Ask HN: What tips do you have for weathering a recession?

As an old guy, I&#x27;ve weathered a few recessions.<p>Some things to keep in mind beyond the obvious &quot;save some money when times are good&quot; advice.<p>(1) they pass. slowly, for sure, but they do pass.<p>(2) you need something to do if you&#x27;re thrown out of work. It&#x27;s not for nothing that graduate school enrollment climbs when unemployment is high. For hackers, it&#x27;s a good opportunity for an open source project.<p>(3) downtimes are great times to start new things.<p>(4) remember everybody struggles in a recession. There&#x27;s no harm in asking landlords for temporary discounts, especially if their alternative is an empty apartment.<p>(5) try to make the subscriptions you have cancellable or downsizable. Let your phone contracts run out and keep your phones longer. Avoid the old &quot;two year commitment up front in return for a tiny temporary discount&quot; trick from vendors.<p>(6) if you really get in trouble, DO NOT IGNORE YOUR POSTAL MAIL. If you get summoned to court for an unpaid bill, SHOW UP! Often you can get a case dismissed by saying to the judge, &quot;please show me the evidence.&quot; Bill collectors count on getting default judgements.

Perhaps too close to the “generic advice” you’ve discouraged, but: accrue money while it’s plentiful, spend money while it’s hard to come by.<p>Right now, money is comparatively cheap and easy to come by. Salaries are high, the markets are doing well, and investment capital flows freely. During these times, most people spend money as freely as they earn it, which is a mistake. Your money will go farther during a downturn when liquid cash is rarer. So hoard now while others spend, and be willing to spend later when others are hoarding cash and it’s difficult to earn.<p>This is the personal finance equivalent of the poker maxim to play loose when the table is tight, and play tight when the table is loose. And it works for largely the same reason.

Many people <i>don&#x27;t</i> have an emergency fund, so it&#x27;s good advice and worth repeating. Being stuck in a high-expense life style, especially if you owe a lot of money, makes it very hard to be flexible. E.g. you might not be able to move to a new place where there are jobs. So living below your means and not having a lot of debt really is important.<p>But beyond that:<p>1. Get to know people outside your small industry niche and outside your local geography.<p>2. Don&#x27;t define yourself by a single technology or set of skills. Get good at learning new things on your own.

Have a strong social network. If you lost your house &#x2F; were evicted from your apartment tomorrow, where would you go? Who would you take into your home for months, years if they needed help?<p>Surviving being poor requires a lot more hustle than being rich. One of the things I like about being a comfortably well paid programmer is that I can go to work, get paid, and not care too hard about the details. The money will work out, I don&#x27;t have to be constantly looking out for ways to make a few bucks or cheap deals on essentials.<p>When the economy is good, trying to become comfortably well paid is a reasonable plan. You can look for <i>a</i> job.<p>If things go to shit, you need to always be on the lookout for <i>jobs</i> -- someone needs a few hours of help per week here, a couple of days on a one-off job there, a man with a van to haul a load cross-town. You&#x27;ve got to piece together an income from a dozen opportunities you don&#x27;t even notice casually walking down the street on your way to your 9-to-5. You&#x27;re not going to find any one job that will give you much income for very long, so you&#x27;ve got to be looking always for new opportunities.

1. Don&#x27;t buy a house right now if you live in a big city. If you already own a house in a big city, selling will probably net you enormous profits.<p>2. Don&#x27;t speculate in markets. You&#x27;re very likely to get burned.<p>3. Be the best you can possibly be in your field of work. If you&#x27;re in school, start working on your assignments as soon as they&#x27;re assigned. Leave no question as to your competence by being extremely prepared and reasonable.<p>4. If you see your field of work probably being replaced by automation in the coming decades, start training for another field of work that won&#x27;t be replaced. A UBI (or negative tax) is likely necessary in the future, but aim to be someone that doesn&#x27;t need a UBI to survive. You don&#x27;t want to bet your own survival on a UBI being politically possible.<p>5. Be kind, support your friends and family as much as they need, and always ask for help if you need it.

