WEBVTT - Prepping for a Looming Recession #503 0:00:00.080 --> 0:00:02.960 Welcome to How the Money. I'm Joel and I am Att, 0:00:03.040 --> 0:00:06.800 and today we are talking prepping for a looming recession. 0:00:25.880 --> 0:00:28.320 That's right, man, we are talking about what you should 0:00:28.360 --> 0:00:31.880 do with a recession on the horizon. Could like the 0:00:31.880 --> 0:00:35.599 foreboding in my voice, the looming. Yeah, it's like you're 0:00:35.640 --> 0:00:39.120 reading a kid's horse Boy. But so the prepping part 0:00:39.120 --> 0:00:41.680 of it, it it makes me think back to recently we 0:00:41.760 --> 0:00:43.760 talked with Nick Ma Julie and he talked a little 0:00:43.760 --> 0:00:46.280 bit about prepping. So he lives up in New York 0:00:46.280 --> 0:00:48.560 and as we're talking with him, he talked about keeping 0:00:48.560 --> 0:00:51.200 some water on hand or like like a certain amount 0:00:51.200 --> 0:00:53.760 of water like in his apartment, which is something I 0:00:53.760 --> 0:00:55.480 guess I think I would do that. I guess if 0:00:55.520 --> 0:00:57.720 I live there in New York City when there's you know, 0:00:57.840 --> 0:00:59.960 like millions and millions of people packed into a very 0:01:00.040 --> 0:01:02.800 very small geographic location, and then you have less room 0:01:02.800 --> 0:01:04.760 in your apartment to store. So you're like, what all 0:01:04.800 --> 0:01:06.280 that story? But you're right. He said he had a 0:01:06.319 --> 0:01:10.959 mask ahead of time when nobody else in New York. Yeah, 0:01:11.080 --> 0:01:14.560 So I'm like, man, respect like, major props to Nick 0:01:14.680 --> 0:01:17.960 for being slightly prepared. I mean, he's not like by 0:01:17.959 --> 0:01:20.960 any means an actual prepper where he's got meals or 0:01:21.000 --> 0:01:23.000 anything like that. Like we don't even have I mean 0:01:23.040 --> 0:01:24.920 we to know of we didn't get that far with him, 0:01:24.959 --> 0:01:27.480 but that's that's true. He's like in the walls, this 0:01:27.600 --> 0:01:31.080 is where this is where I keep my zombe. You 0:01:31.080 --> 0:01:33.000 want everyone to know where he keeps his can goods 0:01:33.000 --> 0:01:35.959 and all of his all of his gida. I could 0:01:36.120 --> 0:01:37.520 I think I've mentioned this before, but I feel like 0:01:37.520 --> 0:01:40.039 I could see himself getting into that a little bit. Um, 0:01:40.200 --> 0:01:44.040 not because I necessarily think it's something that's going to happen, 0:01:44.319 --> 0:01:46.400 but just because it seems kind of fun, you know, 0:01:46.520 --> 0:01:48.480 just to be it's I mean, and we're gonna get 0:01:48.520 --> 0:01:49.960 to this during this episode, but just to be able 0:01:49.960 --> 0:01:51.520 to kind of flex your muscles a little bit and 0:01:51.520 --> 0:01:54.680 be like, Okay, if something were to happen, if it 0:01:54.720 --> 0:01:58.360 were all to potentially hit the fan, I would be prepared. Uh. 0:01:58.400 --> 0:01:59.800 That's what we're gonna talk about when it comes to 0:01:59.880 --> 0:02:03.440 a me not necessarily that everything is about completely good 0:02:03.440 --> 0:02:05.680 own hill, but that if it were to happen that 0:02:05.760 --> 0:02:08.520 you would absolutely be prepared. That's what we're talking about today, 0:02:08.760 --> 0:02:11.560 and specifically Joel's gonna give his take on as to 0:02:11.720 --> 0:02:14.120 exactly when the recession is, it's gonna start, when it's 0:02:14.120 --> 0:02:15.799 gonna end. I'm gonna give you I've got my crystal 0:02:15.840 --> 0:02:18.840 ball out here, and i will give my predictions. Well no, 0:02:18.960 --> 0:02:20.800 but there are a lot of people who are giving 0:02:20.800 --> 0:02:22.840 their predictions right right now, Mattain, and so I made 0:02:22.880 --> 0:02:25.119 us want to actually talk about this today because if 0:02:25.160 --> 0:02:27.760 you read pay attention, if you read newspapers, if you 0:02:27.840 --> 0:02:30.200 are on Twitter or whatever, you've probably seen the R 0:02:30.240 --> 0:02:33.320 words