Speaker 1: Welcome to How the Money. I'm Joel and I am Att,
Speaker 1: and today we are talking prepping for a looming recession.
Speaker 1: That's right, man, we are talking about what you should
Speaker 1: do with a recession on the horizon. Could like the
Speaker 1: foreboding in my voice, the looming. Yeah, it's like you're
Speaker 1: reading a kid's horse Boy. But so the prepping part
Speaker 1: of it, it it makes me think back to recently we
Speaker 1: talked with Nick Ma Julie and he talked a little
Speaker 1: bit about prepping. So he lives up in New York
Speaker 1: and as we're talking with him, he talked about keeping
Speaker 1: some water on hand or like like a certain amount
Speaker 1: of water like in his apartment, which is something I
Speaker 1: guess I think I would do that. I guess if
Speaker 1: I live there in New York City when there's you know,
Speaker 1: like millions and millions of people packed into a very
Speaker 1: very small geographic location, and then you have less room
Speaker 1: in your apartment to store. So you're like, what all
Speaker 1: that story? But you're right. He said he had a
Speaker 1: mask ahead of time when nobody else in New York. Yeah,
Speaker 1: So I'm like, man, respect like, major props to Nick
Speaker 1: for being slightly prepared. I mean, he's not like by
Speaker 1: any means an actual prepper where he's got meals or
Speaker 1: anything like that. Like we don't even have I mean
Speaker 1: we to know of we didn't get that far with him,
Speaker 1: but that's that's true. He's like in the walls, this
Speaker 1: is where this is where I keep my zombe. You
Speaker 1: want everyone to know where he keeps his can goods
Speaker 1: and all of his all of his gida. I could
Speaker 1: I think I've mentioned this before, but I feel like
Speaker 1: I could see himself getting into that a little bit. Um,
Speaker 1: not because I necessarily think it's something that's going to happen,
Speaker 1: but just because it seems kind of fun, you know,
Speaker 1: just to be it's I mean, and we're gonna get
Speaker 1: to this during this episode, but just to be able
Speaker 1: to kind of flex your muscles a little bit and
Speaker 1: be like, Okay, if something were to happen, if it
Speaker 1: were all to potentially hit the fan, I would be prepared. Uh.
Speaker 1: That's what we're gonna talk about when it comes to
Speaker 1: a me not necessarily that everything is about completely good
Speaker 1: own hill, but that if it were to happen that
Speaker 1: you would absolutely be prepared. That's what we're talking about today,
Speaker 1: and specifically Joel's gonna give his take on as to
Speaker 1: exactly when the recession is, it's gonna start, when it's
Speaker 1: gonna end. I'm gonna give you I've got my crystal
Speaker 1: ball out here, and i will give my predictions. Well no,
Speaker 1: but there are a lot of people who are giving
Speaker 1: their predictions right right now, Mattain, and so I made
Speaker 1: us want to actually talk about this today because if
Speaker 1: you read pay attention, if you read newspapers, if you
Speaker 1: are on Twitter or whatever, you've probably seen the R
Speaker 1: words start popping up in your feed and you're like, uh,
Speaker 1: when where what? Huh? I thought things were going well
Speaker 1: and with the economy, So what the heck are we
Speaker 1: talking about a recession for? Well, we'll get into that
Speaker 1: in this episode. That's right, man. So we'll get to
Speaker 1: all that here later on. But first, a quick little
Speaker 1: story to share with listeners and our family. We are
Speaker 1: looking at a new house, uh, and specifically we so
Speaker 1: we put an offer in on this house. It got accepted,
Speaker 1: So that means work technically under contract now at this
Speaker 1: point a feat in today's market, that islation. That is
Speaker 1: very true. Um, However, here's where things gets sticky. That
Speaker 1: thing didn't fully a praise, which is also not surprising
Speaker 1: given you know the rapid increase in home prices that
Speaker 1: we've seen here in Atlanta over the past year. We've
Speaker 1: seen an average increase of twenty percent. Likely this particular
Speaker 1: house has seen somewhat less of that. But regardless, it
Speaker 1: didn't fully a praise, which means, you know where I'm
Speaker 1: gonna go with this. There's a gap there that you
Speaker 1: gotta that you gotta come to the table more money exactly. Yeah,
Speaker 1: there's a gap between the twenty percent that I was
Speaker 1: that we were looking to put down, uh and what
Speaker 1: I have to put down now. So I thought we
Speaker 1: were gonna, you know, have to just come to the
Speaker 1: table with a little bit more money. But then I
Speaker 1: was talking with my lender and he specifically said that, hey,
Speaker 1: you could always consider p M I, and I was
Speaker 1: just like, dude, private Morgan Insurance, not for me. Have
Speaker 1: you listened to how the money that's for losers? Check
Speaker 1: out my show? However, even though that's something that we
Speaker 1: wouldn't normally recommend, uh, this is a situation where I
Speaker 1: realized that it could make sense because specifically it seemed
Speaker 1: like it was gonna make sense maybe for two reasons,
Speaker 1: one of which I asked him to shop it around
Speaker 1: and he was able to find p m I that
Speaker 1: was only going to cost sixty dollars a month, which
Speaker 1: is pretty affordable. And then secondly, he said that they
Speaker 1: would offer a lender credit, so they were going to
Speaker 1: chip in fift undred dollars towards closing costs, which that
Speaker 1: would effectively pay for our p m I for two years.
Speaker 1: And so what that means is that at the end
Speaker 1: of that two years, then I'm gonna have to pay
Speaker 1: for that p m I myself right basically out of
Speaker 1: out of pocket. Uh, that's not a cost that has
Speaker 1: essentially kind of been subsidized. But by that point, there
Speaker 1: will be enough paid down on that balance to have
Speaker 1: reached that in equity threshold. And so in this case,
Speaker 1: I'm not necessarily even counting on the home appreciating even more.
Speaker 1: It's just a matter of looking at the amortization schedule
Speaker 1: and seeing that literally, like I think it's actually twenty
Speaker 1: five months past when we might be set to purchase
Speaker 1: the home, we will enter that territory. And so essentially
Speaker 1: that means we're gonna be able to come to the
Speaker 1: table with a little bit less money. That's money that
Speaker 1: we will be able to continue to invest in the
Speaker 1: market or put towards other goals or other projects that
Speaker 1: we might have in mind. So I wanted to share
Speaker 1: that because this is just one of those situations where
Speaker 1: the general rule of thumb like that we do often
Speaker 1: talk about here on the show doesn't necessarily apply. Yeah,
Speaker 1: it makes me think there are a lot of things
Speaker 1: that we say on the show from time to time,
Speaker 1: and we're we're talking to a wide range of people
Speaker 1: who are in a bunch of different circumstances, and we're
Speaker 1: giving our best advice, and that doesn't mean that that
Speaker 1: advice applies to every specific situation. It makes me think
Speaker 1: of we you know, we hate when people take out
Speaker 1: loans for vehicles. Buying a new car and taking out
Speaker 1: some sort of five six year loan. It's not ideal,
Speaker 1: and if it's an even longer loan, it's even worse. Right,
Speaker 1: But if you have the cash on hand to pay
Speaker 1: for that car and you can get a zero percent interest, right, well,
Speaker 1: that that changes the game. That's basically like it's it's
Speaker 1: in my mind, is sort of like a credit card
Speaker 1: with a yearly statement, or like it's like, hey, this
Speaker 1: statement doesn't actually hit for like two or three years,
Speaker 1: and so our views are subject to change. We've recently
Speaker 1: talked about how our views have changed a little bit,
Speaker 1: at least when it comes to how those by now
Speaker 1: pay later things work on on websites when you're checking out,
Speaker 1: And the same is true for certain specific situations where
Speaker 1: the numbers pan out differently than they normally do. So
Speaker 1: p am I typically isn't sixty bucks a month. It's
Speaker 1: usually quite a bit more for most can be a
Speaker 1: lot more, and not everyone gets offered a lender credit. Right,
Speaker 1: But if all the if it all lines up and
Speaker 1: the numbers make sense, then like a general piece of
Speaker 1: advice that we do give, and like we would still give,
Speaker 1: we we don't we don't want you to pay an
Speaker 1: additional fee. Essentially, Like that's how I view p m I.