Make sure you have a marketable skillset, even in a down economy. Having been a tech recruiter for both good times and a couple downturns, I noticed that the people who got released first were doing tasks that managers felt could be passed along to others somewhat easily. No real surprise.<p>Since tech was my field, I first saw project managers who were non-technical (couldn&#x27;t code or add other value) getting let go. Tech leads were handed PM responsibility. Sysadmins, DBAs, and some QA were also let go when there were devs who could pick up the slack. Companies might not need dedicated resources there, so contractors might be a more efficient solution.<p>Try to expand your skillset and have the ability to contribute in a few areas. Companies may be more likely to get rid of someone who is only good at one thing.

Live beneath your means. This is beneficial in two ways: 1. It allows you to save more money today, which will be handy during a recession for obvious reasons. 2. It prepares you for being comfortable when your income may dip.<p>The smaller the chunk of your income you need to live a happy life, the more resilient you&#x27;ll be.

First and foremost: knowledge and relevance. Your working income will always return more than your investments (at least, until you&#x27;ve made enough that it doesn&#x27;t matter anymore). Keep yourself thoroughly employable, even better if its in multiple fields.<p>Second, diversification. You can&#x27;t count on any one thing to weather a recession, but if you have some of your assets in ETFs, some in bonds, some in real estate, it&#x27;s less likely that everything will take a hit at the same time.<p>Lastly, at least a good portion of your assets should be liquid. Some people like to put everything into real estate, which is great and all, until the real estate market crashes or interest rates skyrocket and nobody is buying. Now, if you want to sell, you&#x27;re going to take a hit on the already reduced value. At least with stocks, etfs, etc, you can liquidate easily and cheaply if you need money, for example, for food.

There&#x27;s no secrets and the real answer is really just boring generic advice. Being financially healthy is the absolute only guaranteed way, anything else you do to prepare would be gambling.<p>Spend less than you make and have a budget, even if it&#x27;s an informal budget. This is the most important. Ideally you should end up saving at least 20% of your income. This means you may not be able to afford the things you may like to have, be at peace with that. [1]<p>Have an sizable CASH emergency fund. The amount depends on your life situation. If you have plenty of cashflow and can easily cut expenses during a loss of income then you need much less than if you can barely make the bills.[2]<p>Get out of debt. If your debt is high interest (&gt;~6%) then prioritize paying off your high interest debt BEFORE building your emergency fund.<p>Once you are out of debt stay out of debt (besides a mortgage). That means saving for big expenses.<p>Diversify your investments. Certainly don&#x27;t put all your wealth into your house.<p>Don&#x27;t put money in the stock market if you plan to spend it in the next ~5 years.<p>Work on increasing income (or lowering expenses) until at least the above is easy peasy.<p>This has nothing to do with weathering a storm but part of being financially healthy: purchase term life insurance but only if the loss of your income would severely negatively affect your heirs.<p>During a recession, don&#x27;t panic, you have prepared for this. If you can keep saving and investing.<p>Bonus advice: If you buy a house you almost certainly will be offered a larger loan that you can realistically afford (while still following the above advice). Budget for your house beforehand, don&#x27;t let loan officers tell you what you can afford.<p>You can absolutely weather almost any storm using this advice. If Joe Kennedy had followed this advice he would have had survived the crash even if he didn&#x27;t liquidate his stocks beforehand.<p>[1] This has the added benefit of giving you a massive amount of flexibility.<p>[2] You have no idea how truly amazing this is for your sanity. We had a surprise &gt;$4,000 expense a few months ago. Because we had already had saved that money in an emergency fund it was absolutely <i>no problem, no worry, nothing</i>, it was a <i>complete non-issue</i>. I had considered that money already spent. Most of the people without an emergency fund would be absolutely devastated by this. Now we are adding a few hundred a month to our fund to replenish it.

the best way to weather a recession is to have cash. The emergency fund is the most important tool. IF you don&#x27;t have cash, you can&#x27;t spend time transitioning from one area of work to another. You also need a low burn rate when switching areas. Low debt enables this.

Keep a long term view (10+ years or more) and not a short term view (&lt; 5 years). That&#x27;s what most of this advice boils down to.<p>Almost all bad decisions result from not taking a long enough perspective.<p>The recession will end at some point, so how can you use the recession to improve your situation?