start popping up in your feed and you're like, uh, 0:02:33.360 --> 0:02:35.400 when where what? Huh? I thought things were going well 0:02:35.480 --> 0:02:37.720 and with the economy, So what the heck are we 0:02:37.720 --> 0:02:39.720 talking about a recession for? Well, we'll get into that 0:02:39.760 --> 0:02:41.679 in this episode. That's right, man. So we'll get to 0:02:41.720 --> 0:02:44.160 all that here later on. But first, a quick little 0:02:44.160 --> 0:02:46.680 story to share with listeners and our family. We are 0:02:46.720 --> 0:02:50.000 looking at a new house, uh, and specifically we so 0:02:50.080 --> 0:02:52.600 we put an offer in on this house. It got accepted, 0:02:52.600 --> 0:02:54.800 So that means work technically under contract now at this 0:02:54.840 --> 0:02:57.560 point a feat in today's market, that islation. That is 0:02:57.639 --> 0:03:00.720 very true. Um, However, here's where things gets sticky. That 0:03:00.800 --> 0:03:03.520 thing didn't fully a praise, which is also not surprising 0:03:03.600 --> 0:03:06.400 given you know the rapid increase in home prices that 0:03:06.400 --> 0:03:08.440 we've seen here in Atlanta over the past year. We've 0:03:08.440 --> 0:03:12.120 seen an average increase of twenty percent. Likely this particular 0:03:12.120 --> 0:03:16.840 house has seen somewhat less of that. But regardless, it 0:03:16.880 --> 0:03:20.520 didn't fully a praise, which means, you know where I'm 0:03:20.520 --> 0:03:21.959 gonna go with this. There's a gap there that you 0:03:22.040 --> 0:03:24.560 gotta that you gotta come to the table more money exactly. Yeah, 0:03:24.600 --> 0:03:27.280 there's a gap between the twenty percent that I was 0:03:27.440 --> 0:03:30.040 that we were looking to put down, uh and what 0:03:30.160 --> 0:03:32.040 I have to put down now. So I thought we 0:03:32.040 --> 0:03:33.440 were gonna, you know, have to just come to the 0:03:33.440 --> 0:03:35.040 table with a little bit more money. But then I 0:03:35.080 --> 0:03:37.640 was talking with my lender and he specifically said that, hey, 0:03:37.920 --> 0:03:39.960 you could always consider p M I, and I was 0:03:40.000 --> 0:03:43.040 just like, dude, private Morgan Insurance, not for me. Have 0:03:43.200 --> 0:03:45.080 you listened to how the money that's for losers? Check 0:03:45.080 --> 0:03:47.600 out my show? However, even though that's something that we 0:03:47.640 --> 0:03:51.120 wouldn't normally recommend, uh, this is a situation where I 0:03:51.160 --> 0:03:54.200 realized that it could make sense because specifically it seemed 0:03:54.200 --> 0:03:56.240 like it was gonna make sense maybe for two reasons, 0:03:56.280 --> 0:03:58.360 one of which I asked him to shop it around 0:03:58.520 --> 0:04:00.640 and he was able to find p m I that 0:04:00.680 --> 0:04:03.320 was only going to cost sixty dollars a month, which 0:04:03.360 --> 0:04:06.040 is pretty affordable. And then secondly, he said that they 0:04:06.080 --> 0:04:08.200 would offer a lender credit, so they were going to 0:04:08.320 --> 0:04:12.800 chip in fift undred dollars towards closing costs, which that 0:04:12.840 --> 0:04:17.120 would effectively pay for our p m I for two years. 0:04:17.480 --> 0:04:19.120 And so what that means is that at the end 0:04:19.120 --> 0:04:21.599 of that two years, then I'm gonna have to pay 0:04:21.600 --> 0:04:23.520 for that p m I myself right basically out of 0:04:23.880 --> 0:04:26.120 out of pocket. Uh, that's not a cost that has 0:04:26.200 --> 0:04:29.600 essentially kind of been subsidized. But by that point, there 0:04:29.600 --> 0:04:32.200 will be enough paid down on that balance to have 0:04:32.320 --> 0:04:36.479 reached that in equity threshold. And so in this case, 0:04:36.480 --> 0:04:40.240 I'm not necessarily even counting on the home appreciating even more. 0:04:40.560 --> 0:04:43.279 It's just a matter of looking at the amortization schedule 0:04:43.320 --> 0:04:46.240 and seeing that literally, like I think it's actually twenty 0:04:46.279 --> 0:04:49.960 five months past when we might be set