Doing the next recession right! Survival tips?
I moved to the Bay Area this year from the southeast. Raleigh, NC if you want to be specific. I️ made it through 2009 unscathed and with credit score fully intact. But I’m not going to count on luck for future economic changes. Financial professionals recommend 6-9 months of cash in an emergency fund. What would you do if you faced periods of LONG term income reduction when companies know they can low ball and get away with it? Scenario: Employee gets laid off after recession goes full swing Employers offering 50-60% of what they were paying during high demand We are facing possibly the next 4-5 years making half of what we used to. Maybe a full year of unemployment. Emergency fund recommendations won’t cover this cut for this long. Selling investments would sound like a bad idea because stocks would likely be at a low point given the economy we’re talking about.
Step 1) forget about your investments Step 2) forget about working Step 3) get a bunker (buy vs build discussion out of scope) Step 4) stockpile as much food and guns as you can Step 5) .... Step 6) PROFIT!!!!
Mmmm guns
I love step 5 —> 6. It’s like saying yadda yadda yadda....and you’re rich!
Prep for a recession is not a quick fix. Most people get screwed in a recession because they cannot meet their home payment. With property values skyrocketing and the average tech worker getting a 1m mortgage, they lose all contingency when the bad things happen. The other issue is people having major student loans. If you have massive loans, I do recommend paying off early. I do know these can be low interest, but there is no escaping these loans.
Why pay loan off instead of buying bonds.
Unless they are federal loans, and then there is possible temporary escape, like income-based repayment plans and unemployment deferment/forbearance.
Ideas ... · Live well inside of your means in the first place · Bank one year of vacation time so that you get an additional payout if let go · Stop paying taxes during unemployment (I mean don't pay taxes on any benefits you receive, make it up when you get back to work - chances are, an unemployment stint will lower your tax bracket and yoru tax burden will wash out because of payments made while working g · Dont overlook welfare benefits like food stamps and health insurance for kids - you normally pay taxes to support these programs - don't hesitate to use them right away to prolong your savings
Where in the world can you bank on year of vacation time? The most I have seen is 5 weeks and the lease is unlimited but cannot cash out.
I mean one year worth of vacation, which I assume is all your employer will allow you to roll over. Basically, don't take time off in your first year and carry that balance forward every year after that. You'll have somewhere between 2-6 weeks of pay, depending on your allowance, when you leave the company.
Have two budgets. One for now, so you can save a significant portion of your income, and one for the worst case scenario, that will enable you to live on 50% of your income if that's what you expect. When entering into non-negotiable expenses like mortgage, car payment, phone contracts, etc, use the lean budget to decide whether you can afford them. And other than the above, stay the fuck out of debt.
Don’t buy shit you can’t afford on your base salary.
I've survived two major recessions in my career. The first one back in the early 80s when interest rates for home loans went to 17-18 %, I was in construction and everyone went out of business including me. Fortunately I had a very low cost of living and an appropriate amount of savings. I could see the handwriting on the wall that Tech would be the future and was able to reinvent myself to fit into that future. My regret from those days is not moving to Silicon Valley. In the last major recession my employer had already laid off everybody at our company and I was one of the survivors. But there's always life after a layoff, there's always life with another company, just don't get yourself caught up where you're upside down financially in everything.
Well said..thx for sharing
Chapter 7 bankruptcy is not as big of a deal as most people think it is. It's one of the bedrocks of our economy and Incredibly useful for situations such as an economic crash. I went through chapter 7 right after the crash and literally got a credit card offer two months later. I easily was able to rebuild my credit and even bought a house within 3 years. Everyone in America likes to panic about everything but seriously their systems in place you just have to swallow your pride and use them
You lose a lot of equity, other than your home and your car every thing is fair game.
Not really. If you do it right you don't really lose anything. Asset star balanced against debts. You get to keep a lot more than you think you do and if you're smart about it it's not really much of a big deal.
Is the 50-60% rule true for FANG tho?
I️ truly don’t know. That’s why I’m asking. I️ could be thinking inside a very small box.
The early 2000s had a huge collapse. There was such demand for workers during the dotcom, large companies were desperate. In the late 2000s, same issue with Banking. Many people earning 100k then still are not at that level. There is zero reason to think tech would be different. Right now, we have a tight labor supply and growing companies. What if that changes? There could be low demand and a glut of workers, especially those in low cost of living areas pricing out the Bay Area