Speaker 1: It's just like man, even just the principle of it,
Speaker 1: I still don't like it. But at the end of
Speaker 1: the day, when I look at the numbers, I'm saying
Speaker 1: to myself, oh, this actually makes a lot more sense
Speaker 1: for me to go ahead and do this, even though
Speaker 1: it's going to be difficult. I mean, I feel like
Speaker 1: I'm kind of confessing here on the podcast that I
Speaker 1: will likely have p M I for the next couple
Speaker 1: of years. I guess if we go through with buying
Speaker 1: this house the Scarlet letter, Matthew, that's what it feels like.
Speaker 1: But specifically, I'm willing to say that because at the
Speaker 1: end of the day, what do the numbers show? And
Speaker 1: the numbers show that it makes sense for us to
Speaker 1: go ahead and accept and eat this feed because essentially
Speaker 1: it's getting paid for by the When I took out
Speaker 1: a loan on my niece on Leaf, I felt like
Speaker 1: a fraud. I was like, who am I? I've never
Speaker 1: bought a new car, I've never had a car loan
Speaker 1: like I had, like some one of those existential moments,
Speaker 1: like some cognitive business between what you've normally said but
Speaker 1: then versus what the reality is showing on the ground
Speaker 1: with the number exactly. But when it comes down to it,
Speaker 1: you gotta look at the numbers and you gotta look
Speaker 1: at the reality, which is like, well, if you could
Speaker 1: afford to buy that car anyway, and you can do
Speaker 1: more productive things with that money than it's not a
Speaker 1: bad idea. Yeah, it's exactly. You have to leave room
Speaker 1: for that new once. So we have the money on
Speaker 1: hand to where we could come to the table with
Speaker 1: the full In this case, we're choosing not to similar
Speaker 1: to just like you, like you could have paid cash
Speaker 1: for that vehicle, but like you said, zero percent loan,
Speaker 1: Like that is something that is worth considering because okay,
Speaker 1: what else could I do, especially to if you're going
Speaker 1: to have that money set aside? Uh, you know, maybe
Speaker 1: you're going to beef up your your reserves a little
Speaker 1: bit more, your emergency fund a little bit more. That
Speaker 1: still keeps you in that strong position just in case
Speaker 1: something were to happen that you could quickly eliminate that.
Speaker 1: Oh the unique and quirky world of personal finance. There
Speaker 1: are so many things to consider. But I'm glad you
Speaker 1: you shared one of those coqurks with us today because
Speaker 1: it's something that I think we can we can all
Speaker 1: learn from and apply to our personal situations. Absolutely. All right,
Speaker 1: let's move on. Let's mention the beer we're having on
Speaker 1: today's episode. This one is called ironer all barish duncle.
Speaker 1: I think I pronounced ever on. I might have mispronounced
Speaker 1: every single one of those words. Just now, No, you
Speaker 1: got the Dunkle part right, Uh, well, this is a
Speaker 1: Bavarian dark logger. We'll give our thoughts at the end
Speaker 1: of the episode, but for now, Matt, we're talking prepping
Speaker 1: for a looming recession. And when I was thinking about
Speaker 1: this episode, I was, I was, I don't know. For
Speaker 1: some reason, it made me think about backup actors. And
Speaker 1: I never actually really did any acting myself. Did you
Speaker 1: Were you in the drama school place. I was not
Speaker 1: a drama kid. Okay, well, uh, it just made me
Speaker 1: think that the person in that role, the person who
Speaker 1: is the backup actor, they have to they're the understudy,
Speaker 1: and they have to be prepared like they were going
Speaker 1: to take the stage that night, right, like they're gonna
Speaker 1: let's say they're preparing for the main role in like
Speaker 1: a Shakespearean drama. You better prepare like you're actually you're
Speaker 1: going to be the person there on stage, even though
Speaker 1: the greater likelihood is that you're going to be sitting
Speaker 1: on the sidelines, right, And if you only halfway studied
Speaker 1: let's say the lines, so you didn't really put much
Speaker 1: effort in at practice, then you're not going to be
Speaker 1: ready to shine in case the lead actor gets sick.
Speaker 1: Or injured. And so yeah, while there's a chance you
Speaker 1: might never perform in front of a crowd on this
Speaker 1: specific production, you better prepare like you're gonna be out
Speaker 1: there every single night four weeks to come. And so yeah,
Speaker 1: I think of recession prepping the same way. You know,
Speaker 1: are we gonna see a recession next year? Well, I
Speaker 1: don't really know. There are predictions going around saying that
Speaker 1: we will, we might or might not when we see
Speaker 1: one in the next five years, we could, um, But
Speaker 1: whether we do or we don't, we still need to
Speaker 1: prepare financially as though we're going to And just like
Speaker 1: that understudy, you want to make sure that you're ready
Speaker 1: just in case, because yeah, flooding half your lines because
Speaker 1: you didn't prepare adequately, that sounds that sounds pretty stressful, exactly. Yeah.
Speaker 1: So the reason we're talking about this today again is
Speaker 1: because there's a good chance that you are hearing these rumblings,
Speaker 1: you know, these musings from the expert. It is out
Speaker 1: there that we might be in for a bumpy economic ride.
Speaker 1: I mean, not just the United States, the whole world
Speaker 1: just feeling this way. Deutsch Bank, they just put out
Speaker 1: a warning that were likely to see a recession next year.
Speaker 1: In a recent Wall Street Journal survey of economists shows
Speaker 1: a massive upward trend in the number of folks who
Speaker 1: are predicting in upcoming recession. And it kind of reminds
Speaker 1: me to you of the joke that economists have correctly
Speaker 1: predicted thirteen of the last four recession. If you call
Speaker 1: them often enough, eventually you're gonna be right. Yeah, meaning that,
Speaker 1: like the R word, it just gets overused. Even still,
Speaker 1: it is something worth talking about because one of the
Speaker 1: current signs point directly to this possibility, and that's the
Speaker 1: inverting of the yield curve that happened recently. You might
Speaker 1: have seen that in the financial headlines recently as well.
Speaker 1: UH and the FED it will continue to raise rates
Speaker 1: in order to try and calm some of the inflation
Speaker 1: we've been seeing. This adds more risk. But what is
Speaker 1: it that you need to do. That's what we're talking
Speaker 1: about here today. We want to get granular on this topic.
Speaker 1: We want to give some specific steps that you should
Speaker 1: take in or to be prepared whether we enter a
Speaker 1: recession territory in a month or maybe not even for
Speaker 1: another decade. Who does that's right? So I think that
Speaker 1: it's an important point to make, Matt that that we're
Speaker 1: not necessarily going into a recession. Right. There are all
Speaker 1: these predictions, there are more headlines, there's more consensus around
Speaker 1: the idea that we might be closing in on a recession,
Speaker 1: but it doesn't mean it does not guarantee that it's
Speaker 1: inevitable exactly, and so there's no need to freak out.
Speaker 1: That is not what this episode is trying to do
Speaker 1: is to get you to to freak out in stockpile
Speaker 1: food for the next two years because you know, in
Speaker 1: your root celler Nick mcjulie style, because he doesn't actually
Speaker 1: do that. I think I gave him a hard time
Speaker 1: on that episode too. I feel a little bad about that,
Speaker 1: but we had a good time. But yeah, while these
Speaker 1: predictions are being thrown around like hotcakes, that's not that's
Speaker 1: not really our jam. We're not going to make any
Speaker 1: predictions here. We don't we don't know, we'll we'll claim uncertainty.
Speaker 1: But a friend of the show, former guest Morgan Housel,
Speaker 1: he tweeted the other day and I thought this was
Speaker 1: just a brilliant way of saying he said, we're definitely
Speaker 1: heading towards the recession. The only thing that's uncertain is
Speaker 1: the timing, location, duration, magnitude, and policy response, and so
Speaker 1: aside from all of those things, this will happen exactly.
Speaker 1: So basically, yes, it will happen one of these days.