to purchase 0:04:50.000 --> 0:04:52.960 the home, we will enter that territory. And so essentially 0:04:53.000 --> 0:04:54.200 that means we're gonna be able to come to the 0:04:54.200 --> 0:04:55.880 table with a little bit less money. That's money that 0:04:55.920 --> 0:04:58.479 we will be able to continue to invest in the 0:04:58.520 --> 0:05:01.000 market or put towards other goals or other projects that 0:05:01.040 --> 0:05:02.960 we might have in mind. So I wanted to share 0:05:03.000 --> 0:05:05.479 that because this is just one of those situations where 0:05:06.000 --> 0:05:08.279 the general rule of thumb like that we do often 0:05:08.279 --> 0:05:10.800 talk about here on the show doesn't necessarily apply. Yeah, 0:05:10.839 --> 0:05:12.279 it makes me think there are a lot of things 0:05:12.279 --> 0:05:13.800 that we say on the show from time to time, 0:05:13.800 --> 0:05:16.479 and we're we're talking to a wide range of people 0:05:16.480 --> 0:05:18.360 who are in a bunch of different circumstances, and we're 0:05:18.360 --> 0:05:21.479 giving our best advice, and that doesn't mean that that 0:05:21.520 --> 0:05:25.320 advice applies to every specific situation. It makes me think 0:05:25.320 --> 0:05:28.120 of we you know, we hate when people take out 0:05:28.320 --> 0:05:30.760 loans for vehicles. Buying a new car and taking out 0:05:30.760 --> 0:05:33.359 some sort of five six year loan. It's not ideal, 0:05:33.440 --> 0:05:35.480 and if it's an even longer loan, it's even worse. Right, 0:05:35.760 --> 0:05:38.200 But if you have the cash on hand to pay 0:05:38.200 --> 0:05:40.520 for that car and you can get a zero percent interest, right, well, 0:05:40.560 --> 0:05:43.320 that that changes the game. That's basically like it's it's 0:05:43.480 --> 0:05:44.960 in my mind, is sort of like a credit card 0:05:45.520 --> 0:05:48.159 with a yearly statement, or like it's like, hey, this 0:05:48.200 --> 0:05:50.560 statement doesn't actually hit for like two or three years, 0:05:51.160 --> 0:05:53.360 and so our views are subject to change. We've recently 0:05:53.360 --> 0:05:55.760 talked about how our views have changed a little bit, 0:05:55.839 --> 0:05:58.279 at least when it comes to how those by now 0:05:58.400 --> 0:06:01.280 pay later things work on on websites when you're checking out, 0:06:01.480 --> 0:06:04.320 And the same is true for certain specific situations where 0:06:04.440 --> 0:06:07.320 the numbers pan out differently than they normally do. So 0:06:07.400 --> 0:06:09.440 p am I typically isn't sixty bucks a month. It's 0:06:09.480 --> 0:06:11.320 usually quite a bit more for most can be a 0:06:11.600 --> 0:06:14.120 lot more, and not everyone gets offered a lender credit. Right, 0:06:14.520 --> 0:06:16.600 But if all the if it all lines up and 0:06:16.640 --> 0:06:19.720 the numbers make sense, then like a general piece of 0:06:19.760 --> 0:06:22.080 advice that we do give, and like we would still give, 0:06:22.120 --> 0:06:23.599 we we don't we don't want you to pay an 0:06:23.640 --> 0:06:26.640 additional fee. Essentially, Like that's how I view p m I. 0:06:26.720 --> 0:06:29.400 It's just like man, even just the principle of it, 0:06:29.440 --> 0:06:30.800 I still don't like it. But at the end of 0:06:30.800 --> 0:06:32.320 the day, when I look at the numbers, I'm saying 0:06:32.320 --> 0:06:34.600 to myself, oh, this actually makes a lot more sense 0:06:34.640 --> 0:06:37.320 for me to go ahead and do this, even though 0:06:37.600 --> 0:06:39.520 it's going to be difficult. I mean, I feel like 0:06:39.520 --> 0:06:42.480 I'm kind of confessing here on the podcast that I 0:06:42.520 --> 0:06:44.400 will likely have p M I for the next couple 0:06:44.400 --> 0:06:45.960 of years. I guess if we go through with buying 0:06:46.000 --> 0:06:48.600 this house the Scarlet letter, Matthew, that's what it feels like. 0:06:48.720 --> 0:06:50.920 But specifically, I'm willing to say that because at the 0:06:51.000 --> 0:06:53.160 end of the day, what do the numbers show? And 0:06:53.279 --> 0:06:55.599 the numbers