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Ask HN: What tips do you have for weathering a recession?
77 points by tbirrell on Nov 28, 2017 | hide | past | web | favorite | 104 comments
Joe Kennedy famously survived the Great Depression by selling out of the stock market once the shoe-shines started giving him advice. I'm not sure if it's just I'm in an industry where people are more aware or not, but I'm starting to get worried about an economic downturn in the next couple of years. Either way, I figure what helps in a recession would be good to do anyway.

What advice have you guys heard/followed for protecting against another recession? And I don't mean the generic "cut spending, have an emergency fund" stuff. I mean the stuff that I won't find at the top of a google search or on WikiHow.

Edit: to be clear, I specified against the generic advice because it's already easy to find and simple to follow. I'm looking for advice and tips that can supplement it. Thank you to those who pointed out why the generic advice is still a good idea.

Perhaps too close to the “generic advice” you’ve discouraged, but: accrue money while it’s plentiful, spend money while it’s hard to come by.

Right now, money is comparatively cheap and easy to come by. Salaries are high, the markets are doing well, and investment capital flows freely. During these times, most people spend money as freely as they earn it, which is a mistake. Your money will go farther during a downturn when liquid cash is rarer. So hoard now while others spend, and be willing to spend later when others are hoarding cash and it’s difficult to earn.

This is the personal finance equivalent of the poker maxim to play loose when the table is tight, and play tight when the table is loose. And it works for largely the same reason.

Eh, sorta. It seems like prices for anything never really go down, the firms that can't make a profit just go under so there's less supply. Or prices go up slower. You might have gotten 20% off a house if you bought during the 2009 downturn (or 50% in places like Vegas). This advice seems like Monday morning quarterbacking. Or maybe works of you're Warren Buffett.

As an old guy, I've weathered a few recessions.

Some things to keep in mind beyond the obvious "save some money when times are good" advice.

(1) they pass. slowly, for sure, but they do pass.

(2) you need something to do if you're thrown out of work. It's not for nothing that graduate school enrollment climbs when unemployment is high. For hackers, it's a good opportunity for an open source project.

(3) downtimes are great times to start new things.

(4) remember everybody struggles in a recession. There's no harm in asking landlords for temporary discounts, especially if their alternative is an empty apartment.

(5) try to make the subscriptions you have cancellable or downsizable. Let your phone contracts run out and keep your phones longer. Avoid the old "two year commitment up front in return for a tiny temporary discount" trick from vendors.

(6) if you really get in trouble, DO NOT IGNORE YOUR POSTAL MAIL. If you get summoned to court for an unpaid bill, SHOW UP! Often you can get a case dismissed by saying to the judge, "please show me the evidence." Bill collectors count on getting default judgements.

Many people don't have an emergency fund, so it's good advice and worth repeating. Being stuck in a high-expense life style, especially if you owe a lot of money, makes it very hard to be flexible. E.g. you might not be able to move to a new place where there are jobs. So living below your means and not having a lot of debt really is important.

But beyond that:

1. Get to know people outside your small industry niche and outside your local geography.

2. Don't define yourself by a single technology or set of skills. Get good at learning new things on your own.

And please make sure some (most?) of your emergency fund is somewhat cash-equivalent. Stocks, bitcoin, gold, life insurance and other investments might be hard/slow to access or only with a significant hit on total value. I'm not talking about physical cash, just the ability to access or transfer a large enough sum in say a day to pay for whatever emergency needs funding.

Which is kind of obvious, but I had to stop myself from investing too much or even all of my nest egg multiple times. If it pays a dividend it's likely not an emergency fund.

I wish I had more than one upvote. If your emergency fund isn't a deposit account that is FDIC insured, its not an emergency fund.

Source: My emergency fund was in a money market fund that was temporarily insolvent during the 2008 global financial crisis.

Have a strong social network. If you lost your house / were evicted from your apartment tomorrow, where would you go? Who would you take into your home for months, years if they needed help?

Surviving being poor requires a lot more hustle than being rich. One of the things I like about being a comfortably well paid programmer is that I can go to work, get paid, and not care too hard about the details. The money will work out, I don't have to be constantly looking out for ways to make a few bucks or cheap deals on essentials.

When the economy is good, trying to become comfortably well paid is a reasonable plan. You can look for a job.

