Financially Surviving a Recession

[thecubemonkey]

Hi everyone...I recently wrote an article on my blog titled, "Six Steps…to Financially Surviving a Recession."

With all of the recession talk on the news, the housing market crisis, stocks plummeting, etc...many are worried. This post drew a tremendous amount of traffic to the site and most came from Google searches...which surprised me as most other articles are from links from other sites.

I thought you might want to take a look and add your two cents. There seems to be a lot of worry out there and I think we can all help people survive a recession if we pull or ideas together.

Thanks,
Ron

[1000feet]

Most of that advice is what people should be doing anyways... being worried about financial readiness for a recession at this point is ludicrous. When the media mentions a recession they're just "breaking the news" that the economy can't grow at 15% per year forever. That's it - the worst the average person will feel is probably slower growth. There may be industries that take it harder than others, but they have their own reasons (homebuilders had their fun and now it's time to wait out the market).

Maybe it's because I don't have a supposedly stable job but I don't see anything to worry about - seeing my income jump up and down from 50 to 100% from month to month probably has something to do with this but I know that since I have great skills and reputation there will always be people willing to pay for my help. If someone absolutely needs the same paycheck from the same employer every 2 weeks or the whole situation will fall apart, being prepared for a recession isn't their problem - it's being prepared for life.

[thecubemonkey]

1000feet,

You are 100% correct. The advise I give is life advice...but many times people don't think about it until something jolts their system...like talk of a recession, terminal disease, etc.

Thanks for the input...

[codefreeze]

Nice post Ron. The sad fact of the matter is far too many people in our society today are complete dunderheads when it comes to managing their finances - many of the institutions are no better!

Sadly, in the West people have been living a life of debt-filled consumerism and now those financial issues are coming home to roost.

When will people learn it's not about "getting more" but "wanting less" that is the path to real happiness. It's about focusing on what really counts.

Yes, you are right it often does take a serious hiccup to jolt people into taking stock and re-engineering their lives. Thankfully, with sites like yours out there, people are changing...but slowly.

[elliot]

Originally Posted by thecubemonkey

Hi everyone...I recently wrote an article on my blog titled, "Six Steps…to Financially Surviving a Recession."

With all of the recession talk on the news, the housing market crisis, stocks plummeting, etc...many are worried. This post drew a tremendous amount of traffic to the site and most came from Google searches...which surprised me as most other articles are from links from other sites.

I thought you might want to take a look and add your two cents. There seems to be a lot of worry out there and I think we can all help people survive a recession if we pull or ideas together.

Thanks,
Ron

Great posting, I love your article It reminds me of Ramit Sethi's I Will Teach You To Be Rich blog. I like the general flow of the posting. Not too much fluff and enough information to really help those committed to taking action. Personally, I have dumped all my stocks except for one that took a huge nosedive about 3 days after I bought it, even though the fundamentals of the company are positive.

I recently made a huge purchase, a new automobile with more luxuries and 30-40% greater fuel economy than my old, soon-to-be out of warranty one. It could be assessed in many different ways, but it still is an enormous expense to me. If my income were to go up say 5k or more this year I wouldn't feel as much of a blow. Right now though I'm reshuffling my assets so I have at least one year of an emergency fund available. Easier said than done.

I hate debt with a passion, but also must look at the big picture. Is the debt in question truly bringing me happiness / moving me close to my goalsl, or is it simply a hole that sucks up huge amounts of money. It's a question of balance.

For me personally, I still live with my parents at 24 years of age. That makes things a lot easier than me vs living alone, but dealing with student loans and auto loans is a reality that I likely will be dealing with for the next few years. Does it bother me? Not as much as it used to and here's why...

The Executive MBA will boost my earnings potential by significantly more than what was involved in earning it. Right now I am experiencing challenges in unleashing my potential. Market is bad, workplace is increasingly competitive, etc. If I stay where I am and do my best to move up, but there will always be a part of me that wishes I chose something else.

My old vehicle, a 2003 model was purchased used and provided me with three years of reliable sporty transportation. During that time the cost of gas doubled, things such as sensors began to go on the car and the warranty coverage would soon be completely gone. It was a challenging decision, but I chose piece of mind over the smartest financial decision (running it into the ground and making small fixes as necessary). Had I been a mechanic, or been close to someone who was, my choice may have been different.

Everyone has a vice, for some it is shoes, others alcohol or cigarettes. Mine is eating out. The convenience of it really puts a dent in my wallet. $8 chicken salads at the restaurant near my job, then spending the same or more come dinner time. Multiply that by 50 and you get $4k. That's the equivalent of a year's worth of car payments. These things add up fast. Taking food into work or running home on my lunch break to grab a bite results in healthier eating with minimal expense to me.

As you've indicated, saving is a huge deal. I feel sorry for those people who are in a rush to cash their paychecks as soon as they receive them. It's like the money is burning a hole in their pocket. If a person can't be trusted to save some of a $1000, how are they going to be with 3,4,5 a week. My rate of saving had been between 20 and 30% of my annual income. It worked well for me at the time, but then I had to start paying off loans.

Diversification is also key to ensuring long-term success, especially if you're playing in the markets. Too many people get burned thinking just because the company they're interested in has record performance today doesn't mean they won't experiences setbacks later down the road. Look at Apple and Google. Even companies powered by the most talented creative minds in the world are subject to the ebbing and flowing of the markets.

[thecubemonkey]

Hey elliott....thanks for the reply..good stuff! Eating out is a big one for me also. My wife and I try to limit dinners out to once a week and we are both allowed one lunch out while at work.

Electronic gadgetry was a weakness but I cut that out about 5 years ago. But, when I go into Best Buy I still get all giddy...but I refrain!