Have skills so you can easily get a job that will still exist in bad economic times. For example, if nobody is paying programmers to write useless apps anymore you can be a plumber. People will always shit in toilets, no matter what the economy is like.

Be prepared to take advantage of it. Downturns are basically sales.

There&#x27;s an economic depression (edit: recession) about once every 5 years. You can weather it by not owing people money, having assets, and always saving.<p>Sorry this wasn&#x27;t a sexy answer. Being fiscally secure is boring.

1) Stay solvent 2) Buy high growth assets when everyone is selling. There&#x27;s a lot of value to be had during recessions&#x2F;bear markets. Asset prices invariably go up when the market turns around.

Become a minimalist and learn to be happy with less.

Have multiple streams of income. Know a &quot;trade&quot; you can do with your hands - string rackets if you have to. Sadly I&#x27;ve neglected this part for a while.

In addition to the comments about diversifying your skills and being frugal, you can start to rebalance your investment portfolio towards safer assets. This means reducing exposure to volatile stocks (tech &#x2F; biotech startups, emerging markets, crypto). This strategy will likely mean you see your friends and peers getting richer than you for a period of time, maybe even years. If you can deal with that as a price to pay for more financial security, then go for it<p>If you really want to get aggressive you can get short exposure to risky stocks, but this is an incredibly risky strategy that rarely makes money and requires considerable expertise, research, and luck to make it work<p>Overall your best bet is to not try to time the market, but if you are worried about a recession and have an investment portfolio with risky assets, maybe take some of that risk of the table understanding that you may sacrifice real financial gain

Step 1: Keep your knowledge as sharp as the sharpest knife. Knowledge is the ultimate currency.<p>Step 2: Research people&#x27;s attitude during that time (every recession creates a change in behaviour and personality) and find a personality trait that will match it so you can gain their trust or affection (not in the partner sense), especially higher ups that can give you employment or any other sort of resource (recession is not a time to be thinking of money as the only resource).<p>Step 3: Meet people, force yourself to do it and apply those traits. Don&#x27;t become an asshole in the process.<p>Step 4: Repeat with other resources that may be handy during that specific recession. Diversify.

Above all maintain an abundance attitude. Stay positive and focused on building your network and thinking big. If you&#x27;re one of only a few taking risks, there will be greater rewards.

My experience based on a few market cycles and a lot of work put into this and it is a bit contrary: do speculate in the stock market (I am trading using robots) those are the best times to make money going up, near the top, going down, etc... for me the hardest (losing years) is when the market is trying to get off the bottom... SO I can&#x27;t wait for the recession, because it is a great opportunity for me personally... Besides that, having paid house and FU money is great...

Think hard where the new opportunities will be. Go back to school in that area. Take on federal student loans. You don&#x27;t have to pay them back till you finish.<p>Minimize monthly expenses. Rent out rooms if you own or vice versa if you don&#x27;t. Buy raw ingredients instead of prepared foods. Food kitchen. Goodwill.<p>Pool resources. Costco runs.<p>Saving during good times is the best advice though.

Tony Robbins suggests, more than solid finances-- &#x27;state of mind&#x27; is the key, be prepared for extraordinary opportunities &gt; <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=PSi7BUqXuU4" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=PSi7BUqXuU4</a>

Property can weather downturns. Investments can go bust. If you own property outright, it may go up and down but never (almost never) zero. And you have a place to park your butt. And maybe grow some food.

What industry do you work in that would give you insight into a coming downturn?

don&#x27;t take debts. that way you can quickly shrink your expenses if times come by. the only acceptable debt is for investment (either financial or material) that have a guaranteed roi or a short term vesting.

