I posted yesterday some thoughts about how the “recession” may be affecting you. Today I wanted to provide some additional thoughts on what we have done that in my opinion, makes us recession proof. Because even in the midst of all this talk about a recession, my wife and I are doing quite well financially. Now don’t get me wrong…we’re not using hundred dollar bills as napkins or painting the house in pure gold ala Donald Trump. But financially, we’re not struggling.
Now if you or your family are having a tough time, I don’t say that as a knock against you in anyway. I know times are very difficult for some people but for many people, it has been their own poor decision-making with money that has put them in a bind. At the same time, there are plenty of people that are having difficulties by no fault of their own. So despite all of this talk about a possible “recession,” here are some things we have done that have made us, in my mind, recession proof:
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We’re Not Dependent a J-O-B for Income: Job security is a myth. At any moment, you could be downsized, laid off, disabled, fired, outsourced, or any other number of scenarios that would leave you unemployed. I’m self-employed so I’m dependent on no one other than myself. It goes back to that old saying, “Don’t put all your eggs in one basket.”
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We’ve Planned For the Worst Before It Arrives: You need to have a financial umbrella because it is not a question of if it is going to rain, it is just a matter of when or how hard it will rain. So if you know it’s going to rain, why wouldn’t you plan accordingly? My wife and I have an emergency fund equal to a couple of months worth of expenses for us. It is set up in a separate savings account and is there only for emergencies. Vacation to the Bahamas isn’t an emergency. A sale at the mall isn’t an emergency. And Christmas isn’t an emergency. In case you haven’t noticed, it’s always in December. They don’t move it.
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We’re Not Dependent on the Government to Take Care of Us: We’re not dependent on the government or really anyone else to take care of us. While we’re getting a tax refund this year plus the economic stimulus check like the rest of you, that money isn’t going to make or break our world. I’m not dependent on the government or a presidential candidate to save my life. I’m not going to change my daughter’s diapers for the rest of her life. Why? Because at some point she has to learn to grow up and take care of herself.
- We’re Proactive With Our Money: With a possible recession, everyone is all of the sudden paying much closer attention to their money. In reality, you should be doing that year round. In “The Millionaire Next Door” by Thomas Stanley, he found in a study of millionaires that one of their top traits was that they pay attention to their money and are proactive in what happens with it. Personally, my wife and I do a budget every month and can tell you where every dollar is going. You have to pay attention to what is happening.
Personally, I would just rather not live life in fear of what the economy is doing or wondering if I’m going to have a paycheck next week. You can become financially recession proof but you have to make the decision to do so.
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