If things go to shit, you need to always be on the lookout for jobs -- someone needs a few hours of help per week here, a couple of days on a one-off job there, a man with a van to haul a load cross-town. You've got to piece together an income from a dozen opportunities you don't even notice casually walking down the street on your way to your 9-to-5. You're not going to find any one job that will give you much income for very long, so you've got to be looking always for new opportunities.

1. Don't buy a house right now if you live in a big city. If you already own a house in a big city, selling will probably net you enormous profits.

2. Don't speculate in markets. You're very likely to get burned.

3. Be the best you can possibly be in your field of work. If you're in school, start working on your assignments as soon as they're assigned. Leave no question as to your competence by being extremely prepared and reasonable.

4. If you see your field of work probably being replaced by automation in the coming decades, start training for another field of work that won't be replaced. A UBI (or negative tax) is likely necessary in the future, but aim to be someone that doesn't need a UBI to survive. You don't want to bet your own survival on a UBI being politically possible.

5. Be kind, support your friends and family as much as they need, and always ask for help if you need it.

1 seems to contradict 2. It's literally speculation on housing markets.

Is it speculation by not participating in a market that has rapidly inflated? I think that's stretching the economic meaning of "speculation".

It's speculating to, well, speculate on rapid changes in the near-term price of an asset, regardless of the direction of the speculation.

So if you mean to imply that the rapid inflation will be followed by a rapid contraction, then that's speculating in my eyes.

Can you elaborate on point #1? I've always felt if the housing market crashes, I'd just stay in the same house with the same mortgage payment. If I wanted to move in the middle of a recession, my house's depreciation should be relative to whatever new house I'm looking to buy, so is any value truly lost?

Eg if I have a house worth 100k, and there's a recession that values it at 50k, assuming I can stay employed is there a difference to me? If I wanted to upgrade to a house worth 150k, assuming that house is now worth 75k in recession times so if anything I actually have more buying power in that scenario than I would in the pre-recession scenario.

I'll admit that I'm lucky in that I have job security, so that probably changes my options significantly.

Secure employment is a huge assumption though. It may be true for you, but in general, owning a house reduces your liquidity and mobility. Those are the two things you need most during a downturn and with under-/un-employment.

Right, it's a massive assumption, although luckily one I believe to be true in my particular case.

As far as mobility goes though, I figure networking / "who you know" is always the easiest way to get a job - during or outside of recession. Point being, I don't think for most established folks it's worth relocating geographically, so we're talking about moving to somewhere nearby, at a cheaper monthly cost... Which is significantly harder if you owe more on your mortgage than your house is now worth, I guess.

Moral of the story for me here seems to be "don't buy a house that you can only barely afford", instead of "never buy a house". I'm happy living in a house at half the monthly rate I can afford, at the cost of not living in a mansion during the good times.

In the recession you would sell your $100k house for $50k, but you would still owe the bank the remainder of your mortgage.

The difference would be that if you sell your house for 100k now, you'll have 25k extra after "moving up" to the 75k (previously 150k) house, minus a few years of rent that you might have paid in the meantime.

This is assuming that you put your profit into something that doesn't lose 50% of its value like your house will. The stock market might crash just as badly, or your property value might rise even higher and sitting on (otherwise secure) cash equivalents will lower your real wealth.

So we don't really know, right? I think the only takeaway here is to invest large sums into a single asset class (real estate, or stocks, or cash) if you're playing to win, or diversify among dissimilar asset classes (with your house only being one of several types of investments) if you're playing not to lose.

> I have a house worth 100k, and there's a recession that values it at 50k, assuming I can stay employed is there a difference to me?

You can sell now, get 100k. Buy during recession for 50k. You now have 50k profit.

Don't forget transaction costs (average 10% in the USA) and rent (which may or may not be a rounding error).

No house where I would want to live is going to drop 50% in the next recession.

Make sure you have a marketable skillset, even in a down economy. Having been a tech recruiter for both good times and a couple downturns, I noticed that the people who got released first were doing tasks that managers felt could be passed along to others somewhat easily. No real surprise.

Since tech was my field, I first saw project managers who were non-technical (couldn't code or add other value) getting let go. Tech leads were handed PM responsibility. Sysadmins, DBAs, and some QA were also let go when there were devs who could pick up the slack. Companies might not need dedicated resources there, so contractors might be a more efficient solution.

