Update: June, 2020 - Well, it looks like the recession has arrived suddenly! With the Coronavirus/COVID19 pandemic currently sweeping the world, I put together a FREE Financial Crisis Survival Guide (blog post with available printable PDF) to help those of you either preparing for or responding to a cut in hours, layoff or termination.
Here's the blog post for the guide: Financial Crisis Survival Guide (Version: COVID19) Blog Post Version
Link to the blog post.
Here's the free downloadable PDF version of the guide: Financial Crisis Survival Guide (Version: COVID19) Downloadable PDF version
Link to the FREE downloadable/printable PDF guide.
Are you ready for the next recession? If not, are you preparing?
I don't know when it's coming. No one does for sure, but as history has shown, we're certainly due for one (about once a decade).
So, if your finances aren't in order yet, then it's the time to start looking at your budget, your debt and your entire financial picture. I don't want for you to be blindsided by the inevitable.
Here's a video I shot a few months ago about "recession prep". Looking back I wish I would have been more "forceful" in my messaging, but heck if you're here, it's hopefully not to late to get prepared.
The 2008 "great" recession wasn't all that long ago and it could happen again. As a matter of fact and of history, some semblance of an event like that will happen again.
Why? Because economics are cyclical. It's just the way it works.
My intention is to get you prepared for it, so rather than being a negative event for you, it can actually be a positive one.
Even The Bible warns us to prepare for "less than ideal" circumstances:
"Give a portion to seven, or even to eight, for you know not when disaster may happen on earth." - Ecclesiastes 11:2
By the way, I feel compelled to write a short disclaimer about this article here at the beginning.
My intention in writing this piece is not to be alarmist or to send you into a panic attack about your financial situation.
Not at all. I’ve been there. I know what that's like to feel that way and I know that it's not fun and not necessarily productive, so that is not at all my intention.
Rather, my intention IS to nudge many of you who have fallen into a slumber about your financial situation given the "good times" we've been experiencing these last few years.
I say "good times" even while I simultaneously understand it hasn't been good for all of us.
But for a lot of Americans the times have been sufficiently good enough for them to let their guard down economically.
It's lead to relaxing of their paying down of debt and maybe even lulled them into a false sense of security that "it's okay" to go into more of it.
Whatever the effect of these "good times" have been for you, I want to encourage you to spend some time watching the fantastic and short-ish documentary I'm going to recommend below.
No matter where you are in the debt elimination or wealth building process just let this piece serve as a bit of a wake up call for you. Let it motivate you to sound the alarm for your friends and family, too.
Let it serve as a means for you to benchmark where you are versus where you need to be financially.
Okay, disclaimer finished.
Okay, so I always like to present the bad news first. That makes the good news even better (hopefully).
The bad news is…. there’s a recession coming. I know, I know, no one really knows when it will happen, but like I said earlier it’s part of the business cycle and it WILL happen again.
Are you prepared for it? Have you mapped out what that might look like for you?
Now the good news. You can be in such a strong financial position that you’re not only not phased by an economic down turn, but you’re even poised to take advantage of certain things that go on “sale” during a recession.
What do I mean? I mean that you can and should be out of debt, have an an emergency fund and a small-to-medium-to-large pile of cash set aside for when real estate, the stock market and other assets are “devalued” during a recession.
With 78% of the population living paycheck to paycheck, let’s face it there will be TONS of opportunity to acquire lots of things broke people are buying that they can’t afford.
Please don’t be one of them. If you haven't yet, please get on a written budget, start eliminating debt and live well within your means.
One of the most unsettling themes of this short documentary is that most people have all but forgotten the financial meltdown of 2008.
Foreclosures, car repossessions, bankruptcies, and general economic despair became much more mainstream during this period as people lost jobs, homes and ultimately, hope.
You can watch the documentary here: The American Nightmare
It was a dark time. I personally remember how frightened I was, even though I had totally eliminated my debt by that point.
Do you remember? What was it like for you? Have you recovered?
I was shocked to learn that, even as of 2019, many have still not financially recovered from the crisis.
What?! "How is that even possible", I thought to myself as I watched the doc.
$1.6 Trillion in student loan (US), over 100 million Americans have car loans. The average car payment is over $500/mo.
The question is "why"? Have we not learned anything from 2008? Did we learn and we just forgot?
Those are more philosophical and rhetorical questions that are beyond the scope of this post.
Nevertheless, I would submit to you that no, we did not learn and yes we have just forgotten.
It’s been the case since the beginning of time and it will continue to be until the bitter end.
The more important and question is, "what about you?" Where are you in this process? Have you recovered from 2008?
Since eliminating my own debt in 2007, I’ve promised myself that I would NEVER forget what it was like to suffer under the insurmountable burden of debt and living paycheck to paycheck.
You might even say I’m on a mission to help make a dent in the reduction of this pervasive phenomenon in our culture.
I will never forget and I will always be willing to help.
The point I'm trying to make here is that, if you haven't started or finished getting out of debt, I desperately want you to.
But it's imperative that you start now. Or if you've already started and stalled, restart.
Again, if you’re looking for some resources to get started (or restarted), you can download our free budgeting forms.
Also, if you’re in a place where you’re ready to kick your debt in the teeth, here’s the link to our free “8 Steps To Erase Debt” guide for you to use as your foundation.
The point is, don't wait, start imperfectly, start now!
You can always get help when you get stuck (and you will, I promise). But at least you'll have started. That's THE MOST important part.
I part with you today with a call to action directly from Ecclesiastes:
"In the morning sow your seed and at evening withhold not your hand, for you do not know which will prosper, this or that, or whether both alike will be good." - Ecclesiastes 11:6
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!