IS IT TIME TO…
Several economists are proclaiming “Now is the time…”
1. https://www.businessinsider.com/jeremy-grantham-recession-stock-market-crash-fed-bubble-rates-policy-2023-8?op=1
2. https://www.marketplace.org/2023/08/17/leading-economic-indicators-recession/
Now is the time to solidify your resources, they say. They are claiming that there is a serious recession coming. This time, they say, the recession was “baked in” when the Fed started raising interest rates. Namely, the Fed is hoping to cause a period of net reduction in jobs. The Fed goal is to cool the economy.
When the number of jobs decreases it puts downward pressure on prices, slowing or stopping inflation (sometimes causing a deflation). However, too many interest rate increases can also damage the economy and kill too many jobs, so it is a fine wire tightrope they are weaving.
WHAT DOES THAT MEAN FOR YOU?
1. Your job may be on the line.
2. You may have incredible opportunities IF you have the money to take advantage of them.
3. Your house may soon be worth less than you paid for it.
4. Your investments may take a nosedive.
That your house may be worth less is significant only if you were hoping to borrow against its value, or if you were hoping to move.
That your job may be on the line creates obvious problems. One of which is that you may not be able to pay for your house, car, and groceries.
That there may be amazing opportunities implies that you will need savings to take advantage.
As far as investments, you should think NOW about turning some portion into cash. It doesn’t have to be a huge amount, but now may not be the time to be 100% invested. You have no way to take advantage of a downturn if you have ZERO cash. Remember, never sell when the market is falling.
[My strategy (purloined from those wiser) is to buy on the down and sell on the up. If I like a stock (or fund) and it loses 3% I will buy a little. If it drops another 3% I will buy some more. When it recovers I will have gained on both purchases. However, if my selective stock or fund is tanking when the market is going up…I’m less eager to take the plunge.]
IF TRUE, WHAT SHOULD YOU BE DOING RIGHT NOW?*
(* Note: several of these suggestions apply even if there never is a recession.)
+Work a Second Job. It is time to up your income. You may want to pay down things like credit card debt (which increases with every interest rate bump) and other unsecured debts.
+Reduce Expenses. Now is not the time to buy that new fishing rod or boat. 70% of American families spend more than 10% of their income on “toys” like above, or entertainment, or eating out. The U.S. Bureau of Labor Statistics claims that the average family (2021) spent about $3,000 on meals away from home (37% of their food budget), and about $3,500 on entertainment. That’s $250 per month on pizza, McDonald’s, “The Hungry Heifer,” and the local coffee shop. That is a big number which means that most families have an opportunity to change some things NOW which could pay off in the near future.
+Build or Increase an Emergency Fund. This is a 3-step process. a) Determine your minimum monthly needs, like loan payments, utilities, property taxes, insurance, food (not restaurant food), etc. b) Evaluate the likelihood of being laid off and how long. Your Fund should keep you for at least 3 months, but if you live in a town that is dependent on a single employer plan for 6. c) SAVE money for that rainy day.
+Think of Opportunities. I am looking at a few. If the market crashes I know what I want to buy. If it zooms I know what I want to sell. What opportunities are you looking for? Is there a property that, if it became cheaper, you would like to buy? Are there some stocks you would love if the price dropped by 30%? Then, stack up Benjamins to prepare for the opportunity. How do you think wealthy people build wealth? They plan to take advantage of opportunities.
+Plan for Troubles. COVID should have taught us to build a home supply when stores are abundantly stocked. I expect that, if there is a recession, the supply chain will snap again. Even now, going to the store, some shelves are sparcely stocked. Canned foods, TP, soaps, cooking oils, facial tissues (BTW you should have cloth hankies), rice, powdered milk, flour, 2x4s, and toothpaste all have long shelf-lives.
+Plan for Christmas. If a recession fails to appear, you can have the expense of Christmas shopping already covered. Wouldn’t it be nice to go into next year with no gift debt? That’s a nice Christmas gift for YOU!
THINK ABOUT IT…
Maybe it is time to take control of your finances. Have you written some big goal? Maybe it is time … to start dreaming big. What would you like to do that would take $50,000 or more? That’s a down payment on a simple home in some parts of the country. That’s perhaps your portion of a couple years of college for your son or daughter. That’s a good start to a retirement program.
Any one of those will put you ahead of most of your nearest neighbors. And it is funny, too, that some of the richest people own 4 year old Chevys. Some of America’s richest live in middle-income homes in middle-income neighborhoods. They got ahead by not attempting to “move on up.” You can, too.
Is it time to … ?
Copyright 2023 Donald Whelpley
[PLEASE NOTE that Don is always open to discussing the thoughts and opinions he shares here and welcomes comments as shared in the comment section. He doesn’t use other social media platforms, as I do, and won’t see whatever you’d like to share with him if you post it elsewhere. ~ Sherry]
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~ OOPS! That’s How I Write ~ The RE-COLONIZATION of America, pt. II ~
~ Laws The U.S. Should Enact ~ The Re-Colonization Of America, pt. I ~ How To Retire On Less ~ State Song ~
~ The “Holier Than Thou” Attitude of “The Boy Who Cried ‘Wolf’” ~ THE TRUTH ~ H.A.L.T ~ Where’s The Clamor? ~
~ Parents Who Lie ~ Odd Places ~ Internet Is Fragile ~ Shopping ~ Student Loans ~ A Government ~
~ Going To Church ~ Anheuser-Busch ~ Hans Van Doorn ~ he Wrong Problem ~ Talking About Money ~ Trustworthy ~
~ A Life More Beautiful ~ TECH with ATTITUDE! ~ Black Drink ~ Public Schools III ~ Public Schools II ~ Public Schools I ~
~ 5-Star Reviews ~ Fractions Matter! ~ Small Spoons ~ Dumpster ~ Weird Forgiveness III ~ Weird Forgiveness II ~
~ Weird Forgiveness I ~ Classified Documents ~ Future You Needs A Friend ~ Feeling Understood ~
~ Starting The New Year Right ~ Awe! Aah! Ooh! ~ Christmas As A Poor (Rich) Child ~ Bigger Problems ~ Blessing ~
~ Climate Change – 2 ~ Medical Science Too Far? ~ Gravity and Light ~ Travel Fun ~
~ Fascinating People: Gloria Hartman Doughty ~ Sadly Magic Words ~ Mulberries ~ Climate Change? ~
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