show that it makes sense for us to 0:06:55.720 --> 0:06:58.599 go ahead and accept and eat this feed because essentially 0:06:58.640 --> 0:07:00.800 it's getting paid for by the When I took out 0:07:01.120 --> 0:07:02.480 a loan on my niece on Leaf, I felt like 0:07:02.480 --> 0:07:04.040 a fraud. I was like, who am I? I've never 0:07:04.080 --> 0:07:05.640 bought a new car, I've never had a car loan 0:07:05.800 --> 0:07:08.480 like I had, like some one of those existential moments, 0:07:08.520 --> 0:07:11.280 like some cognitive business between what you've normally said but 0:07:11.320 --> 0:07:13.520 then versus what the reality is showing on the ground 0:07:13.520 --> 0:07:15.960 with the number exactly. But when it comes down to it, 0:07:15.960 --> 0:07:17.880 you gotta look at the numbers and you gotta look 0:07:17.920 --> 0:07:19.680 at the reality, which is like, well, if you could 0:07:19.680 --> 0:07:21.080 afford to buy that car anyway, and you can do 0:07:21.120 --> 0:07:23.880 more productive things with that money than it's not a 0:07:23.880 --> 0:07:26.000 bad idea. Yeah, it's exactly. You have to leave room 0:07:26.040 --> 0:07:27.960 for that new once. So we have the money on 0:07:28.000 --> 0:07:29.600 hand to where we could come to the table with 0:07:29.640 --> 0:07:32.480 the full In this case, we're choosing not to similar 0:07:32.520 --> 0:07:34.360 to just like you, like you could have paid cash 0:07:34.400 --> 0:07:38.200 for that vehicle, but like you said, zero percent loan, 0:07:38.360 --> 0:07:41.400 Like that is something that is worth considering because okay, 0:07:41.440 --> 0:07:43.120 what else could I do, especially to if you're going 0:07:43.160 --> 0:07:46.000 to have that money set aside? Uh, you know, maybe 0:07:46.040 --> 0:07:47.720 you're going to beef up your your reserves a little 0:07:47.720 --> 0:07:49.560 bit more, your emergency fund a little bit more. That 0:07:49.680 --> 0:07:51.960 still keeps you in that strong position just in case 0:07:51.960 --> 0:07:54.600 something were to happen that you could quickly eliminate that. 0:07:54.640 --> 0:07:57.240 Oh the unique and quirky world of personal finance. There 0:07:57.240 --> 0:08:00.040 are so many things to consider. But I'm glad you 0:08:00.040 --> 0:08:01.960 you shared one of those coqurks with us today because 0:08:01.960 --> 0:08:03.480 it's something that I think we can we can all 0:08:03.520 --> 0:08:06.280 learn from and apply to our personal situations. Absolutely. All right, 0:08:06.360 --> 0:08:08.000 let's move on. Let's mention the beer we're having on 0:08:08.040 --> 0:08:12.400 today's episode. This one is called ironer all barish duncle. 0:08:12.720 --> 0:08:15.520 I think I pronounced ever on. I might have mispronounced 0:08:15.520 --> 0:08:17.800 every single one of those words. Just now, No, you 0:08:17.880 --> 0:08:21.600 got the Dunkle part right, Uh, well, this is a 0:08:21.800 --> 0:08:24.160 Bavarian dark logger. We'll give our thoughts at the end 0:08:24.160 --> 0:08:27.240 of the episode, but for now, Matt, we're talking prepping 0:08:27.400 --> 0:08:30.120 for a looming recession. And when I was thinking about 0:08:30.160 --> 0:08:32.280 this episode, I was, I was, I don't know. For 0:08:32.320 --> 0:08:34.720 some reason, it made me think about backup actors. And 0:08:34.920 --> 0:08:37.280 I never actually really did any acting myself. Did you 0:08:37.320 --> 0:08:39.160 Were you in the drama school place. I was not 0:08:39.160 --> 0:08:42.080 a drama kid. Okay, well, uh, it just made me 0:08:42.080 --> 0:08:45.120 think that the person in that role, the person who 0:08:45.280 --> 0:08:49.520 is the backup actor, they have to they're the understudy, 0:08:49.559 --> 0:08:51.560 and they have to be prepared like they were going 0:08:51.600 --> 0:08:53.840 to take the stage that night, right, like they're gonna 0:08:54.200 --> 0:08:56.840 let's say they're preparing for the main role in like 0:08:56.880 --> 0:09:00.120 a Shakespearean drama. You better prepare like you're actually you're 0:09:00.120 --> 0:09:03.040 