee against loss of principal. And, of course, each dollar will buy more as prices decline, making the lack of interest earnings easier to take.

Twelve-month CDs currently average around 1.358 percent, and six-month CDs about 1 percent, according to the BankingMyWay.com survey. Plenty of CDs beat the averages -- AIG Bank (Stock Quote: AIG) has a 12-month CD yielding 2.41 percent, while Discover Bank (Stock Quote: DFS) has one at 2.35 percent.

Use the BankingMyWay.com shopping tool to search for generous CDs, and use the CD Ladder Calculator to find a mix of CDs that will provide the best combination of yield and liquidity.

U.S. Treasury securities also provide a good safe haven during times of deflation. Again, interest earnings may be close to zero, but the government guarantees return of principal. And high demand can drive Treasury prices up during deflation.

You can buy Treasuries from the government through its TreasuryDirect site. Also, most mutual fund companies have Treasury funds. Shop for them through market-data firm Morningstar, Inc. (Stock Quote: MORN).

Some experts also recommend high quality corporate bonds during deflation. It’s critical, however, to be sure the quality really is high, ensuring the company will continue paying interest and return your principal.

Companies that run into trouble in deflation can default on their bond obligations, or have bond ratings cut, weakening prices.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.