How to prepare for the next recession?

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Ego
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Re: How to prepare for the next recession?

Post by Ego »


plantingourpennies
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Re: How to prepare for the next recession?

Post by plantingourpennies »

In addition to size of nut (very important!), get some income producing skills that will be useful in a downturn.

For me, this is sales. A company is loathe to cut it's sales force and will cut budget in other areas first.

If you're one of the few that are s producing an income in a major recession you can buy assets at massive discounts.

ThisDinosaur
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Re: How to prepare for the next recession?

Post by ThisDinosaur »

My job is recession resistant (I think), so I am anxiously anticipating a market drop so I can start buying up US stocks again. I don't have much cash lying around (about two months worth) so I am more fragile there than I should be. But most of my money is in non-US funds. Historically, recessions are *usually* restricted geographically and, in the US, *usually* last no more than two years.
https://en.wikipedia.org/wiki/List_of_r ... ted_States

chicago81
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Re: How to prepare for the next recession?

Post by chicago81 »

I made it through 2008-2010 unscathed and employed at the same company throughout. It was quite a boon to my net worth to be able to continue to throw a lot of my income into the stock market at those levels.

I feel that I am pretty much at the twilight of my working career, but I have a big case of (several) OMY-syndrome due to uncertainty about costs for medical insurance and/or care in the United States, along with a few other one-time large expenses that are coming up on the horizon.

If your main concern about the next recession is the potential loss of employment/income, here is what I have done:

I maintain a spreadsheet that lists a bunch of companies that are potential employment opportunities.
Any time I hear of an interesting company in my field, or hear of a colleague getting hired at another company, I add that company name to the list.
Along side the company, I keep the names of the colleagues.
Currently I have a list of about 100 nearby companies where I could look to for future employment.
What are the chances that 100 places all turn me down, even in a recession? :)

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C40
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Re: How to prepare for the next recession?

Post by C40 »

- LOW SPENDING
- Recession-proof work. (I worked in a specific part of industry where no matter what happened, people would not stop buying our products and only gradual reductions to our volumes would happen, but only slowly, and it was more like shifts to cheaper products rather than stopping or changing to competitors.... It was also a type of product where logistics are a critical part of cost, and where quality/trust/reputation is important, so buying these products from mexico, china, etc. was out of the question)
- Don't own a home in a city where employers failing will cause real estate price crashes (For example - like living in a smallish city in 2008 where a lot of the population worked at a car factory or suppliers that could end up shutting down... of course it's hard to know the risk before it happens, but you could have an idea)

jacob
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Re: How to prepare for the next recession?

Post by jacob »

I retired in March 2009.

25x savings
Low spending
Side-income (contractor) that would cover low spending.

It's important to set this up in advance (1+ years ahead) because once the recession is officially declared, jobs and income opportunities will be vacuumed up; the market will be down; and even selling stuff for cash won't be doing well. Conversely, if you're prepared, you can profit on the lack of preparation. Lots of cheap stocks back then. For example, you could buy WFC (Wells Fargo) for <$10. Also cheap stuff on ebay, craigslist.

W/o preparation, the key is to act fast. If the job is lost, reduce spending immediately. This will make the money last longer. I saw a lot of examples of the opposite back then much to my dismay. People would keep up their spending presuming that they'd find something in time. When they didn't the adjustment was so much more brutal.

enigmaT120
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Re: How to prepare for the next recession?

Post by enigmaT120 »

I didn't have any trouble that time. People still wanted to eat food, and various government agencies that purchase it still wanted it inspected. Now I'm just hoping they'll offer an early-out to cut government spending....

George the original one
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Re: How to prepare for the next recession?

Post by George the original one »

Recession-proof jobs only means that the 90% of people who kept working weren't laid off or managed to quickly find new work, a form of survivorship bias. It sucks to be in the other 10% though.

Be prepared to move to find a new income.
Don't be afraid to switch careers.
Don't be too picky about the work you take.

One of my friends was laid off during the great recession. He managed to find a string of temp/contractor work that kept him viable for awhile, but by 2012 he couldn't find any more. Unfortunately, he got picky about the work he was willing to do and didn't bother switching careers, so he became one of the permanently unemployed, his two condos were foreclosed, and he drained his retirement account trying to sustain things. Today he is living in his mom's apartment, training, but definitely still unemployed because he isn't changing careers. Tough place to be when you've passed 50!

halfmoon
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Re: How to prepare for the next recession?

Post by halfmoon »

scriptbunny wrote:* If a homeowner, prepare for primary home to lose value
Having your home lose market value for a few years is only a problem if you want or need to sell/refinance it. If you buy less home than you need, pay cash or keep the loan payments small and the interest rate fixed, then a lower market value can be a boon in lean times because it translates to lower property taxes. I enjoyed seeing our taxes go down for a few years, but they're back up now because our properties are "worth" more. Yippee.
George the original one wrote:Don't be afraid to switch careers.
Don't be too picky about the work you take.
+1 to flexibility.

James_0011
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Re: How to prepare for the next recession?

Post by James_0011 »

My suggestion would be not to buy property in case you need to move to find employment in the future.

George the original one
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Re: How to prepare for the next recession?

Post by George the original one »

James_0011 wrote:My suggestion would be not to buy property in case you need to move to find employment in the future.
Not necessarily. Getting a renter in the property is not too bad of an outcome.

James_0011
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Re: How to prepare for the next recession?

Post by James_0011 »

True, I didn't think of that. Although a property that you may want to rent out may be different from one that you would live in.

Riggerjack
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Re: How to prepare for the next recession?

Post by Riggerjack »

True, I didn't think of that. Although a property that you may want to rent out may be different from one that you would live in.
This has more to do with landlording style than anything else. You can maximize returns, and go for apartments or you can minimize headaches, and rent out nice single family homes. Or not go to either extreme.

ducknalddon
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Re: How to prepare for the next recession?

Post by ducknalddon »

Big companies often have a hiring freeze during recessions so they will use contractors to work around that. Eventually it catches up though as new projects aren't started and old ones are finished or cancelled.

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