going to be the person there on stage, even though 0:09:03.320 --> 0:09:06.920 the greater likelihood is that you're going to be sitting 0:09:06.920 --> 0:09:09.720 on the sidelines, right, And if you only halfway studied 0:09:09.800 --> 0:09:11.679 let's say the lines, so you didn't really put much 0:09:11.720 --> 0:09:14.040 effort in at practice, then you're not going to be 0:09:14.080 --> 0:09:16.480 ready to shine in case the lead actor gets sick. 0:09:16.559 --> 0:09:18.199 Or injured. And so yeah, while there's a chance you 0:09:18.280 --> 0:09:20.480 might never perform in front of a crowd on this 0:09:20.520 --> 0:09:23.520 specific production, you better prepare like you're gonna be out 0:09:23.559 --> 0:09:26.480 there every single night four weeks to come. And so yeah, 0:09:26.480 --> 0:09:30.080 I think of recession prepping the same way. You know, 0:09:30.080 --> 0:09:33.240 are we gonna see a recession next year? Well, I 0:09:33.240 --> 0:09:35.400 don't really know. There are predictions going around saying that 0:09:35.440 --> 0:09:37.760 we will, we might or might not when we see 0:09:37.760 --> 0:09:40.520 one in the next five years, we could, um, But 0:09:40.559 --> 0:09:42.520 whether we do or we don't, we still need to 0:09:42.559 --> 0:09:45.360 prepare financially as though we're going to And just like 0:09:45.400 --> 0:09:48.400 that understudy, you want to make sure that you're ready 0:09:48.480 --> 0:09:50.760 just in case, because yeah, flooding half your lines because 0:09:50.760 --> 0:09:54.120 you didn't prepare adequately, that sounds that sounds pretty stressful, exactly. Yeah. 0:09:54.120 --> 0:09:56.200 So the reason we're talking about this today again is 0:09:56.200 --> 0:09:58.560 because there's a good chance that you are hearing these rumblings, 0:09:58.559 --> 0:10:00.280 you know, these musings from the expert. It is out 0:10:00.320 --> 0:10:03.680 there that we might be in for a bumpy economic ride. 0:10:03.760 --> 0:10:05.800 I mean, not just the United States, the whole world 0:10:05.800 --> 0:10:07.920 just feeling this way. Deutsch Bank, they just put out 0:10:07.920 --> 0:10:10.800 a warning that were likely to see a recession next year. 0:10:11.120 --> 0:10:14.720 In a recent Wall Street Journal survey of economists shows 0:10:15.360 --> 0:10:18.080 a massive upward trend in the number of folks who 0:10:18.080 --> 0:10:21.240 are predicting in upcoming recession. And it kind of reminds 0:10:21.240 --> 0:10:23.320 me to you of the joke that economists have correctly 0:10:23.360 --> 0:10:26.440 predicted thirteen of the last four recession. If you call 0:10:26.520 --> 0:10:29.800 them often enough, eventually you're gonna be right. Yeah, meaning that, 0:10:30.000 --> 0:10:32.720 like the R word, it just gets overused. Even still, 0:10:32.760 --> 0:10:35.319 it is something worth talking about because one of the 0:10:35.360 --> 0:10:39.079 current signs point directly to this possibility, and that's the 0:10:39.120 --> 0:10:42.079 inverting of the yield curve that happened recently. You might 0:10:42.080 --> 0:10:44.520 have seen that in the financial headlines recently as well. 0:10:44.840 --> 0:10:47.079 UH and the FED it will continue to raise rates 0:10:47.480 --> 0:10:49.840 in order to try and calm some of the inflation 0:10:50.120 --> 0:10:53.120 we've been seeing. This adds more risk. But what is 0:10:53.160 --> 0:10:54.800 it that you need to do. That's what we're talking 0:10:54.800 --> 0:10:57.600 about here today. We want to get granular on this topic. 