Recession
Preparing Financially
Emergency Funds
- Save up at least 1k or 3 mon of salary to live off of
- Keep savings in a CD or low risk savings account so it can’t be spent willy nilly
Debts
- Pay off debt as quick as you can
- Pay off high interest and credit card debt first
- Use budgeting system to track your money
Generate additional income sources
- Provide services to people in their homes, such as house cleaning, home organization, meal preparation, or interior decorating.
- Sell goods you produce, such as baked goods, custom clothing or jewelry.
Financial Advisors
- Investors can shield the bulk of their assets from a market crash or an economic depression with preparation and diversification.
- Diversifying your portfolio is probably the single most important measure that you can take to shield your investments from severe market difficulties.
- Most professional traders move to cash or cash equivalents when there is real turbulence in the markets.
- Keep at least a small portion of your portfolio in guaranteed investments that won't fall with the markets.
- You can also protect your portfolio by hedging your bets with options, paying off debts, and using tax-loss harvesting to mitigate your losses.
Economic Collapse
After delivering its second consecutive year of 20%-plus gains, investors will be watching the S&P 500's January performance closely. The index's January performance has historically been a strong predictor of performance for the remainder of the calendar year. The New York Fed's recession probability model suggests there is still a 29.4% chance of a U.S. recession sometime in the next 12 months.
- Wayne Duggan, US News Money
Worst Case Scenario
- The value of your currency falls drastically, inflation hits an all-time high and paper money is essentially worthless.
- Banks go bust and even virtual currency has no value. Credit and debit cards cease to function.
- Panic-buying and looting sets in due to low economic activity (and therefore no means to transport supplies round the country), so stores run low on food and supplies.
What to do
- Have back up funding in commodities like alcohol, precious metals, and fuel
- Keep liquid cash on hand in a cash box
Sources
- How to Prepare for Economic Collapse
- PDF 6 ways to prepare for a market crash
- Prepare For Economic Collapse [9 Tips]
Saving Tips
Food
- When meal planning - aim to make recipes where eat serving is less than $1 per plate.
Shopping
- Buy in bulk only when it makes sense
- Go to a CostCo or other bulk membership location for multiple people and split cost of membership