Try to expand your skillset and have the ability to contribute in a few areas. Companies may be more likely to get rid of someone who is only good at one thing.

It's interesting that, in my country, the ones that are retained are the PMs, because they are the "decision makers" and thhus the ones that really add value.

Developers are perceived as mere technicians, who can be cheaply replaced, if not directly hired as contractor.

I worked in other countries were the power balance was like the one you described, and it definitely felt more rational.

My point is: it is incredible how much variety you can find among the various countries/cultures. What is true in the US can be false somewhere else.

Definitely agree with this. If you're a PM, make sure you can code. Similarly, in finance, if you're in the front office, be sure to understand risk and compliance - those are often the departments that begin hiring in a recession, while the others cut back!

I've known 30-40 PMs in my time in the valley and maybe 2 of them could code professionally if it came to it. Mostly they are people who like to be the decision maker.

Live beneath your means. This is beneficial in two ways: 1. It allows you to save more money today, which will be handy during a recession for obvious reasons. 2. It prepares you for being comfortable when your income may dip.

The smaller the chunk of your income you need to live a happy life, the more resilient you'll be.

First and foremost: knowledge and relevance. Your working income will always return more than your investments (at least, until you've made enough that it doesn't matter anymore). Keep yourself thoroughly employable, even better if its in multiple fields.

Second, diversification. You can't count on any one thing to weather a recession, but if you have some of your assets in ETFs, some in bonds, some in real estate, it's less likely that everything will take a hit at the same time.

Lastly, at least a good portion of your assets should be liquid. Some people like to put everything into real estate, which is great and all, until the real estate market crashes or interest rates skyrocket and nobody is buying. Now, if you want to sell, you're going to take a hit on the already reduced value. At least with stocks, etfs, etc, you can liquidate easily and cheaply if you need money, for example, for food.

Worst case you can get an HELOC approved in about two weeks.

Just because you've always had easy access to credit in the past doesn't mean you always will in the future. Depending on easy access to credit for financial security is very foolish.

People lose jobs during a recession. People without income don't usually have easy access to credit and lending standards tighten (or even temporarily halt) during a recession.

If the housing crash causes you to become underwater or close to it on your mortgage you aren't going to get approved for a home equity line of credit. Any lines of credit you did have will be cancelled.

If you have 50% equity in your house, you'll get a HELOC. It's just an easy way to access equity without selling your house. Of course if you have close to no equity this won't work.

Housing crashes strips away your equity, that's kind of the definition of a housing crash.

HELOCs were cancelled en mass during the last crash.

Lending standards are tightened and new laws are passed during crashes, just because you can get a no income HELOC ("liar loan") now doesn't mean you always will be always able to in the future.

Get it now and let it sit. Why would you wait until the market crashes?

Ive already said it twice: existing HELOCs get cancelled when the market crashes. It happened en mass in 2008. The bank says "You know that line of credit we gave you? We're taking it away." They also do this if your credit score drops. That's a big part of what got a lot of people into a lot of trouble in 2008-09.

They also usually come with closing costs and fees.

I don't have a HELOC because I have a savings account instead. Pulling equity out of your house like it's a checking account as a matter of course is a good way to lose your house. Putting 100% of your money into your primary residence and relying on being able to borrow against it (with interest!) when you need cash is really, really irresponsible and stupid risky. They can have their place, but not as a substitute for a savings account.

1) A lender can reduce (or freeze) your HELOC. 2) Pulling money out of your house during a downturn is dumb. You now have to pay interest on that, and in a few years or so, you're going to have a lump sum payment to pay off that loan.

If you just keep pulling money willy-nilly, you're very likely to lose that house.

Agreed you shouldn't pull 'willy-nilly' but it can be an additional source of 'income' and can help with short term cash flow (which can be crucial if you move from being an employee to a contractor).

Like any other tool, be aware of the way it can help or hurt you.

I'd open a HELOC now, but be aware it could be closed in the event of a bank reevaluating your ability to pay.

It's one more source of 'income' for diversification.

There's no secrets and the real answer is really just boring generic advice. Being financially healthy is the absolute only guaranteed way, anything else you do to prepare would be gambling.