0:10:57.640 --> 0:10:59.480 We want to give some specific steps that you should 0:10:59.520 --> 0:11:01.839 take in or to be prepared whether we enter a 0:11:01.840 --> 0:11:04.040 recession territory in a month or maybe not even for 0:11:04.040 --> 0:11:07.480 another decade. Who does that's right? So I think that 0:11:07.640 --> 0:11:10.679 it's an important point to make, Matt that that we're 0:11:10.679 --> 0:11:13.600 not necessarily going into a recession. Right. There are all 0:11:13.600 --> 0:11:16.960 these predictions, there are more headlines, there's more consensus around 0:11:16.960 --> 0:11:19.160 the idea that we might be closing in on a recession, 0:11:19.200 --> 0:11:21.200 but it doesn't mean it does not guarantee that it's 0:11:21.200 --> 0:11:23.600 inevitable exactly, and so there's no need to freak out. 0:11:23.640 --> 0:11:26.120 That is not what this episode is trying to do 0:11:26.360 --> 0:11:28.760 is to get you to to freak out in stockpile 0:11:29.000 --> 0:11:31.360 food for the next two years because you know, in 0:11:31.640 --> 0:11:35.280 your root celler Nick mcjulie style, because he doesn't actually 0:11:35.320 --> 0:11:36.480 do that. I think I gave him a hard time 0:11:36.520 --> 0:11:38.120 on that episode too. I feel a little bad about that, 0:11:38.120 --> 0:11:40.040 but we had a good time. But yeah, while these 0:11:40.080 --> 0:11:42.800 predictions are being thrown around like hotcakes, that's not that's 0:11:42.800 --> 0:11:44.600 not really our jam. We're not going to make any 0:11:44.600 --> 0:11:47.520 predictions here. We don't we don't know, we'll we'll claim uncertainty. 0:11:47.800 --> 0:11:49.960 But a friend of the show, former guest Morgan Housel, 0:11:50.000 --> 0:11:51.480 he tweeted the other day and I thought this was 0:11:51.760 --> 0:11:53.760 just a brilliant way of saying he said, we're definitely 0:11:53.800 --> 0:11:56.120 heading towards the recession. The only thing that's uncertain is 0:11:56.160 --> 0:11:59.760 the timing, location, duration, magnitude, and policy response, and so 0:12:00.480 --> 0:12:03.880 aside from all of those things, this will happen exactly. 0:12:04.679 --> 0:12:07.360 So basically, yes, it will happen one of these days. 0:12:07.400 --> 0:12:09.200 It's just we don't know when, where, how it's going 0:12:09.240 --> 0:12:11.440 to come about. And it's still worth being prepared for 0:12:11.480 --> 0:12:15.160 her because historically we do experience a recession every five 0:12:15.200 --> 0:12:17.800 point nine years. And then that brings up the question, 0:12:17.840 --> 0:12:19.600 I guess, Matt, people like you've been using this word 0:12:19.600 --> 0:12:22.000 recession a lot now early on the show, what does 0:12:22.040 --> 0:12:24.040 that mean? You know, we had to define terms when 0:12:24.040 --> 0:12:26.880 we did crashes corrections in your Reaction episode, So let's 0:12:26.880 --> 0:12:29.120 talk about that, because a recession is is when the 0:12:29.120 --> 0:12:31.720 economy hits a rough spot and stops growing and and 0:12:31.760 --> 0:12:34.320 we're officially in recession territory when that happens for two 0:12:34.320 --> 0:12:37.760 consecutive quarters or for six months total, and and you know, 0:12:37.840 --> 0:12:39.719 it's it's often that you don't know that you're in 0:12:39.760 --> 0:12:41.960 a recession in the middle of it. You you find 0:12:41.960 --> 0:12:43.520 out based on data at the end of it, and 0:12:43.880 --> 0:12:46.679 you can kind of extrapolate or assume or or predict, 0:12:46.800 --> 0:12:49.240 but it's hard to know really until the event is 0:12:49.280 --> 0:12:51.480 actually is actually over. Yeah, you know, it's not unlike 0:12:51.480 --> 0:12:53.360 someone trying to time the stock market, right, Like, so, 0:12:53.400 --> 0:12:55.800 I remember having a conversation with a friend who is 0:12:55.840 --> 0:12:59.080 an investment advisor back in this is like yeah, nearly 0:12:59.280 --> 0:13:02.079 ten years ago, and after a couple of years of 0:13:02.080 --> 0:13:05.200 amazing growth, he was expecting for the market to significantly correct. 0:13:05.440 --> 0:13:07.720 Like I don't specifically remember if he was saying that 0:13:07.760 --> 0:13:10.240 we should be expecting a bear market or anything like that, 0:13:10.280 --> 0:13:12.880 but regardless, he was saying that he wasn't going to 0:13:12.920 --> 0:13:16.000 be investing until things dropped back down. And you know, 0:13:16.080 --> 0:13:19.280 like maybe he was able to time the market perfectly 0:13:19.520 --> 0:13:22.600 back in steen when things corrected a little bit, when 0:13:22.640 --> 0:13:24.719 the market was down like only about I think it 0:13:24.760 --> 0:13:27.160 was about ten percent. But if you would have stopped 0:13:27.200 --> 0:13:30.160 investing back in when when we were having this conversation, 0:13:30.200 --> 0:13:33.640 you would have missed out on over growth during that period. 