Become a Recession Prepper and Survive
How to get ready for a downturn in the economy
The ‘doom and gloomers’ are at it again.
They’re using the ‘R’ word. Recession. That’s the technical word for when the economy goes through a tough time.
There’s a lot going on. Housing costs are high, there are several wars in our headlights and people are carrying too much debt. Not good.
Just a few things to be concerned about.
Here’s another one. When the government raises interest rates to slow down spending, the higher rates make it harder for people and businesses to spend and invest. That adds to the ‘R’ problem.
So what’s really going to happen?
There are a bunch of things that are semi-related to each other. One negative thing affects the others until everything is in a slow downward spiral.
People stop buying things they don’t really need.
When all your money goes toward food and rent, there’s nothing left for the fun things. When there’s less money flowing around, it’s harder to get ahead.
The good side is that people learn to be more careful with their money. They figure out how to budget. They cook, rather than eat out, which is healthier. Some people learn how to sew and mend their clothes, rather than buying new ones.
It’s better for the environment when we don’t spend as much. There’s less packaging going in the trash and we repair things, rather than throwing them out.
Companies slow down their spending too
Businesses might delay or cancel plans to invest money in new projects. High-interest rates make it harder for a company to borrow. This can slow the economy unless something new happens.
The good? Companies are investing in new technology. EVs and the potential of artificial technology are two big things that might boost productivity. That could slow down a recession and spark new projects.
People get laid off
If companies have to tighten their belts, they’ll let some people go. This makes the situation worse unless they have some savings to fall back on.
The good? If you’re prepared, you can weather this storm.
Banks put the brakes on lending
Banks set a higher bar for lending money. That’s to protect them from too many bad loans. This is one of the main things that push the economy down the spiral even more.
The good side? Banks won’t crash, which would make the problem worse.
The stock market drops, big time
People panic and sell shares, which drives the price down.
The good side? If you have some cash, it’s a great time to invest. If you know a company has value and its share price drops, you can get a great deal.
Houses get cheaper
People don’t have money, and can’t get loans so fewer people buy homes.
The good side? The price of houses goes down. That’s bad for the bank and for people with large mortgages. But lower prices can help people get into the housing market. Again, if you have money set aside, you’ll do ok.
You might get a break from the government
Tax cuts are one small advantage that can happen. The government tries to put money in people’s pockets. If they can increase the money floating around out there, it might support a business or two.
The good side? Interest rates might get lower. That will help some people get loans or buy a home. Some businesses will be able to make investments or hire back staff.
It’s catching
Like a virus, a recession can spread around the world. If fewer people are buying things, countries that sell them to us will be in trouble too.
What to do, what to do……..
Think like a prepper and get ready now
- If you don’t have a budget, create one and stick to it. Make budgeting a habit before you have to do it. Take another look at your standard of living and find ways to lower it.
- Cancel subscriptions and other automatic payments. It’s surprising how much money leaves our bank account in small amounts every month.
- Stockpile nonperishable food. If you’re already a prepper, you’re ready for an emergency. If you’re a newbie to this, focus on nutrition.
- Pay down as much debt as you can, especially debt with higher interest and secured debt. You don’t want to lose your house or car.
- Sell items you no longer need or use. Consider selling your extra vehicle. Take the bus and save the cash.
- Look at your investments. Consider selling some of them now, while the prices are stable. If you have cash on hand and the stock market drops, you’ll be in a good position to buy them back.
- Put your emergency fund into cashable GICs or other easy-to-access investments. Add as much cash to this fund as you can.
- Don’t be the weakest person at your current job. Be the person they can’t afford to let go because you have an amazing work ethic and a valuable skillset. Take advantage of any learning opportunities they offer.
- Get a second job. Create multiple streams of income so you’re less reliant on a single one.
- Work with your hands. If you learn how to fix things, sew, or bake, you can support yourself and reduce your costs.
- Learn how to cook inexpensive meals. Plant a garden. Make friends with local farmers and offer to work for food.
A recession might sound scary, but we’ve survived several over the years. If you can see it coming, it will make things easier for you.
This is in no way to be considered investment advice. Go talk to your investment advisor before you make any decisions.