Spend less than you make and have a budget, even if it's an informal budget. This is the most important. Ideally you should end up saving at least 20% of your income. This means you may not be able to afford the things you may like to have, be at peace with that. [1]

Have an sizable CASH emergency fund. The amount depends on your life situation. If you have plenty of cashflow and can easily cut expenses during a loss of income then you need much less than if you can barely make the bills.[2]

Get out of debt. If your debt is high interest (>~6%) then prioritize paying off your high interest debt BEFORE building your emergency fund.

Once you are out of debt stay out of debt (besides a mortgage). That means saving for big expenses.

Diversify your investments. Certainly don't put all your wealth into your house.

Don't put money in the stock market if you plan to spend it in the next ~5 years.

Work on increasing income (or lowering expenses) until at least the above is easy peasy.

This has nothing to do with weathering a storm but part of being financially healthy: purchase term life insurance but only if the loss of your income would severely negatively affect your heirs.

During a recession, don't panic, you have prepared for this. If you can keep saving and investing.

Bonus advice: If you buy a house you almost certainly will be offered a larger loan that you can realistically afford (while still following the above advice). Budget for your house beforehand, don't let loan officers tell you what you can afford.

You can absolutely weather almost any storm using this advice. If Joe Kennedy had followed this advice he would have had survived the crash even if he didn't liquidate his stocks beforehand.

[1] This has the added benefit of giving you a massive amount of flexibility.

[2] You have no idea how truly amazing this is for your sanity. We had a surprise >$4,000 expense a few months ago. Because we had already had saved that money in an emergency fund it was absolutely no problem, no worry, nothing, it was a complete non-issue. I had considered that money already spent. Most of the people without an emergency fund would be absolutely devastated by this. Now we are adding a few hundred a month to our fund to replenish it.

the best way to weather a recession is to have cash. The emergency fund is the most important tool. IF you don't have cash, you can't spend time transitioning from one area of work to another. You also need a low burn rate when switching areas. Low debt enables this.

Keep a long term view (10+ years or more) and not a short term view (< 5 years). That's what most of this advice boils down to.

Almost all bad decisions result from not taking a long enough perspective.

The recession will end at some point, so how can you use the recession to improve your situation?

Have skills so you can easily get a job that will still exist in bad economic times. For example, if nobody is paying programmers to write useless apps anymore you can be a plumber. People will always shit in toilets, no matter what the economy is like.

Being a tradesman during a downturn is a bad time.

At least a programmer can write not-useless things to potentially make money. A plumber can't wish work into existence.

Be prepared to take advantage of it. Downturns are basically sales.

That's a distorted view that you get from imagining if you had invested at the low of the last recession. Look at Japan's index, where it still hasn't caught up to the 1989 peak.

By Japanese index, I assume you mean the Nikkei 225. And don't you mean 1989 crash's low? The 21k levels have now become the new highs.

Calling a low is almost as impossible as calling a high. Though there are methodologies like Graham's which provide decent net-nets to invest in. A study on the Graham stocks since 1990: http://www.netnethunter.com/benjamin-graham-is-this-where-mo...

So, it really depends on the methods used to find the bargain which matters.

Yes, for investing, keep extra cash on hand for when the stock markets plummet. Then you can scoop up ETFs etc. for hugely discounted price.

The economy will recover, and you'll have bought a lot of value for a good discount.

There's an economic depression (edit: recession) about once every 5 years. You can weather it by not owing people money, having assets, and always saving.

Sorry this wasn't a sexy answer. Being fiscally secure is boring.

Recessions are common, depressions are not.

Correct, I misspoke

1) Stay solvent 2) Buy high growth assets when everyone is selling. There's a lot of value to be had during recessions/bear markets. Asset prices invariably go up when the market turns around.

Become a minimalist and learn to be happy with less.

Express gratitude for things/people that are already in your life. Become truly grateful for the life you live. External validation can only do so much.

Have multiple streams of income. Know a "trade" you can do with your hands - string rackets if you have to. Sadly I've neglected this part for a while.

Do you have suggestions for good trades for tech people? Software is pretty different than other things. I'm decent at sw. Not sure what trade I'd have a chance at and that would be recession proof.