0:13:33.880 --> 0:13:36.240 You know, even if you had checked your you know, 0:13:36.320 --> 0:13:38.520 checked your your your rate of growth, uh, in the 0:13:38.559 --> 0:13:40.880 midst of some of those little declines there. So like 0:13:40.920 --> 0:13:42.400 aside from that, you would have been up like thirty 0:13:43.080 --> 0:13:46.400 and if you didn't even get in and you're still 0:13:46.400 --> 0:13:49.720 waiting for that composing on on over, you know, like 0:13:49.800 --> 0:13:52.680 hundreds of percents uh in in in growth. Uh And 0:13:52.679 --> 0:13:55.400 so similar to the stock market, trying to time and 0:13:55.600 --> 0:13:58.400 to pinpoint exactly when a recession is about to hit 0:13:58.559 --> 0:14:01.080 is a really difficult and ever, that's right. That's that's 0:14:01.120 --> 0:14:04.760 why you and I we don't want to prognosticate anything. One, 0:14:04.800 --> 0:14:06.920 we're not smart enough. And too, we don't think anybody 0:14:07.040 --> 0:14:09.760 smart en run enough necessarily to do that. It's uh, 0:14:09.800 --> 0:14:12.880 it's a fool's Errand but despite our inability to time 0:14:12.920 --> 0:14:15.880 a recession, in order to optimize things, we think that 0:14:15.920 --> 0:14:18.880 folks should always treat their finances in a way that 0:14:18.880 --> 0:14:22.120 that assumes that a recession could happen, and and you 0:14:22.120 --> 0:14:25.280 gotta treat it with respect. That's right. You gotta know that. Uh, 0:14:25.600 --> 0:14:28.640 you make hay while the sunshines, right, realizing that negative 0:14:28.640 --> 0:14:31.240 things have the potential to arise in the future. And 0:14:31.520 --> 0:14:34.640 that's because it's not just broad economic trends that impact 0:14:34.680 --> 0:14:38.000 our finances. Right, the the economy might even keep roaring along, 0:14:38.400 --> 0:14:40.800 but you might still experience what we would call a 0:14:40.840 --> 0:14:44.440 personal recession. You could fall on hard times health wise 0:14:44.480 --> 0:14:46.800 in your own life or or your spous or or 0:14:46.880 --> 0:14:49.480 partner has some health issues that arise and you have 0:14:49.520 --> 0:14:51.280 to take time off of work to help care for them, 0:14:51.640 --> 0:14:54.120 um some steep medical bills that you have to pay for, 0:14:54.320 --> 0:14:57.160 or your monthly expenses might dramatically increase or or even 0:14:57.240 --> 0:15:00.360 matt take with with rents going up across the country, 0:15:00.560 --> 0:15:02.600 someone might have a personal recession where their rent went 0:15:02.640 --> 0:15:05.080 up two dollars a month and they weren't prepared for that, 0:15:05.120 --> 0:15:06.280 and so these are the kind of thing that you 0:15:06.280 --> 0:15:09.400 can payment. Exactly, that's a big increase in your monthly expenses. 0:15:09.440 --> 0:15:11.160 And so these are the kind of things that it's 0:15:11.240 --> 0:15:13.840 it's not just a macro level recession that can impact you. 0:15:13.840 --> 0:15:15.880 It's all these micro things that happened along the way. 0:15:16.120 --> 0:15:19.040 You could lose your job, you know, effectively eliminating the 0:15:19.080 --> 0:15:21.920 majority of your income altogether. And so basically, you know, 0:15:21.960 --> 0:15:25.200 a personal recession that specifically affects you and your family 0:15:25.240 --> 0:15:27.680 could come at any time. And you know, even if 0:15:27.680 --> 0:15:30.640 the American economy continues to crush, continues to cruise along, 0:15:31.040 --> 0:15:33.280 even if wages are up, unemployment is low, it's wise 0:15:33.320 --> 0:15:35.640 to be prepared in your own life, in your own 0:15:35.680 --> 0:15:38.680 family to make sure your personal finances already for whatever comes. 