By Jeff Brown
The big “stress test” is all over the news, as the government reports on how well the country’s biggest banks could weather a deep recession. That said, it’s a good time for an individual stress test as well.

How successfully could your household withstand a continued economic downturn? And what can you do to improve your odds of survival?

Individuals should take a lead from banks like Citigroup (Stock Quote: C), Wells Fargo (Stock Quote: WFC) and Bank of America (Stock Quote: BAC) and build reserve funds.

Despite some positive economic signs, the economy is still in big trouble. Unemployment continues to rise, though the rate of new unemployment filings is no longer accelerating.

The household stress test should be a soup-to-nuts look at what would happen if, for example, one or more breadwinners starts making less or loses a job. The goal should be to survive as long as possible before stooping to take a job that will make you miserable or won’t fit your career plan.

Start by studying discretionary expenses, like entertainment and meals out. By trimming these now, rather than waiting for a crisis to hit, you can build a reserve fund to get through hard times. Many people are startled to discover how much they spend on incidentals like snacks, pay-per-view cable and unneeded cell phone minutes.

Fixed expenses are tougher to deal with but may be trimmed with some effort. With mortgage rates at near-record lows, homeowners should look into refinancing to reduce payments. Use the Refinance Interest Savings calculator to see what you could save.

Currently, the 30-year fixed-rate mortgage is a bargain, averaging just 5.05 percent, according to the BankingMyWay.com survey. Find the best deal with the site’s shopping tool.

If refinancing won’t save you enough to justify the costs, look into getting a home equity line of credit which will allow you to borrow against the difference between the home’s value and your mortgage balance. This will give you access to inexpensive loans. To qualify for a HELOC, apply while you still have a job. Use the shopping tool to find a good deal.

Try to trim your debts by cutting back on credit card use and stepping up monthly payments on high-interest card balances. Use the credit card shopping tool to find cards with lower interest charges, or shift your debt to a new card that postpones interest charges on balance transfers.

To minimize new expenses, reexamine your spending practices. Many people, for example, figure it doesn’t make sense to spend $2,000 repairing an older car that’s not worth much more than that.

In fact, it’s usually cheaper to keep an old car going than to buy a new one. The best approach looks at the cost of driving per mile. If a $2,000 repair keeps the old car going for two more years, that’s cheaper than a new car with a $300-a-month payment.

And if you absolutely must replace a dying car, consider one that’s three or four years old. It may cost half as much as a new car and still have 80 percent of its life ahead of it.

Finally, look for the most profitable way to save your cash reserve. Six months worth can go into checking and savings accounts, so you can get at it immediately. Money you may not need until after that can earn a bit more in certificates of deposit. Use the shopping tools for CDs and Savings to find the best rates.

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