Speaker 1: It's just we don't know when, where, how it's going
Speaker 1: to come about. And it's still worth being prepared for
Speaker 1: her because historically we do experience a recession every five
Speaker 1: point nine years. And then that brings up the question,
Speaker 1: I guess, Matt, people like you've been using this word
Speaker 1: recession a lot now early on the show, what does
Speaker 1: that mean? You know, we had to define terms when
Speaker 1: we did crashes corrections in your Reaction episode, So let's
Speaker 1: talk about that, because a recession is is when the
Speaker 1: economy hits a rough spot and stops growing and and
Speaker 1: we're officially in recession territory when that happens for two
Speaker 1: consecutive quarters or for six months total, and and you know,
Speaker 1: it's it's often that you don't know that you're in
Speaker 1: a recession in the middle of it. You you find
Speaker 1: out based on data at the end of it, and
Speaker 1: you can kind of extrapolate or assume or or predict,
Speaker 1: but it's hard to know really until the event is
Speaker 1: actually is actually over. Yeah, you know, it's not unlike
Speaker 1: someone trying to time the stock market, right, Like, so,
Speaker 1: I remember having a conversation with a friend who is
Speaker 1: an investment advisor back in this is like yeah, nearly
Speaker 1: ten years ago, and after a couple of years of
Speaker 1: amazing growth, he was expecting for the market to significantly correct.
Speaker 1: Like I don't specifically remember if he was saying that
Speaker 1: we should be expecting a bear market or anything like that,
Speaker 1: but regardless, he was saying that he wasn't going to
Speaker 1: be investing until things dropped back down. And you know,
Speaker 1: like maybe he was able to time the market perfectly
Speaker 1: back in steen when things corrected a little bit, when
Speaker 1: the market was down like only about I think it
Speaker 1: was about ten percent. But if you would have stopped
Speaker 1: investing back in when when we were having this conversation,
Speaker 1: you would have missed out on over growth during that period.
Speaker 1: You know, even if you had checked your you know,
Speaker 1: checked your your your rate of growth, uh, in the
Speaker 1: midst of some of those little declines there. So like
Speaker 1: aside from that, you would have been up like thirty
Speaker 1: and if you didn't even get in and you're still
Speaker 1: waiting for that composing on on over, you know, like
Speaker 1: hundreds of percents uh in in in growth. Uh And
Speaker 1: so similar to the stock market, trying to time and
Speaker 1: to pinpoint exactly when a recession is about to hit
Speaker 1: is a really difficult and ever, that's right. That's that's
Speaker 1: why you and I we don't want to prognosticate anything. One,
Speaker 1: we're not smart enough. And too, we don't think anybody
Speaker 1: smart en run enough necessarily to do that. It's uh,
Speaker 1: it's a fool's Errand but despite our inability to time
Speaker 1: a recession, in order to optimize things, we think that
Speaker 1: folks should always treat their finances in a way that
Speaker 1: that assumes that a recession could happen, and and you
Speaker 1: gotta treat it with respect. That's right. You gotta know that. Uh,
Speaker 1: you make hay while the sunshines, right, realizing that negative
Speaker 1: things have the potential to arise in the future. And
Speaker 1: that's because it's not just broad economic trends that impact
Speaker 1: our finances. Right, the the economy might even keep roaring along,
Speaker 1: but you might still experience what we would call a
Speaker 1: personal recession. You could fall on hard times health wise
Speaker 1: in your own life or or your spous or or
Speaker 1: partner has some health issues that arise and you have
Speaker 1: to take time off of work to help care for them,
Speaker 1: um some steep medical bills that you have to pay for,
Speaker 1: or your monthly expenses might dramatically increase or or even
Speaker 1: matt take with with rents going up across the country,
Speaker 1: someone might have a personal recession where their rent went
Speaker 1: up two dollars a month and they weren't prepared for that,
Speaker 1: and so these are the kind of thing that you
Speaker 1: can payment. Exactly, that's a big increase in your monthly expenses.
Speaker 1: And so these are the kind of things that it's
Speaker 1: it's not just a macro level recession that can impact you.
Speaker 1: It's all these micro things that happened along the way.
Speaker 1: You could lose your job, you know, effectively eliminating the
Speaker 1: majority of your income altogether. And so basically, you know,
Speaker 1: a personal recession that specifically affects you and your family
Speaker 1: could come at any time. And you know, even if
Speaker 1: the American economy continues to crush, continues to cruise along,
Speaker 1: even if wages are up, unemployment is low, it's wise
Speaker 1: to be prepared in your own life, in your own
Speaker 1: family to make sure your personal finances already for whatever comes.
Speaker 1: That's right, But the question still remains, what should you
Speaker 1: be doing in what ways should you be preparing for
Speaker 1: an upcoming recession, whether it happens in the next year
Speaker 1: or the next ten years. We will get to all
Speaker 1: of that right after this break. All right, we're back.
Speaker 1: We're still talking about processions and the possibility that one
Speaker 1: comes in the near future. There's a chance, there's a chance,
Speaker 1: there's a definite chance. And it's like it's sort of like, hey,
Speaker 1: you're gonna die. It's like, oh my gosh, well, yeah,
Speaker 1: I guess we all die eventually, right, Like it will
Speaker 1: happen at some point. We don't know when, we don't
Speaker 1: know how. Yeah, And we still want you to get
Speaker 1: term life in church just in case, because even if
Speaker 1: you're thirty two and you know, the actual aerial tables
Speaker 1: show and your current health standing shows that there's a
Speaker 1: really it's a really really low percent unlikely. Yeah, it
Speaker 1: will still happen, exactly, and so it's still still wants
Speaker 1: to prepare for it. So life in church would be yeah,
Speaker 1: I think a similar sort of thing. And and there
Speaker 1: is good news here, Matt. Before if we do enter
Speaker 1: recession territory. Fortunately, the American consumer, the American individual is
Speaker 1: kind of in good standing financially. Overall, Americans are sitting
Speaker 1: pretty in a lot of ways. One is just to
Speaker 1: say I have more cash on hand. Some estimates show
Speaker 1: that we've got two and a half trillion dollars in
Speaker 1: excess savings trillion with the T. Yeah, that's a lot
Speaker 1: that bill and trillion that has been built up during
Speaker 1: the pandemic thanks to stimulus payments and UH and just
Speaker 1: people banking more of the money that comes in, and
Speaker 1: so saving sabit's really changed quite a bit during the pandemic,
Speaker 1: which makes sense understandably. So the normal savings right in
Speaker 1: the US, it's typically pitifully small, and so it's good
Speaker 1: to see a little bit of a change in in
Speaker 1: the savings direction. But for the time being, everyone it
Speaker 1: seems to be keeping that money stocked away. And then
Speaker 1: this bodes well for individuals and families. If you know,
Speaker 1: an overall macro recession hits, or if a micro recession
Speaker 1: hits in your life, having cash on hand is key.
Speaker 1: And it's good to know that if a storm does
Speaker 1: kind of pop up on the horizon recession wise, that
Speaker 1: people are mostly prepared, they got their umbrella out. For
Speaker 1: a second, I thought you're gonna say, having cash on
Speaker 1: hand is king. They're gonna say king, which I don't
Speaker 1: think that's something we've ever said. King. Cash is king
Speaker 1: because cash is helpful. Cash is helpful, and sometimes, depending
Speaker 1: on what you've got going on, having more cash on
Speaker 1: hand is smart. But a lot of times oftentimes, uh,
Speaker 1: it seems that folks, you know, they've got too much
Speaker 1: cash on hand and they're not investing those dollars. It
Speaker 1: kind of just depends who you're talking to. But I
Speaker 1: thought you're gonna say cash is king. But I mean, essentially,
Speaker 1: like we're talking about some of the different reasons why
Speaker 1: you shouldn't be worried about a recession, uh that might
Speaker 1: be looming on the horizon. And and another one of
Speaker 1: those reasons, Joel, you just mentioned cash on hand, But
Speaker 1: another reason too is that the unemployment rate it's almost
Speaker 1: at three and a half percent, which is essentially a
Speaker 1: fifty year low. Uh. There are still roughly about two
Speaker 1: jobs out there for everyone who is looking for a job.
