How to prepare for a Recession Its Coming

a recession is a downturn in the economy that officially occurs when the GDP or the gross domestic product of a country is negative for two successive quarters or six months the economy seems to be strong right now but the US has seen a quarterly economic expansion since 2009 ten years this is four years longer than the average expansion so sometimes the law of averages can punch you in the face these recessions are inevitable but they tend to sneak up on people because the statistics are not available until well after the second- quarter is over so you don't really know when you're in a recession until it's behind you and you may not even see it coming so it's best to prepare for a downturn when things are good like right now but what specifically can you do to prepare well there's plenty and that's coming up right now is it possible that we will see a recession in 2019 yes it's very possible the economy is good right now but we may be in an overheating economy this can lead to inflation and rising interest rates and these are the biggest causes of a recession it's likely to come from self-inflicted wounds things like escalating trade war with China a hard brexit for the UK downturn and consumer and economic sentiment and political change in the UK or us things never keep growing indefinitely there's always a downturn it's just a matter of time now I'm gonna give you 6 small tips that can help you be better prepared for this inevitability and if the downturn doesn't come you'll just be better prepare for the time when it does number one pay off debt there's nothing like being free of debt in order to increase your cash flow credit card debt should be first in or less since this is the most costly in over 17% average interest per year mortgage debt is least costly and there are tax benefits so it's not usually advisable to pay this off but if you have automobile debt personal debt or other types of debt over 7 percent APR after tax then it's usually advisable to pay these off number two reduce spending a penny saved is a penny earned as Benjamin Franklin said over 200 years ago skip a vacation and save the money you would have spent this can be part of your rainy day money eat it instead of eating out if you eat out once a week take a look at the cost it's probably costing you more than your cable bill and speaking of cable bill unless you're getting $150 a month worth of entertainment from having cable cut the cable I did this in my bill went from $150 a month to $40 a month with faster internet a myriad of streaming services make it less attractive to keep cable take every dime that you would save on cost and put it in a savings account pay yourself instead of the cable company the surest way to make more money is to spend less money number three increase your emergency savings the average length of unemployment is 22 weeks during recessions it's 30 weeks and for people over 55 it takes an average of one year to find another job so save to at least be able to afford to live for a year without a paycheck the reality is that half of all workers under 50 will suffer a job loss and the vast majority are not prepared consider yourself warrant number four update your resume no matter how safe you think your job is right now you should note that employers tend to panic during a downturn and the first thing they will do to save money is to fire people I don't care how much you think your boss loves you unless you are directly responsible for creating top-line sales for your company when it comes to people most large employers have absolutely no loyalty it's all business and when push comes to shove and profits are on the line they don't give a bleep about you take advantage of employer-provided educational opportunities up your networking game if you're not used to networking in and outside your company start doing so most jobs are found because of who you know not what you know number five get a side gig if possible one of the easiest ways is to sell your services on up work or other freelancing websites everyone including you has something special that they are good at it may or may not have anything to do with your current job why not sell this special skill for a fee as a freelancer it will give you a source of alternate income if you get fired and number six in your investment portfolio increase your money market and short-term bond exposure versus stocks this will insulate you from market downturns but if you have money invested in stocks during downturns why because everything is on sale the stock market I promise you will come back up soon it always does and it's guaranteed also consider converting your 401k and traditional IRA to Roth IRA this is a good time to do it why because they will have decreased in value and it will minimize your capital gains taxes all the money that you convert to your Roth IRA will grow tax-free and will not be subject to required minimum distributions it is the best investment gift that government has given you why not take advantage of it is a recession coming yes it's inevitable it always does because world economies are cyclical so it's only a matter of time but you can set yourself up for a soft landing we're preparing for the worst during the best of times like right now have I missed anything on this list what are you doing to prepare for the coming recession is there something that you would add to this list if so please put your comment below I'd love to hear from you and I think your comments could help a lot of people so I'll see you down below or I'll see you in the next video all the best my friends [Music]