In California if you are a plumber, roofer, HVAC, electrician etc you can make six figures. If you own a small contracting business in one of the above fields you can clear $400K a year, tax free, for like 6 months of work. The real estate boom in CA combined with a shortage of skilled blue collar labor means that if you have these skills you literally have a 2-6 month waitlist for your work

I know some people who grew up in very low income situations, in and out of jail, but took an HVAC or plumbing course and are now making $150-200K at age 25-30

Of course this is definitely not recession proof but I was super surprised to learn this

Definitely not recession-proof. Would suspect a very high recession correlation due to drop in housing starts, deferral of maintenance on existing homes in hard times. So maybe not the recession occupation of choice?

With the North Bay fires toss in several billion dollars of insurance money as well. It's going to be a construction Gold Rush up there.

As far as later in life activity we just utilized a local older guy who does minor home renovations work to keep busy. $80/hr, could charge more, turns down work all day long.


According to this website, in Ontario, Canada, it seems becoming a licensed electrician requires five years of apprenticeship. Talk about a barrier!!

I think other trades are similar :(

Trades are the opposite of recession proof. If anything, they are the canaries in the coal mines. When people/businesses/governments are flush with cash, they go on building sprees. Nevermind the cost because income growth has been crazy the past few years and will obviously continue.

Of course, reality sets in and people/business/government's incomes stop their crazy growth (or even go down), and they start cancelling projects. Slowly that six month waiting list goes to three, then one, then you're cold calling everyone you've quoted in the past year, offering discounts just to get your guys some work. Your guys got use to all that OT pay and they have $50k truck notes due next week. They are desperate.

A solid indicator of an imminent recession is cold-calls from tradesman you got quotes from six+ months ago.

Installing/configuring security systems is a thought I had a long time ago. Seems like a intersection of working with your hands + setting up technology, and I suppose the need for security goes up in uncertain times.

Actually, the first thing to go on a budget during a recession is security. The last things to go? Maintaining plumbing and electrical.

Never thought about that way! By security I do mean camera systems and physical security mostly.

Yup, I had buddies that had camera system companies. The last recession wiped them out. I'm unsure about physical security companies.

In addition to the comments about diversifying your skills and being frugal, you can start to rebalance your investment portfolio towards safer assets. This means reducing exposure to volatile stocks (tech / biotech startups, emerging markets, crypto). This strategy will likely mean you see your friends and peers getting richer than you for a period of time, maybe even years. If you can deal with that as a price to pay for more financial security, then go for it

If you really want to get aggressive you can get short exposure to risky stocks, but this is an incredibly risky strategy that rarely makes money and requires considerable expertise, research, and luck to make it work

Overall your best bet is to not try to time the market, but if you are worried about a recession and have an investment portfolio with risky assets, maybe take some of that risk of the table understanding that you may sacrifice real financial gain

This only makes sense if you are planning on using that money in the near term (< 5 years from now).

Like you say, timing the market is a bad idea, and that is what you are doing if you try to move to "safer" assets when you "think" the market will go bad.

If you keep your assets in riskier stocks (which have higher long-term returns) for more than a decade, you may take a huge hit during a recession, but you'll come out the other end way ahead than if you try to time the market.

It depends on the stock. I'm referring more to stocks with a high chance of going to zero (like early stage biotech) than small cap high vol stocks

There's a subtle difference between market timing and adjusting your portfolio as risk / reward changes. As an example, suppose you invest in a stock thinking it will give you a 40% return in one year. The stock does just that, and in a year it has risen 40%. At that higher price, the risk / reward is no longer the same as it was, and you will need to re-evaluate that investment. However, many people just hold on to these stocks because they made money without rationally re-evaluating their investment vs other options

probably didnt make that as clear in the above

in any event, investing strategy is based on personal goals. if your personal goal is to protect yourself more against a recession, selling risky assets is a good way to do so

I ended up cashing out my stocks last month and moving the $ to another asset class. We'll see how I fare in 5 years.

Above all maintain an abundance attitude. Stay positive and focused on building your network and thinking big. If you're one of only a few taking risks, there will be greater rewards.

My experience based on a few market cycles and a lot of work put into this and it is a bit contrary: do speculate in the stock market (I am trading using robots) those are the best times to make money going up, near the top, going down, etc... for me the hardest (losing years) is when the market is trying to get off the bottom... SO I can't wait for the recession, because it is a great opportunity for me personally... Besides that, having paid house and FU money is great...

Think hard where the new opportunities will be. Go back to school in that area. Take on federal student loans. You don't have to pay them back till you finish.

Minimize monthly expenses. Rent out rooms if you own or vice versa if you don't. Buy raw ingredients instead of prepared foods. Food kitchen. Goodwill.