Speaker 1: And so yeah, you know, while the labor market it's
Speaker 1: not perfect, it's kind of been a bright spot economically,
Speaker 1: and it's become easier for for a lot of folks
Speaker 1: to bounce to another job in order to earn more money,
Speaker 1: or you know, even just to ask for a more
Speaker 1: meaningful raise from their their current employer. At the very least,
Speaker 1: it means that most Americans can continue to count on
Speaker 1: a steady paycheck and obviously having that regular income it's
Speaker 1: always a great thing, regardless if there's a recession coming
Speaker 1: or not. Yeah, So, even if the economy cools off,
Speaker 1: it's well, maybe there's just one job opening for every
Speaker 1: individual looking for a job. And so the economy has
Speaker 1: been running so well that just a slowdown that we
Speaker 1: might experience might not even indicate a recession. It might
Speaker 1: just be indicate maybe a return to normal. Yeah. So
Speaker 1: in another bright spot, mattes consumer demand. Right, So, you know,
Speaker 1: one of the natural outcomes of lots of cash on
Speaker 1: hand that I talked about just a minute ago and
Speaker 1: more cash flowing into people's bank accounts, flowing into their
Speaker 1: lives is is a willingness to spend more of the
Speaker 1: money that they've got in That demand is still hot
Speaker 1: for so many items. We're talking about houses, cars, travel,
Speaker 1: you know, all of the demand in those sectors points
Speaker 1: to the fact that demand is intense and and we're
Speaker 1: not seeing signs of consumers curving their spending in in
Speaker 1: big ways, not yet at least, And so in part
Speaker 1: this consumer demand we're seeing, it's this pent up demand
Speaker 1: that's you know, finally able to be quenched because COVID
Speaker 1: has dropped off a cliff and and travel for instance,
Speaker 1: right this is an area that we we literally weren't
Speaker 1: able to spend on uh most of the past two years,
Speaker 1: and and so folks are itching to get back out there.
Speaker 1: They're spending their dollars that have been sitting idle in
Speaker 1: savings accounts, and so I think there is a right
Speaker 1: spot here that people have the cash on hand and
Speaker 1: they are saving it, but they're also willing to spend
Speaker 1: on things that matter to them, and I think that
Speaker 1: bodes well for businesses right who are looking to hire
Speaker 1: and the economy in general. The fact that there are dollars,
Speaker 1: that there is a thriving marketplace, that that people are
Speaker 1: engaged in. The average American consumer has a significant amount
Speaker 1: of optimism right now. Yeah, certainly seems like it's a
Speaker 1: symptom that points to the health and the confidence that
Speaker 1: folks have with their financial situation. So we've highlighted the
Speaker 1: strength of the economy, you know, the fact that things
Speaker 1: are getting back to normal. Jobs are plentiful, spending is strong.
Speaker 1: Let's talk about recessions and what it is that you
Speaker 1: should be doing right now. Uh. You know, because of
Speaker 1: the Fed's attempt to rain in inflation, we could see
Speaker 1: slower growth, which which could halt this recovery that we're seeing.
Speaker 1: And so even though it remains anyone's guests as to
Speaker 1: you know, what will actually happen and when that thing
Speaker 1: will happen, it's important to talk about what you should
Speaker 1: be doing in order to prepare for a recession. So
Speaker 1: the first thing that we want to talk about is
Speaker 1: shoring up your income. Specifically, we want you to firm
Speaker 1: up your your position at your current job. So whether
Speaker 1: that means you are working from home, whether you're working
Speaker 1: in person, you want to make yourself indispensable. You know,
Speaker 1: if you feel like you're maybe a little off your
Speaker 1: boss's radar, it's worth scheduling a chat to make sure
Speaker 1: that that you're living up to expectations, maybe even seeing hey,
Speaker 1: what else could I take on? Like just kind of
Speaker 1: getting on the radar seeing how it is that you
Speaker 1: can step up, how you can take a lead in
Speaker 1: in future projects, because if a recession does come along
Speaker 1: and you happen to work in an industry that gets
Speaker 1: hit hard, you want to be like the last person
Speaker 1: on the chopping block, right like like you want to
Speaker 1: be the person where that she's like, well, certainly, like
Speaker 1: I can't get rid of Joel because of you know,
Speaker 1: like Joel does this instead because he's really tall. Yeah, okay,
Speaker 1: he's gonna reach the toilet paper in the break room
Speaker 1: to exactly. That's what I'm good for. Yeah, you got
Speaker 1: you gotta keep all those things in Mike. But um, yeah,
Speaker 1: I think firming up your current job, matt Is makes
Speaker 1: a lot of sense. Making yourself indispensable. That's good advice.
Speaker 1: And then another thing to do is is to try
Speaker 1: to get a raise, um, to try to make more
Speaker 1: money now so you can be banking more money in
Speaker 1: the months ahead. And you know, I know that lots
Speaker 1: of folks wish that pay bumps were just equal across
Speaker 1: the board, that you didn't have to fight to get
Speaker 1: more money, that it was just kind of standard um
Speaker 1: cost of living bumps plus a little more on top
Speaker 1: of it. But the truth is that that's not the case,
Speaker 1: and and the squeaky wheel gets the grease. And I'm
Speaker 1: not saying that you should wine and complain or pester
Speaker 1: your boss for a raise, Like there's a way to
Speaker 1: do this, and then there's a way that's going to
Speaker 1: end up in you becoming actually the dispensable person at
Speaker 1: your job by being too much of a complainer, but
Speaker 1: pointing out the value that you're bringing to the table
Speaker 1: and equating that to a reasonable increase in salary. It's
Speaker 1: crucial to make sure that you're not leaving money on
Speaker 1: the table, especially in this environment where employees are incredibly valuable,
Speaker 1: where the labor market is offering a premium for workers
Speaker 1: who fight for themselves, who speak up for themselves, this
Speaker 1: is a great time to increase the amount of money
Speaker 1: that you're making this right, Yeah, So, like the way
Speaker 1: I like to view the world, or that I naturally
Speaker 1: view the world is I agree, Like I feel like
Speaker 1: you shouldn't have to be this week wheel, right because
Speaker 1: in like the perfect world, markets are like perfectly efficient,
Speaker 1: people would recognize your accomplishments and reward you commensurate exactly,
Speaker 1: So if like Hey, you are bringing more value to
Speaker 1: your your boss or to your company, there should be
Speaker 1: a perfect and equivalent rays to your salary. But the
Speaker 1: fact is that's just not how the world actually works.
Speaker 1: Like it does make me think of the efficient market
Speaker 1: hypothesis where it's just like all data is available and
Speaker 1: with the given data that more production is now happening
Speaker 1: at X company, you should see a proper a proper race.
Speaker 1: But the fact is you also have your boss or
Speaker 1: your manager, because what they're trying to do is create
Speaker 1: as an efficient of a company as possible as well.
Speaker 1: And if they can keep you happy while keeping expenses low,
Speaker 1: well then they win or not, you know, they don't win,
Speaker 1: but like that then they're they're the ones doing a
Speaker 1: really good job. And so I guess all that to say,
Speaker 1: you do have to advocate for yourself and whether that's
Speaker 1: you know, just being the squeaky wheel or finding other
Speaker 1: ways to to kind of step up, that's what we
Speaker 1: want to see folks do. Yeah, And so I think
Speaker 1: one one other thing when it comes to income, mac
Speaker 1: because the first tip you mentioned was sure your income,
Speaker 1: and I think another way to do that is to
Speaker 1: diversify your income. So if we're talking about a recession
Speaker 1: on the horizon, or or even the possibility of you
Speaker 1: having a personal recession in your life. It's important to
Speaker 1: make sure that not all of your money is coming
Speaker 1: from one place. You know, one of our listeners they
Speaker 1: recently sent us a message, um And and she said
Speaker 1: that she's trying to actively monetize her hobbies right now,
Speaker 1: if only to cut down on the costs of the
Speaker 1: things that she loves to do. And I loved hearing
Speaker 1: that mindset, Matt, that she's like she's even thinking about
Speaker 1: in in just some of those hot hobby pursuits, that
Speaker 1: she's like trying to make sure that she's not spending
Speaker 1: too much or that she's at least breaking even. But
Speaker 1: having having those multiple streams of income is so helpful
Speaker 1: when the economy is starting to contract. Like it always
Speaker 1: sucks to lose your job, but it's way worse if
Speaker 1: that's the only income you have, right if you don't
Speaker 1: have any other methods of making income, making money at
Speaker 1: your disposal, if you are a one trick pony when
Speaker 1: it comes to income, If if it literally only comes
Speaker 1: from one place and that's your your w two job,
Speaker 1: then we would say start thinking about that now, finding
Speaker 1: other ways to not only save money, but potentially diversify
Speaker 1: the way money comes into your life. That's a that's
Speaker 1: a smart way to prepare for a recession. Absolutely, man.
Speaker 1: That is why we're such huge fans of real estate.
