I should be able to manage. I'll just be more careful at what I'm doing a lot more that's all, and take huge advantages of all the price drops.
I think being careful is the main thing to be honest, and that's probably why a lot of people don't cope with a recession. If you don't change the way you live, according to certain economic trends, then people will be caught out. You can't earn and spend the same amounts during a recession as what you can when times are good.
Completely agree. When times are hard, you've got to make sacrifices and some smart choices. Coming off the last recession I learned a hell of a lot and will be damned if I make the same mistakes I did back then. If everyone was smart and budgeted accordingly then there should be no serious cause for alarm come another recession.
Those who are hit hardest by recessions are those who overspend, over-borrow, who make their money in cyclical industries, and who lose jobs/businesses and end up unemployed or under-employed for very long. I've learned not to spend to much, to minimize and pay off debt, to not get too cocky, and to keep a good chunk of my assets liquid. One thing I've learned over the years is to never get too complacent. I never wake up a single day being totally fearless and sure of everything. Other than the sun coming up in the morning and going away in the evening, I'm not too sure of much else I encounter.
How exactly do you keep your assets liquid? Or do you mean that you have large cash reserves available at any moment?
I like to keep most of my money in stocks, mutual funds, ETFs, REITs, short term debt, and some cash. Basically anything that is either cash or that can be easily converted to cash quickly. I've known lots of people who who won't go near stocks, bonds, etc. They say it's all a "ponzi scheme" or whatever. That it's not an investment if they can't see it, touch it, feel it, smell it, etc. They stick to real estate, private businesses, etc. But as good as these things can be in good times, they can be very hard to liquidate when the tide changes. I don't like being in a situation where I've got little or no cash flow available. And I don't use much in the way of leverage or other borrowing.
I couldn't agree more. This last "credit crunch" has forced me to adopt more money-saving habits and I'm actually grateful. Now I'm coming out at the other side, I'm finding that my new attitude is starting to pay off. Not only do I have a little more spare cash but I've also managed to reduce waste and up my income. If it doesn't kill you, it just makes you stronger!
The money I have in investments is money I do not need for my day-to-day expenses between now and retirement. So as long as a recession does not directly impact my income or expenses in a dramatic way, it does not effect me. I sat on my investments through the last recession, I dare say I will do the same through the next one.