Pool resources. Costco runs.

Saving during good times is the best advice though.

Tony Robbins suggests, more than solid finances-- 'state of mind' is the key, be prepared for extraordinary opportunities > https://www.youtube.com/watch?v=PSi7BUqXuU4

What's with the Tony Robbins wave on HN?

What does he bring to the table that's special?

Property can weather downturns. Investments can go bust. If you own property outright, it may go up and down but never (almost never) zero. And you have a place to park your butt. And maybe grow some food.

I don't agree with this advice. IMHO, a lot of property (specifically, real-estate) is ridiculously overvalued compared with the income generating capacity of locals. In Toronto, an average house is close to a million bucks. I don't think you will get a lot of land to grow. But lets say, you go really far .. like an hour or hour and a half. Still .. it is pretty expensive and you just raised your commuting costs.

I think for people with skills and few assets, saving cash is the most important thing to do. When shit hits the fan, you will be mobile to move to where the jobs are.

but saving cash isn't a good plan for building wealth. sometimes it can be tough to save quickly enough while also minimizing opportunity cost of not investing that cash.

You are totally right. The stock market seems dangerously overvalued to me so I don't invest outside my 401K. Keep losing out to inflation. I guess the rational strategy is to diversify. But doing that in a meaningful way requires a lot of assets to begin with.

Anyone can trade in index funds, commodities, and bonds and CDs. It's not a meaningless amount of diversity available to normal folk.

Like the other person said, ETFs and index funds are a good start - risk there is you're not protected against market downturns, but you're diversified enough to not be exposed to more common risk factors.

So buy someplace cheaper.

I agree with what you say. But 'go and hour and a half' is very short-sighted. In an economic downturn, you lose your job, you can go anywhere. Kansas City. Des Moines. A hundred places where property is easy to own.

Which is why you don't buy now. Later you might need to move states and lose big trying to get rid of dud real estate.

Most property is mortgaged/on loan . Very different than ownership

Yup, it allows you to leverage a lot of money.

What industry do you work in that would give you insight into a coming downturn?

My uncle did tax preparation in NYC, and he definitely saw signs of 2008 bust coming.

Can you elaborate on that? What signs did he see?

Been a while, but IIRC people losing their jobs, or making less money.

Probably while still having huge mortgage interest deductions.

don't take debts. that way you can quickly shrink your expenses if times come by. the only acceptable debt is for investment (either financial or material) that have a guaranteed roi or a short term vesting.

Much of the advice I have seen is very relevant and useful, especially the idea of saving up and living well below your means. However, to more specifically address what you are looking for, I think the most important thing to think about is what are your risk factors, and how can you mitigate them?

Here are a few risk factors (more to give you an example):

(1) Loss of income from employment / Inability to get a similar income in your next job - Do you have the savings to weather 6 months of unemployment (or more)? There is a saying, though I don't know how true it is, that for every 10k of salary, you need to plan to allow up to a month to find a comparable job. - Is your job set something that will always be needed, or is it something that is somewhat fickle based on the markets? As a concrete example, ActionScript may have been a popular language at some point, but you would be out of a job now if that was all you knew. - Are you yourself either specialized in something that will never go away, or flexible enough to handle whatever comes your way? You need to be one of those.

(2) How is your health? - I think this is something most people missed below in terms of preparedness. It is easy to think you can weather any recession if you have your health... but what if you lose it? The #1 cause of bankruptcy is due to Medical Issues. Do you have a means to weather medical issues? - Are you actively keeping care of yourself (an ounce of prevention is worth a lb of cure as the saying goes). - Do you have a healthplan (or means of switching to a health plan) that will cover you in the worse case scenario? (note: you can usually use COBRA if you get suddenly unemployed, but what is the monthly cost?) - Note the specific "backup" health plan should be tailored to your risk factors: does your family have a history of cancer, etc.

(3) Risk of your assets getting severely depleted - People make a lot of assumptions about how "safe" their investments are. It is always worth taking a hard cold look as to what your risks really are, and making sure they are diversified. For example, is real estate in the bay area really independent of tech? I would harbor to think NOT. - A general safe bet (if you follow Warren Buffet/Ben Graham) is to look what everyone else is doing, and do the opposite. "Sell when everyone else is greedy, buy when everyone else is scared".