Speaker 1: We're not going to be the ones here that tells
Speaker 1: you that you know small you know real estate investing,
Speaker 1: that it's a purely passive endeavor. It does take a
Speaker 1: little bit, a little bit of time, but way less
Speaker 1: than anything else out there. And so this is one
Speaker 1: of those areas where as you ramp up the amount
Speaker 1: of capital, the amount of money that you're able to
Speaker 1: put towards a side hustle, the less time that you're
Speaker 1: having to to dedicate towards. I see it as like
Speaker 1: the sliding scale. Like initially, a lot of times, like
Speaker 1: the thing that is available to anybody, it oftentimes requires
Speaker 1: the most amount of time, right uh, And oftentimes it
Speaker 1: doesn't require much money because there's a lot more folks
Speaker 1: out there who have time than money. But then as
Speaker 1: you kind of progress down that scale, the amount of
Speaker 1: money that is going to be required of you increases,
Speaker 1: and the amount of time can oftentimes be reduced. Ultimately,
Speaker 1: you end up with just passively investing that money in
Speaker 1: the market, which literally requires no time. It's just a
Speaker 1: matter of getting that money in that investment and then
Speaker 1: just seeing it grow from there. But obviously to to
Speaker 1: be able to live off of that it requires a
Speaker 1: lot more money. But so, you know, we're talking about
Speaker 1: what to do during recession, and we kind of talked
Speaker 1: about from the different ways that you can make sure
Speaker 1: that you still have money flowing into your life. Let's
Speaker 1: talk about your expenses, because when you are able to
Speaker 1: cut down your expenses, then you can keep money from
Speaker 1: flowing out of your life, right And specifically, I want
Speaker 1: to talk about holding off on some big purchases. And
Speaker 1: so whether you know, we're talking about an expensive month
Speaker 1: long European vocation, maybe if you're maybe you're really fancy
Speaker 1: and you're thinking about buying a second home like either way,
Speaker 1: making a big splash purchase like this that depletes your reserves,
Speaker 1: it's it's not wise if you're worried that recession might
Speaker 1: be on the horizon. Uh, And regardless of what's going
Speaker 1: on with the economy, these are the types of expenses
Speaker 1: that you want to make sure that you've carefully planned
Speaker 1: for and that you've performed your due diligence right not
Speaker 1: only to make sure that you're getting the best deal possible,
Speaker 1: but also to make sure that this is an expense
Speaker 1: that you can easily stomach. You want to be able
Speaker 1: to absorb these types of expenses in in good or
Speaker 1: in bad, in lean times or in fat times. Yeah.
Speaker 1: I don't think we're saying cancel that plan vacation that
Speaker 1: you have, but think, think long and hard, like do
Speaker 1: you actually have the expendable income to take it? Yeah?
Speaker 1: I mean it shouldn't push you to the brink, but
Speaker 1: like your financials shouldn't be like just dangling by a
Speaker 1: thread were YouTube, you know, go forward with whatever it
Speaker 1: is that you're thinking about. If you're taking money out
Speaker 1: of your home equity line of credit or put it
Speaker 1: on your credit card to pay for it, that's a
Speaker 1: scary sign. And so we would say back away and
Speaker 1: wait to take a vacation until you you can keep
Speaker 1: your emergency fund intact until you can you know, pay
Speaker 1: pay for it with cash on hand. And you know,
Speaker 1: another another thing when it comes down to cutting down expenses,
Speaker 1: Matt is is to save more on the little stuff.
Speaker 1: And it's funny. I'm kind of the guy who prefers
Speaker 1: to get the big things right and then not really
Speaker 1: sweat the small stuff. That's kind of my vibe. Um.
Speaker 1: You know. For instance, we we only have one super
Speaker 1: old car, and that means my transportation expenses are so low.
Speaker 1: It allows me not have to not have to fixate
Speaker 1: on the smaller things. And I'd like to live life
Speaker 1: that way, because otherwise I would be constantly worried about,
Speaker 1: you know, how much I'm spending with every single grocery
Speaker 1: store trip, or whether I can afford that additional item
Speaker 1: I want to put in my card. But it doesn't
Speaker 1: mean that those small expenses don't matter. And so yeah,
Speaker 1: if you have trouble with some of those small expenses
Speaker 1: and you want to get back to focusing on them
Speaker 1: a little bit better, there's this app that I was
Speaker 1: recently made aware of called the flip app f L
Speaker 1: I P P. Will link to it in the show notes,
Speaker 1: And so it helps you see all the retailer flyers
Speaker 1: in one place for that week, so that can help
Speaker 1: you maybe make better grocery lists, shop the sales so
Speaker 1: that you're not overspending on the little things. So you're
Speaker 1: doing a better job planning out your budget. Specifically at
Speaker 1: the grocery store, it's help with that, but there's flyers
Speaker 1: to other businesses too, But being able to see that
Speaker 1: and all in one place can help you make make
Speaker 1: better plans. And really, when it comes down to it, yeah,
Speaker 1: those small things do add up. So finding little ways
Speaker 1: to save more at places that you shop regularly, we
Speaker 1: would say, makes a lot of sense. Nice man, I
Speaker 1: don't think we've ever heard of that one. Another way
Speaker 1: that we can often hemorrhage money, UH is through debt payments.
Speaker 1: And currently Americans say that they are going into more
Speaker 1: debt than ever to pay for higher costs due to inflation.
Speaker 1: And so we want to encourage folks to do your
Speaker 1: best to only carry what what a lot of folks
Speaker 1: will call good debts. Any debt is inherently bad, right
Speaker 1: because you're having to pay interest to a lender. But
Speaker 1: there are certain expenses where it makes more sense, you know,
Speaker 1: depending on what you're able to do without money, that
Speaker 1: that you then free up. Specifically we're talking about like
Speaker 1: a mortgage, uh, student loans, but not too many student loans.
Speaker 1: I think that's a slippery slote for a lot of folks.
Speaker 1: But if you have debt, uh specifically with a variable
Speaker 1: interest rate, it's really important to start paying special attention
Speaker 1: to those credit cards. They're often the biggest culprits here.
Speaker 1: But the rate on your helock, your home equity line
Speaker 1: of credit, it's gonna be heading north as well. But
Speaker 1: we should be looking to pair back on the number
Speaker 1: of you know, of these different debt obligations that we
Speaker 1: have now before recession hits, paying off debt it's almost
Speaker 1: never a bad move, but with a recession potentially looming,
Speaker 1: it makes even more sense now. Yeah, the one yeah,
Speaker 1: I think I would say is just a low interest
Speaker 1: rate mortgage and keeping more cash on hand just provides
Speaker 1: you maybe more security, especially with inflation doing what it's
Speaker 1: doing now, putting more money towards that three percent mortgage
Speaker 1: makes very little sense. But for the most part, we're
Speaker 1: not big fans of paying off your mortgage. If that's
Speaker 1: something that especially that if you've acquired in the past
Speaker 1: three years, or if you've refinanced in the past three years,
Speaker 1: it's right, yeah, because it's still just incredibly low. And yeah,
Speaker 1: you're you're actually not in a bad position given the
Speaker 1: rate of inflation. That we've got going on in the
Speaker 1: country right now. But it's those other debts you're right, Matt, like,
Speaker 1: especially credit cards, hometically lines of credit. As those rates
Speaker 1: go up, it's only going to make those debt payments
Speaker 1: go up. And so getting on the ball now to
Speaker 1: start getting rid of your debt makes sense in advance
Speaker 1: of a potential recession. And you know one other thing
Speaker 1: that we would suggest everybody um do. It's like an exercise.
Speaker 1: We would say that all how the Money Listeners should
Speaker 1: have done is to create a bare bones budget. And
Speaker 1: we've talked about that in depth actually back in episode two. Uh,
Speaker 1: you don't necessarily need to when you do this, to
Speaker 1: cut your spending to the bone right now, right because
Speaker 1: you're not currently in an emergency like we're not currently
Speaker 1: in a recession. You haven't actually lost your job, hopefully.
Speaker 1: And here's the thing, it's it's it's never a terrible
Speaker 1: idea to cut back here and there, even when things
Speaker 1: are going good, in order to accelerate your your path
Speaker 1: towards financial freedom, to increase your savings, right, to be
Speaker 1: able to put a little bit more aside in your
Speaker 1: wrath or your four oh on k. But but at least,
Speaker 1: that act of creating a bare bones budget and knowing
Speaker 1: that you can implement it in order to decrease your
Speaker 1: expenses at a moment's notice is smart. I think it.
