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Monthly Archives: June 2015

Financial crash concept on whiteWhat would do if you had a strong impression that another recession was coming soon? What kinds of actions and changes would you take to weather the coming storm? The steps that I list below aren’t a complete list by any means, and I don’t expect that anyone would be able to accomplish them all, but if any of them sparks something in you to do something that you’re not already doing to become better prepared for a sudden and significant economic downturn, I will have fulfilled the purpose of this blog.

The signs of a coming new recession are all around us:

  • There has never been a sufficient recovery from the Great Recession that started in the autumn of 2008 with the collapse of the housing market. A huge number of people have been unemployed or severely under-employed since that time. They haven’t experienced any recovery or reprieve, just a severe downslide to the brink of poverty and a radical adjustment to what for them has become “the new normal.”
  • Having tens of millions of new people become dependent on the government for food stamps, medical care, and other necessities of life has been a boat anchor for the economy. In a real recovery they would find decent jobs, they would produce something, make their own money, spend their own money, and save some of their own money. All of these things would make life better for everyone. Instead, it is a growing problem that will continue to apply downward pressure on the economy.
  • Big companies have begun laying people off again. Sandy and I run a business-to-business company. Our client businesses have stopped spending money, are laying off employees, and are offering early retirement deals to help save money in the future. All of these are signs of economic contraction.
  • The stock market has been climbing to record highs, but it’s all smoke and mirrors. The rise isn’t caused by underlying economic strength, but because of years of “economic easing,” the federal policy of printing billions of dollars of new money out of thin air. It creates the illusion of wealth without having any real foundation for it.

I could go on, but if you’re reading this article, you probably don’t need to be convinced. You just want to know what to do to help you prepare for it.

  • Stop the bleeding! Are you spending money as if all is well and everything will go on as it always has? Stop it. Take an honest look at every aspect of your life and look for places where you are spending money that you may soon wish you still had. Sandy and I love to travel, but because of the recessionary clouds on the horizon, we’re not going anywhere for a while. Our DirecTV bill is $100 per month. I’m looking into pulling the plug on it and going with all Internet-based streaming TV. Eating out can be another huge drain on a household budget. You can eat like royalty at home for a week for the price of one or two meals out at a marginal restaurant. Make sacrifices. Stop the bleeding.
  • Reduce your debt. Debt is the obligation for payment of money that you spent sometime in the past. Debt is just like the government’s economic easing policy — you generate cash out of thin air to buy things you can’t afford today and hope that you can find a way to pay for them tomorrow. When a recession hits and you aren’t making as much money as you used to (or no money at all), you don’t want to have to pay for purchases you made a long time ago. You’ll need everything that’s coming in to go toward current expenses. Reduce or eliminate your debt now so that you won’t be trying to pay for past expenses at a time of increased current need.
  • Spend wisely. Is there anything that you could buy now that would be a good investment against hard times to come? Is there anything that you could buy now that would either help reduce your expenses or increase your income in the future? I’m thinking about things like:
  • Sell some of your stuff. Do it now. We all have stuff that we don’t really use or need, but for some bizarre reason we hang on to. Sell it now, while you can find a buyer who has the money to pay you what’s it’s worth. The other option is waiting until a major recession hits, needing to sell it to generate cash, and not being able to find anyone who can afford to buy it.
  • Save wisely. It’s tempting to spend all of your money now to buy things that you expect to need in the future. Prices continue to inch upward on almost everything, while incomes remain flat or actually decrease. Some staples that we stocked up on a couple of years ago are selling for 25% more now. That’s a pretty good investment return. Some people believe that our money won’t be worth anything in the not-to-distant future, so they say you need to spend it now to get anything at all from it. I don’t know enough about that stuff to have an opinion on it, but I do know that having a cash reserve has always been a good idea in the past and looks like it’s still a wise choice for the foreseeable future. Saving wisely can be a tricky one. Save as much as you can afford to now so that you are able to meet future expenses, emergencies, or can pounce on a great deal if the opportunity presents itself, but don’t save so much that you can’t spend wisely and reduce your debt now.
  • Increase your income. Earning more money will help you accomplish all of the bullet points in this article. There’s a lot of talk these days about creating multiple revenue streams, which is just another way to say adding an additional source of income to your primary job. You’ve heard the old saying that “it takes money to make money.” Yes, but to meet the goals of the challenge of preparing for the sudden onset of a significant recession, you want to find something that you can do to earn extra money that won’t cost you an arm and a leg to set up. What can you do to earn a buck on the side without a lot of start-up costs?
    • Build things
    • Repair things
    • Cook / bake / cater food
    • Sewing and alterations
    • Create and sell crafts or works of art
    • Sell new or used products on Amazon (yes, you can do that), eBay, or Etsy
    • Pet-sitting or house-sitting
    • Do yardwork
  • Trust God. I really wanted to lead with this point, but I also didn’t want anyone to tune out before I got to it. You won’t find “God helps those who help themselves” quoted in the Bible anywhere, but I believe that God expects us to do our part, and He wants us to trust Him to do what we can’t. Some people refuse to prep because of their faith in God. I’m just the opposite — I prep because of my faith in God. I take action because I trust in Him.

Even since I sat down to write this I’ve received word of one of our client companies cutting their budget to the core and requiring all employees to take a week off without pay this summer. The storm clouds of recession (or worse) are everywhere. It’s time to get busy and it’s time to trust God.