(4) Your "other expenses"/Cost of living - Do you have any expenses that may come up? Do you have a kid that might be needing money for school? - What is your monthly costs, and how easy would it be to slash them? - While I don't know this from personal experience, what I have heard is that the single biggest mistake that a person/company can make is not cutting hard enough early enough when faced with depleting resources. The early you make those hard decisions, the better you are able to weather hard situations.

Those are meant as examples, you know your personal risk factors than anyone else. The best thing of course is to be prepared with options.

Hope this helps...

As others have said, the important things are having money saved and knowing how to have an inexpensive lifestyle. Someone said that you should live an inexpensive lifestyle so that you can get those savings started and build the habits and knowledge you need to live inexpensively. I agree with this and in fact I have been doing it for a while.

My total expense for one month of living is 600 dollars.

I have around six thousand dollars saved right now (which is very little, but I've just started saving and working). So I could last around a year without any income.

I pay 400 dollars for rent. I live in the city and share a two bedroom apartment with four other people. The key to making this arrangement work is to live with nice people. I've managed to find nice people to live with and I enjoy it. If you want to really save money on shelter, build a passive house. Please look at my comment history before commenting that houses are expensive.

My food costs 70 dollars per month to meet all nutritional requirements, and in really tough times I could cut my protein levels in half (still getting more complete protein than most Americans probably) and bring that cost down to 25 dollars per month. I've put a lot of thought into my diet system, and it's nice to finally have an excuse to discuss it.

The human body requires carbohydrates, (complete) protein, fat, essential fats, essential vitamins, fiber and water. Some of you may be familiar with Soylent -- I was a big proponent of Soylent when it first came out. Soylent turned out to have a high GI, a high cost and a high impact on the environment. But the mentality of Soylent is still rock solid: the human body is not magic. If you give the human body the things I listed above, it will function properly. So if you are trying to optimize your diet, you first need to understand what the minimum viable diet looks like. Now that we know what MVD consists of, we need to find the cheapest sources for those things -- the cheapest sources that truly meet all quality and nutrition requirements.

For protein I eat canned chicken. There are probably better solutions but I haven't seen them. It's lean, complete protein and it's cheap. I get a months supply at Costco for 30 to 40 dollars. It also helps me meet my cholesterol requirements.

For carbohydrates and fiber I eat whole wheat bread. You can buy fifty pounds of whole wheat flour at Costco for around 13 dollars. The salt and sugar are so cheap in bulk that they aren't worth mentioning. The yeast comes in dense dry packs, 5 dollars for many months worth. Just open the dry pack and put it in a sealed container and pop that in the freezer. You can add oil for good fat. all you need to do is put these ingredients into a bread machine. If you don't have a bread machine you can buy one at your local thrift store. I bought mine that way and it's been going strong. It only cost 7 dollars. I see a bread machine almost every single time I walk into a thrift store, which is quite often. They are rarely more than 10 dollars. The cost to make a large, very dense, 2000 calorie loaf of delicious whole wheat bread (real whole wheat, not the hybrid garbage you would find in a super market) is 50 cents at the highest. This includes the cost of water and the electricity to run the machine at a cost of 15 cents per kWh. To store my flour I have food-grade buckets with so-called Gamma lids. Its extremely convenient.

For essential vitamins I take a complete multi-vitamin. Just to be extra cautious, I eat a vegetable here and there. There is very little doubt that I get all the vitamins I need. The vitamins I get from Costco -- they are beyond cheap.

For essential fats I take fish oil, which provide Omega 3 EFAs, and for Omega 6 my whole wheat flour is enough. It would be trivial to adjust my EFA levels up or down if I wanted. The fish oil is also from Costco and is very cheap indeed.