Speaker 1: It's such a cool tool because you might say, my
Speaker 1: month expenses right now are tht but this bare bones
Speaker 1: budget says I can get by on And so to
Speaker 1: know that at a moment's notice you can switch over
Speaker 1: to this other budget and save nine dollars a month.
Speaker 1: You can switch to eco mode. It's it's exactly, it's
Speaker 1: it's like eco mode for your car. You can switch
Speaker 1: over there, start saving gas and you know it's not
Speaker 1: gonna be as punchy and stuff like that. And obviously
Speaker 1: you don't want to necessarily move over to that bare
Speaker 1: bones budget unless you have to. But having it just
Speaker 1: the just having created it and knowing that you can
Speaker 1: do it provides so much peace of mind and and
Speaker 1: just then the ability to to be able to thrive
Speaker 1: if if a recession does come along, instead of continue
Speaker 1: to struggle and finding ways to pare down then in
Speaker 1: the heat of the moment. And so I know specifically
Speaker 1: that when I said eco mode, I'm sure you're thinking
Speaker 1: about like an electric vehicle, like an actual EV. But
Speaker 1: did you know, like there's some actual internal combustion engine cars, uh,
Speaker 1: ice vehicles that would sometimes run on fewer cylinders than
Speaker 1: it would be like a V eight that could run
Speaker 1: on like my six cylinders, my sister cylinders maybe has
Speaker 1: something something like a real sort of eco mode. I
Speaker 1: don't know if it actually takes a cylinder down. I'm
Speaker 1: sure that's more like the transmission where it's like, yeah,
Speaker 1: it's less sporty or whatever. But there were literal like
Speaker 1: I think Cadillac back in the day, they had cars,
Speaker 1: they had engines that on the highway you could switch
Speaker 1: it over and it would it would literally shut down
Speaker 1: some of the cylinders. And so it's kind of like
Speaker 1: a bare bones super fuel efficient way. But that's kind
Speaker 1: of what we're talking about here, doing you know, with
Speaker 1: with your money, because once you've got it up to speed,
Speaker 1: it's like you don't really easy, you're just kind of
Speaker 1: you're cruising along, you're keeping it going. Get It reminds
Speaker 1: me too, like it makes me think of working out.
Speaker 1: And so if I'm working out, like do I need
Speaker 1: to be able to squat like hundreds of pounds? No,
Speaker 1: but I know that I'm now capable of doing that.
Speaker 1: And that's what a bare bones budget does. It lets
Speaker 1: you know what you're capable of when the situation arises
Speaker 1: that I do need to like move some furniture or
Speaker 1: something like that, I know what I'm capable of. Right,
Speaker 1: I'm gonna be more prepared. I'm gonna be less likely
Speaker 1: to hurt myself too. But that's what we're talking about
Speaker 1: with the with the bare bones budget here. That's right,
Speaker 1: all right, But we gotta still talk about what to
Speaker 1: do with your investments. That's something that people people want
Speaker 1: to know ahead of time too, is like, well, do
Speaker 1: I need to change my my investing style? Do I
Speaker 1: need to you know, reallocate some of my money before
Speaker 1: or if a recession hits. We'll we'll talk about that
Speaker 1: right after this. All right, we're back and we are.
Speaker 1: Let's let's continue talking about what you're gonna do with
Speaker 1: your money. We're a recession to hit. Until you asked
Speaker 1: this question, you post this question, but right for the break,
Speaker 1: but let's go ahead and answer it. Because regardless of
Speaker 1: what state the economy is in, we're always going to
Speaker 1: invest the exact same way that we would normally. That
Speaker 1: is specifically and widely diversified low cost index funds. Instead
Speaker 1: of changing your investment allocation because a recession seems likely,
Speaker 1: we would rather you have the right investment allocation. Now,
Speaker 1: it's a good idea to know how much risk tolerance
Speaker 1: uh you are comfortable with before a recession hits, so
Speaker 1: that you don't buy, so that you don't sell in
Speaker 1: a way that locks in your losses to where you
Speaker 1: end up losing a lot of money. It's kind of
Speaker 1: like going to a theme park and you're like, I'm
Speaker 1: not sure if I like upside down roller coasters or not,
Speaker 1: but you sit on one anyway, and then you freak out.
Speaker 1: It's better to know your risk tolerance before you get
Speaker 1: strapped in, like they have to forcibly remove you from
Speaker 1: the ride. Well now, for it's as if you wrote
Speaker 1: the roller coaster and then you have the option to
Speaker 1: unbuckle or like hit some sort of a jack button,
Speaker 1: and surely that would be you know, when you're on
Speaker 1: the loop de loop or whatever, that would be a
Speaker 1: terrible time to bail from the roller coaster. It's luckily
Speaker 1: that's not that's something you're capable of doing. But you
Speaker 1: can do that with your investments, and that's that's kind
Speaker 1: of a terrible thing and a lot of people do
Speaker 1: end up doing that because they didn't prepare properly on
Speaker 1: the front end. Yeah, they're not properly strapped in. Uh.
Speaker 1: It reminds me something that a famous investor, Peter Lynch.
Speaker 1: He he once said this, and that is that more
Speaker 1: money has been lost by folks preparing for a recession
Speaker 1: assuming that it was coming soon, then it was actually
Speaker 1: lost because of the recession itself. And man, we we
Speaker 1: feel that he is totally spot on here. Truly. It's
Speaker 1: thinking that we can outsmart or get timey right on
Speaker 1: shifting things around. Those are the bigger things at risk here.
Speaker 1: Then the recession itself, at least in regards to our
Speaker 1: specific investment. Makes me think of the story you told
Speaker 1: earlier about your friend and he's like, I'm gonna wait
Speaker 1: until the market takes a dip, and it's like, cool,
Speaker 1: you can try and maybe you'll be successful, but most
Speaker 1: of the time you're not. And most of the time
Speaker 1: people like you said, with that Peter Lynch quote, lose
Speaker 1: money because they're trying to outsmart. And yeah, I mean
Speaker 1: a recession, while it might happen next year, and we
Speaker 1: might see a correction in the market. And that's not
Speaker 1: a bad thing that it's a buying opportunity for long,
Speaker 1: long term buying hold investors. It's still not something that
Speaker 1: you can actively anticipate. You kind of gotta keep going
Speaker 1: the course recession or not. You know, over the long haul,
Speaker 1: the market tends to go up more than it goes down.
Speaker 1: This so you should continue to buy. And you mentioned
Speaker 1: the word risk there just now, Matt, and and I
Speaker 1: think that's another important part of this when it comes
Speaker 1: to our investing strategy, is is finding ways to eliminate
Speaker 1: unnecessary risk. And and now is the perfect time to
Speaker 1: rethink whether or not you want to consider investing, let's say,
Speaker 1: into any more speculative assets. Were typically comfortable with no
Speaker 1: more than five percent of your overall portfolio in your
Speaker 1: favorite company stock or uh, some cryptocurrency or even n
Speaker 1: f T like if you if you happen to really
Speaker 1: love a particular artist. But keeping it small, we would
Speaker 1: say is crucial because some of those more volatile assets
Speaker 1: very small, they could see wilder downward swings if a
Speaker 1: recession comes along. Uh. It's been particularly easy to misjudge
Speaker 1: your risk tolerance given the bull market that we've been
Speaker 1: on for for more than a decade, especially if you're
Speaker 1: a younger investor and you don't even remember remember the
Speaker 1: downturn of the two two thousand nine two era, uh
Speaker 1: and so vanguard, because what are you talking about. I've
Speaker 1: only seen my investments go up dramatically in value over
Speaker 1: the past twelve years. That's right. It's it's been easy
Speaker 1: to think that, like, well, who saves money because investments
Speaker 1: only go up all the time. But that's I feel
Speaker 1: like it doesn't even register anymore because it happened so quickly.
Speaker 1: It was such a blip. It was such a blip,
Speaker 1: it was such a quick rebound that it's it's almost
Speaker 1: as if and grated. A lot of that was artificially
Speaker 1: imposed with lockdowns and just the fear of the virus,
Speaker 1: But it's almost as if there was no lesson to
Speaker 1: be learned there because of how quickly it did bounce back,
Speaker 1: or how quickly the market specifically bounce. It's important to
Speaker 1: know that that those downturns can and are often more
Speaker 1: prolonged than that, like that that that short lived of
Speaker 1: a downturn, I mean, that's the most rapid stock Parker
Speaker 1: recovery we've had in the history, in the history of stocks.