0:15:38.760 --> 0:15:41.320 That's right, But the question still remains, what should you 0:15:41.400 --> 0:15:44.480 be doing in what ways should you be preparing for 0:15:45.080 --> 0:15:47.840 an upcoming recession, whether it happens in the next year 0:15:47.920 --> 0:15:49.680 or the next ten years. We will get to all 0:15:49.720 --> 0:16:00.760 of that right after this break. All right, we're back. 0:16:00.760 --> 0:16:04.120 We're still talking about processions and the possibility that one 0:16:04.160 --> 0:16:06.440 comes in the near future. There's a chance, there's a chance, 0:16:06.760 --> 0:16:09.320 there's a definite chance. And it's like it's sort of like, hey, 0:16:09.320 --> 0:16:12.320 you're gonna die. It's like, oh my gosh, well, yeah, 0:16:12.360 --> 0:16:14.160 I guess we all die eventually, right, Like it will 0:16:14.200 --> 0:16:16.360 happen at some point. We don't know when, we don't 0:16:16.360 --> 0:16:18.320 know how. Yeah, And we still want you to get 0:16:18.400 --> 0:16:21.400 term life in church just in case, because even if 0:16:21.520 --> 0:16:25.760 you're thirty two and you know, the actual aerial tables 0:16:26.160 --> 0:16:30.240 show and your current health standing shows that there's a 0:16:30.280 --> 0:16:32.720 really it's a really really low percent unlikely. Yeah, it 0:16:32.760 --> 0:16:35.560 will still happen, exactly, and so it's still still wants 0:16:35.560 --> 0:16:37.720 to prepare for it. So life in church would be yeah, 0:16:37.760 --> 0:16:40.080 I think a similar sort of thing. And and there 0:16:40.160 --> 0:16:42.680 is good news here, Matt. Before if we do enter 0:16:42.720 --> 0:16:47.160 recession territory. Fortunately, the American consumer, the American individual is 0:16:47.200 --> 0:16:51.000 kind of in good standing financially. Overall, Americans are sitting 0:16:51.000 --> 0:16:52.600 pretty in a lot of ways. One is just to 0:16:52.600 --> 0:16:54.960 say I have more cash on hand. Some estimates show 0:16:55.000 --> 0:16:57.120 that we've got two and a half trillion dollars in 0:16:57.200 --> 0:16:59.560 excess savings trillion with the T. Yeah, that's a lot 0:16:59.640 --> 0:17:02.840 that bill and trillion that has been built up during 0:17:02.880 --> 0:17:05.760 the pandemic thanks to stimulus payments and UH and just 0:17:05.800 --> 0:17:09.080 people banking more of the money that comes in, and 0:17:09.119 --> 0:17:12.120 so saving sabit's really changed quite a bit during the pandemic, 0:17:12.520 --> 0:17:16.240 which makes sense understandably. So the normal savings right in 0:17:16.240 --> 0:17:19.160 the US, it's typically pitifully small, and so it's good 0:17:19.160 --> 0:17:21.159 to see a little bit of a change in in 0:17:21.200 --> 0:17:24.320 the savings direction. But for the time being, everyone it 0:17:24.320 --> 0:17:26.360 seems to be keeping that money stocked away. And then 0:17:26.400 --> 0:17:29.239 this bodes well for individuals and families. If you know, 0:17:29.320 --> 0:17:31.719 an overall macro recession hits, or if a micro recession 0:17:31.800 --> 0:17:34.880 hits in your life, having cash on hand is key. 0:17:35.160 --> 0:17:37.000 And it's good to know that if a storm does 0:17:37.080 --> 0:17:39.359 kind of pop up on the horizon recession wise, that 0:17:39.440 --> 0:17:41.879 people are mostly prepared, they got their umbrella out. For 0:17:41.920 --> 0:17:43.920 a second, I thought you're gonna say, having cash on 0:17:44.040 --> 0:17:47.240 hand is king. They're gonna say king, which I don't 0:17:47.240 --> 0:17:49.840 think that's something we've ever said. King. Cash is king 0:17:50.480 --> 0:17:54.240 because cash is helpful. Cash is helpful, and sometimes, depending 0:17:54.240 --> 0:17:55.919 on what you've got going on, having more cash on 0:17:56.000 --> 0:18:00.199 hand is smart. But a lot of times oftentimes, uh, 0:18:00.240 --> 0:18:02.160 it seems that folks, you know, they've got too much 0:18:02.200 --> 0:18:04.119 cash on hand and they're not investing those dollars. It 0:18:04.200 --> 0:18:06.280