Some might look at this diet and wonder how anyone could sustain it for long periods of time. I wonder how anyone does anything else. If you read up on heart disease I think that you will view this diet in a much better light. Most diets are high in saturated fat -- anything with saturated fat will stay with you. A portion of the food will literally stay with you, inside you -- it will collect on the inside of your arteries and cause them to harden. Then your arteries will crack, bleed and clot causing you to die in a very painful manner. This diet is very, very low in saturated fat. It has an extraordinarily good glycemic index. It is not only the best way to eat on a diet, it is a very, very good way to eat in general. If I had a billion dollars, I wouldn't change it. This dual purpose makes me very happy with my diet. I've been using it for almost a year and I feel great.


if you live in an apartment, consider a portable washing machine. before, i had to pay four dollars to do a load of laundry in the machines that my complex provides. i dont own or want to own a car, and even if i did i wouldnt want to take my clothes to a laundromat. it turns out that they make washing machines for use inside an apartment. i have a 3 cubic foot model that hooks up under my bathroom sink. its literally ten times cheaper. i also air dry my clothes, which saves even more money. air drying clothes is amazing and i have no idea why it isnt done more in the US. its free and works just as well as machine drying. it doesnt require any more work or time (human engagement time) than machine drying, either.

What do you do for variety? If anything.

Variety isn't necessary for survival. In my case, it isn't even necessary for happiness. But if I want variety there is no shortage of it out there. In good times you might eat out every weekend. But when hard times come, you will be able to stay full for almost nothing. Having experienced extreme hunger due to a lack of money, I find tremendous value in it.

i do like chipotle. brown rice, black beans, chicken, vegetables, mild, sometimes cheese, corn, sour cream, guack.

Own property. You can always rent it out and you will never go homeless because of that.

> You can always rent it out

This is clearly false.

Additionally, if you can't pay your mortgage because the recession hits you as well, then you can lose the house.

There is no bullet-proof strategy.

> This is clearly false.

Wow, nice argument. You can't rent out property during a recession? What stops you, exactly?

You can, but that doesn't mean that it's going to be a cake walk. Just because you are trying to rent out a property doesn't mean it will be rented out.

That's all I was getting at in my poorly constructed reply.

why does nobody else realize this

Because it's not true as the foreclosure rate proved in 2009.

so a bunch of people decided to buy into a scam -- decided to buy hugely, massively overpriced houses, and enter into loans with insane interest rates, all the while not having even the most tenuous fucking hope of ever paying for any of it, and you point to that and tell me that its evidence that land is a bad investment? are you fucking crazy?

Hold bitcoin

What makes you sure that Bitcoin would be recession proof? I know the common arguments for Bitcoin and it being "similar" to gold.

But recently, it feels more like Bitcoin is just another investment product, with its price being ballooned by big time investors and a concentration of 96% of existent bitcoin in the hands of just 4% of the holders.

So if a recession does hit, what would stop investors from dumping their bitcoins to hold on to the cash (cash being an even more valuable asset in times of crisis)?

Recessions often go hand in hand with a breakdown of trust in governments and banks making a trustless system like Bitcoin far more appealing.

Stash cash.

1. Don't have any debt

2. Lower your monthly costs as much as possible

3. Save money

4. Although we don't know how cryptocurrencies will fare in a recession (I think it could go either way, if people cash out, for instance, to buy their daily needs), I think it could be safer to hold some money in solid/proven cryptocurrency compared to say a bank. Modern banks, especially U.S. ones are built on quick-sand with their 100-500x leverage for their assets. If something goes wrong for them it will go wrong quickly. And if things are bad enough, the government will even ban people from withdrawing their money from banks.

US bank accounts are federally insured by the FDIC or the NCUA. During the GFC hundreds of banks closed and every single account holder was made whole up to the limit of FDIC insurance. There was no cash liquidity issue for ordinary account holders.

Trusting cryptocurrency over the FDIC is naive in the extreme.

The latter is potentially dangerous advice. If you are in the US, the FDIC will insure your savings and there are centuries of regulations in place to prevent bank runs. In other countries I know this can be a real risk.

if most people are investing in crypto as a safe haven asset like gold, maybe your advice is good. If people are mostly investing in it to get rich, the advice is probably bad as high risk high return assets will probably get hit the hardest in a recession

What's higher: the risk of a run on a bank in the US or the risk of crypto declining 50%+?

Step 1: Keep your knowledge as sharp as the sharpest knife. Knowledge is the ultimate currency.

Step 2: Research people's attitude during that time (every recession creates a change in behaviour and personality) and find a personality trait that will match it so you can gain their trust or affection (not in the partner sense), especially higher ups that can give you employment or any other sort of resource (recession is not a time to be thinking of money as the only resource).

Step 3: Meet people, force yourself to do it and apply those traits. Don't become an asshole in the process.

Step 4: Repeat with other resources that may be handy during that specific recession. Diversify.

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