Speaker 1: And so Vanguard actually has this helpful quiz that you
Speaker 1: can take to get more accurate idea of your own
Speaker 1: risk tolerance. Will put that the link to that in
Speaker 1: the show notes. But I think it's helpful. It's like
Speaker 1: eleven questions. And I actually took the quiz, Matt. I
Speaker 1: wanted to know, all right, what does Vandguard saying my
Speaker 1: risk tolerance is? And and they were like, you should
Speaker 1: probably be a hunter present invests in the stocks because
Speaker 1: you're totally cool with the risk and they ask you
Speaker 1: some really good questions and I was like, well, funny enough, Vanguard,
Speaker 1: that's exactly my allocation. But interesting that you say that.
Speaker 1: But you might find out by answering certain questions that
Speaker 1: your risk tolerance is not as robust maybe as mine,
Speaker 1: And so you might find that you should have a
Speaker 1: different portfolio set up in advance of things getting rocky.
Speaker 1: And and that's better right than hitting that inject button
Speaker 1: in the middle of the roller coaster, lying uh to
Speaker 1: strap on really before it even gets started. Man, that
Speaker 1: makes me think of I think this is like a
Speaker 1: prank video or something that was fed to me one time.
Speaker 1: But it was this guy who got on a roller
Speaker 1: coaster like next to a stranger. You know, like sometimes
Speaker 1: you get partnered with somebody and you don't know who's
Speaker 1: sitting next to you. And after they had strapped in,
Speaker 1: you know, the things came down over their chests and
Speaker 1: and like basically the roller coaster had launched, like maybe
Speaker 1: it had like it started going up the like the
Speaker 1: big ramp. The guy like reached into his pocket and
Speaker 1: pulled out like this giant bolt. It was just like,
Speaker 1: oh my gosh, what's this. And the guy next toe
Speaker 1: just like completely started flipping up, which is kind of
Speaker 1: a mean trick, but like that that's what I picture.
Speaker 1: That's what I think of when you think about the
Speaker 1: eject button, because that guy I wanted off before that
Speaker 1: thing took that massive plummet, afraid that you know, his
Speaker 1: restraints were going to be loosened. But you know, like
Speaker 1: what we're talking about here basically is like some mental preparation, right,
Speaker 1: Like if you know that you're the kind of person
Speaker 1: who's likely going to make changes based on some of
Speaker 1: these day to day news events or even like month
Speaker 1: a month, right because recessions like it might last a while.
Speaker 1: You need to make sure that you ingest a lot
Speaker 1: less news. Uh. And if you aren't willing to stay
Speaker 1: in the course despite the difficulty, you likely need to
Speaker 1: make changes before a recession occurs so that you can
Speaker 1: stay the course without wavering. But for most folks, though,
Speaker 1: the best course of action, assuming that you are invested,
Speaker 1: is probably in action. Right Like, just like with a
Speaker 1: bare bones budget, you want to prepare. You went to
Speaker 1: forecast what it might be like in the future, and
Speaker 1: that what we're doing here with your investments. You want
Speaker 1: to picture yourself. You're forecasting you, and you're saying to yourself,
Speaker 1: if this world had happened, what would I do? Uh?
Speaker 1: What kind of situation would I be in? You want
Speaker 1: to place yourself mentally in the future and make sure
Speaker 1: that you make the changes now while you your feet
Speaker 1: are like firmly planted on ground that that you're comfortable
Speaker 1: with you. It makes me think one of my friends,
Speaker 1: Matt he for some reason, he has this obsession every
Speaker 1: time he goes to a restaurant or something like that
Speaker 1: he thinks, what happens if an active shooter shows up here?
Speaker 1: And what am I going to do. What's my reaction
Speaker 1: to be, what's the quickest route of escape? You're talking
Speaker 1: about me? No, do you do that too? I mean
Speaker 1: I think about it. I guess it's not something that like,
Speaker 1: that's like one of the first things he does. He
Speaker 1: makes a plan of actually, how would I get out
Speaker 1: when I run out to the kitchen when I kick
Speaker 1: open window. It's smart, but at the same time, like,
Speaker 1: should it completely change your dyning experience? And hopefully that's
Speaker 1: what you're getting to. It shouldn't change everything about your
Speaker 1: your dyning experience. I think it's important to be aware
Speaker 1: of that kind of thing. Well, it's something that never
Speaker 1: crosses my mind, and so if it happened, I would
Speaker 1: be my job would drop and I would have no
Speaker 1: idea how to proceed. But but for him, at least,
Speaker 1: like maybe it has gotten to an extreme level, but
Speaker 1: at least he would have a plan. He would know
Speaker 1: what to do, He would know what he was going
Speaker 1: if if you know, things got Yeah, it's worth thinking through,
Speaker 1: just in the same way it's worth thinking through you
Speaker 1: know what a recession might be like and what it
Speaker 1: might look like for your finances, you know, or your
Speaker 1: investment portfolio to take a fifty percent plunge, Like, that's
Speaker 1: where it's worth thinking through, even though you hope that
Speaker 1: it obviously never happens, and it makes me think that,
Speaker 1: but it doesn't at least prevent him from going out
Speaker 1: to eat. He still goes, but he's always got a
Speaker 1: plan to bust somebody up in the that it's necessary.
Speaker 1: But it's like one of the last pieces of advices
Speaker 1: we want to give on this episode is to don't
Speaker 1: deviate from your larger plans. I think if that possibility
Speaker 1: prevented him from going out to eat and enjoying his
Speaker 1: conversation with his partner or his friends, yeah, that would
Speaker 1: be tough. It's overtaking his life too much at that point.
Speaker 1: And and so I think recessions they can cause people
Speaker 1: to panic and to change up their strategy. But if
Speaker 1: you're in the wealth building stage of your life, um
Speaker 1: then continuing to save and invest the way that you
Speaker 1: have been up until this point, it continues to make sense.
Speaker 1: It continues to be the best path forward. Nothing is
Speaker 1: ever certain for any of us in any given day.
Speaker 1: No one was even talking about a recession just six
Speaker 1: months ago. That was the farthest thing from economist minds
Speaker 1: from any of our minds, but world events, they've they've
Speaker 1: created some changes that have made a bumpy economic future
Speaker 1: a little more likely, and that doesn't mean that it
Speaker 1: should impact you in any meaningful way aside from the
Speaker 1: things that we've talked about on this episode. And in fact,
Speaker 1: if you could weather a recession well, you'll likely have
Speaker 1: the ability to buy more stocks, to invest more at
Speaker 1: depressed prices, which which helping you build wealth over the
Speaker 1: long haul. So it's one of those things that this
Speaker 1: potential shouldn't cause you to freeze up, shouldn't cause you
Speaker 1: to panic. Have a plan, but don't let it necessarily
Speaker 1: impact the things that you're doing already. Keep moving forward,
Speaker 1: keep proceeding towards those goals that are already working towards. Exactly.
Speaker 1: You don't want it to keep you from enjoying your
Speaker 1: beer or enjoying your dinner out. Uh, I mean, ultimately,
Speaker 1: preparing for a recession and just solid personal finance management
Speaker 1: are very similar. In our book, it's wise to be
Speaker 1: cognizant of these macro trends at play, but you also
Speaker 1: don't want to live your life and fear that a
Speaker 1: recession like that. It's just always lurking around the corner.
Speaker 1: Like we said, there's always someone out there predicting doom
Speaker 1: and gloom. I can name a few, actually, I think
Speaker 1: what the guy Robert Kyosaki. He's predicting a recession every
Speaker 1: single year, and you know what, maybe he'll be right
Speaker 1: one of these years, but he's wrong so many times.
Speaker 1: But if you listen to those naysayer voices, it's like
Speaker 1: you're always gonna be looking around the corner and not
Speaker 1: doing the things you need to be doing because of
Speaker 1: the doom and gloom folks. And he's made a living
Speaker 1: doing that, right, right, But the more debt that you
Speaker 1: pay off, the more savings you accrue, the less likely
Speaker 1: that you'll have cause to worry about any of this. Uh,
Speaker 1: making more of an impact at your job, finding another
Speaker 1: stream of income. These can also provide some peace of
Speaker 1: mind as you sure up the amount of money that's
Speaker 1: flowing into your life. It's just basically looking at all
Speaker 1: the different you know, it's like a RESK risk assessment
Speaker 1: session where you're sitting down and you're thinking, Okay, where's
Speaker 1: my money coming from? All right, how do I make
Speaker 1: sure that that's solid? Where does my money go? How
Speaker 1: do I make sure to plug any of those leaks
Speaker 1: or that I know if things were to hit the fan,
Speaker 1: that I can plug up leaks in a certain way. Um,
Speaker 1: and when it comes to my investing, is that within
Speaker 1: a portfolio? Is that within an investment that can that
Speaker 1: I am comfortable with standing scenes some you know, some
Speaker 1: ups and downs, some of that volatility. That is what
Speaker 1: we've talked through today, and hopefully we've given you some
Speaker 1: good food for thoughts. As we may or they not.
Speaker 1: It's a recession, but hopefully this gives you a good
Speaker 1: framework to assess and to analyze what you should be
Speaker 1: doing with your money. Yeah, alright, one more analogy, one
Speaker 1: more example. It makes me think of all right, I
Speaker 1: went to got that going out to dinner scenario. We
Speaker 1: got the roller coaster, we got the understudy, um, we
Speaker 1: got the working out one. Let's keep going. We've got
Speaker 1: too many analogies during this episode. Now we need one more,
Speaker 1: and that's for sure, right that's here. Not enough. So
Speaker 1: this reminds me of just a couple of weeks ago.
Speaker 1: I got to go to the Master, the most prestigious
Speaker 1: golf tournament matt in your hometown with a buddy and
Speaker 1: it was super fun. But we were standing on whole fifteen.
Speaker 1: I was standing a whole fifteen with a couple of
Speaker 1: buds and a ball. A golf ball ended up five
Speaker 1: ft from where we were standing and in a pine
Speaker 1: straw or like actually in this like mud pile. So
Speaker 1: it was like not an ideal place to hit a shot.
Speaker 1: The guy, I don't want to go too far with
Speaker 1: this analogy, but he got to move. Move the ball
Speaker 1: actually a club length away. Yeah, I gotta drop. And
Speaker 1: and the planning that goes into these guys attacking the
Speaker 1: golf course, they're reading the green starre out there before
Speaker 1: the tournament even begins. He couldn't have predicted necessarily that
Speaker 1: he was he was gonna end up in this exact
Speaker 1: spot on the course, five ft from where I was
Speaker 1: standing while I was heckling him. No I wasn't. I
Speaker 1: wasn't heckling you don't. You're not supposed to that golf
Speaker 1: But so hitting it out of the pine straw towards
Speaker 1: the green, but he's still all of that other planning
Speaker 1: really came in handy. His shot was incredible, like it was.
Speaker 1: Everybody else would have hit fifty two branches on the
Speaker 1: way to the green. This guy somehow snaked it through everything.
Speaker 1: It was impressive, but it really is it's all that
Speaker 1: preparation that came in clutch in a moment of difficulty
Speaker 1: on the course for this guy. So I don't maybe
Speaker 1: it's not a great analogy. It's good. He practices, not
Speaker 1: hoping that he will end up in the rough or
Speaker 1: end up in some mud, but he practices. So that
Speaker 1: were that situation to arise, Like that's why you work
Speaker 1: on your whatever. I don't know what club you used.
Speaker 1: I wasn't there, but like that's why he used his wedge,
Speaker 1: you know, until like like where he was, he's used
Speaker 1: an iron man he would have to go like a
Speaker 1: hundred ninety yards through. Yeah, it was nuts, Like I
Speaker 1: don't know, a hundred nine yards or is that like
Speaker 1: a four iron something? Um? And so yeah, I mean
Speaker 1: that's not something you hope happens, but hopefully you have
Speaker 1: the skill and it's something that you've you've practiced and
Speaker 1: you've rehearsed in your mind to be able to tackle.
Speaker 1: But let's go ahead and shift gears and get back
Speaker 1: to the beer that you and I enjoyed during this episode.
Speaker 1: This was an alt battish dun cool. I think that's
Speaker 1: how the Germans say it, don't. I just kind of
Speaker 1: made that up, so I will say, so we've never
Speaker 1: talked about this before. This isn't so it's it's an
Speaker 1: alt beer. So that's what the alt bearish stands for.
Speaker 1: And some folks might know that my last name is
Speaker 1: alt mix, and in German alt means old and technically mix.
Speaker 1: So what we think the original spelling was m I
Speaker 1: K and a mick is up. From what I understand,
Speaker 1: it's a stage in the beer brewing process. And so
Speaker 1: if you combine alts, which is old to mick, I mean,
Speaker 1: what is that? How do you read that? I read
Speaker 1: that as old, ale and first, and I believe that
Speaker 1: like brewing beer is just my bones. That might be
Speaker 1: like my fourth career change my allegens of brewing beer.
Speaker 1: But this is an altar bearish. Obviously. This is from
Speaker 1: my dad's side. The Germans, um, I don't look very German,
Speaker 1: but I look a little bit more like a Korean
Speaker 1: from my mom's side. But but yeah, this is a dunkle. Technically,
Speaker 1: I guess this is a dark logger. But I want
Speaker 1: your thoughts on this one. Okay, well sorry, I just
Speaker 1: saw that. I don't know if you've ever had an
Speaker 1: alt beer on the show before, because I was like,
Speaker 1: we have, that's a European style. I appreciate the insight
Speaker 1: for everyone out there to your name a little bit
Speaker 1: of history there on the Old Man myth, the legend
Speaker 1: old Ale. I'm gonna call you old Man because you're
Speaker 1: old Man. So good man. Well, so this is a
Speaker 1: beer soum at that you and I we don't really
Speaker 1: drink very often. I thought it was refreshing. It was
Speaker 1: light but still flavorful. I think the dark Bavarian lagger
Speaker 1: is just kind of a clutch style, and it's it's
Speaker 1: one that I want to ingut more of. So this
Speaker 1: was a good example. It's kind of a classic example
Speaker 1: a brewery that's been doing it for a long time.
Speaker 1: But yeah, I dug it, what do you think? Yeah, totally, No,
Speaker 1: it was a great change of pace. This is, like
Speaker 1: you said, it's not a good it's not a style
Speaker 1: that we often have, but it was really good. It
Speaker 1: was novel in that sense. It wasn't the standard New
Speaker 1: England hazy I PA that we are often fond of having.
Speaker 1: But this is like one of the classic beers that
Speaker 1: you often see on the shelf and you're like, what
Speaker 1: is that? Just looks like some old generic European beer
Speaker 1: that's been around for hundreds of years blah blah blah,
Speaker 1: But it's actually good. I like that we're starting to
Speaker 1: we're not. It's not that we never branched out before.
Speaker 1: It's just that there were so many options surrounding us,
Speaker 1: and we're just like, Oh, I want to try this
Speaker 1: barrel edge sour. Oh I'm gonna try this, you know,
Speaker 1: Russian Imperial stout with cocoa nibs and chili peppers in it.
Speaker 1: But oftentimes it can be good to go back to
Speaker 1: some of the classics, and I think we've kind of
Speaker 1: been doing that a little bit more lately. But but yeah,
Speaker 1: I really enjoy this one, and we would recommend for
Speaker 1: folks who are maybe if you're first getting into beer,
Speaker 1: this would be a very approachable style, right because it's
Speaker 1: really multi If you like bread, uh, you know, like
Speaker 1: whole wheat bread has kind of got this dark flavor
Speaker 1: going on with this, I would totally recommend. Uh this
Speaker 1: einger a bearished uncle awesome. Yeah, I know this should
Speaker 1: be on the shelves pretty much wherever you would think,
Speaker 1: so it's a nationwide kind of a classic. I think
Speaker 1: that the Ironer has a few different beers that they brew,
Speaker 1: but early Doug this one, so all right, it was tasty.
Speaker 1: That's gonna do it for this episode. For folks who
Speaker 1: want the show notes for this episode, well you can
Speaker 1: find those up on our website at how to money
Speaker 1: dot com. That's right. So that's gonna be it for
Speaker 1: this episode until next time. Joel, best Friends Out, Best
Speaker 1: Friends Out,