Much of the advice I have seen is very relevant and useful, especially the idea of saving up and living well below your means. However, to more specifically address what you are looking for, I think the most important thing to think about is what are your risk factors, and how can you mitigate them?<p>Here are a few risk factors (more to give you an example):<p>(1) Loss of income from employment &#x2F; Inability to get a similar income in your next job - Do you have the savings to weather 6 months of unemployment (or more)? There is a saying, though I don&#x27;t know how true it is, that for every 10k of salary, you need to plan to allow up to a month to find a comparable job. - Is your job set something that will always be needed, or is it something that is somewhat fickle based on the markets? As a concrete example, ActionScript may have been a popular language at some point, but you would be out of a job now if that was all you knew. - Are you yourself either specialized in something that will never go away, or flexible enough to handle whatever comes your way? You need to be one of those.<p>(2) How is your health? - I think this is something most people missed below in terms of preparedness. It is easy to think you can weather any recession if you have your health... but what if you lose it? The #1 cause of bankruptcy is due to Medical Issues. Do you have a means to weather medical issues? - Are you actively keeping care of yourself (an ounce of prevention is worth a lb of cure as the saying goes). - Do you have a healthplan (or means of switching to a health plan) that will cover you in the worse case scenario? (note: you can usually use COBRA if you get suddenly unemployed, but what is the monthly cost?) - Note the specific &quot;backup&quot; health plan should be tailored to your risk factors: does your family have a history of cancer, etc.<p>(3) Risk of your assets getting severely depleted - People make a lot of assumptions about how &quot;safe&quot; their investments are. It is always worth taking a hard cold look as to what your risks really are, and making sure they are diversified. For example, is real estate in the bay area really independent of tech? I would harbor to think NOT. - A general safe bet (if you follow Warren Buffet&#x2F;Ben Graham) is to look what everyone else is doing, and do the opposite. &quot;Sell when everyone else is greedy, buy when everyone else is scared&quot;.<p>(4) Your &quot;other expenses&quot;&#x2F;Cost of living - Do you have any expenses that may come up? Do you have a kid that might be needing money for school? - What is your monthly costs, and how easy would it be to slash them? - While I don&#x27;t know this from personal experience, what I have heard is that the single biggest mistake that a person&#x2F;company can make is not cutting hard enough early enough when faced with depleting resources. The early you make those hard decisions, the better you are able to weather hard situations.<p>Those are meant as examples, you know your personal risk factors than anyone else. The best thing of course is to be prepared with options.<p>Hope this helps...

As others have said, the important things are having money saved and knowing how to have an inexpensive lifestyle. Someone said that you should live an inexpensive lifestyle so that you can get those savings started and build the habits and knowledge you need to live inexpensively. I agree with this and in fact I have been doing it for a while.<p>My total expense for one month of living is 600 dollars.<p>I have around six thousand dollars saved right now (which is very little, but I&#x27;ve just started saving and working). So I could last around a year without any income.<p>I pay 400 dollars for rent. I live in the city and share a two bedroom apartment with four other people. The key to making this arrangement work is to live with nice people. I&#x27;ve managed to find nice people to live with and I enjoy it. If you want to really save money on shelter, build a passive house. Please look at my comment history before commenting that houses are expensive.<p>My food costs 70 dollars per month to meet all nutritional requirements, and in really tough times I could cut my protein levels in half (still getting more complete protein than most Americans probably) and bring that cost down to 25 dollars per month. I&#x27;ve put a lot of thought into my diet system, and it&#x27;s nice to finally have an excuse to discuss it.<p>The human body requires carbohydrates, (complete) protein, fat, essential fats, essential vitamins, fiber and water. Some of you may be familiar with Soylent -- I was a big proponent of Soylent when it first came out. Soylent turned out to have a high GI, a high cost and a high impact on the environment. But the mentality of Soylent is still rock solid: the human body is not magic. If you give the human body the things I listed above, it will function properly. So if you are trying to optimize your diet, you first need to understand what the minimum viable diet looks like. Now that we know what MVD consists of, we need to find the cheapest sources for those things -- the cheapest sources that truly meet all quality and nutrition requirements.<p>For protein I eat canned chicken. There are probably better solutions but I haven&#x27;t seen them. It&#x27;s lean, complete protein and it&#x27;s cheap. I get a months supply at Costco for 30 to 40 dollars. It also helps me meet my cholesterol requirements.<p>For carbohydrates and fiber I eat whole wheat bread. You can buy fifty pounds of whole wheat flour at Costco for around 13 dollars. The salt and sugar are so cheap in bulk that they aren&#x27;t worth mentioning. The yeast comes in dense dry packs, 5 dollars for many months worth. Just open the dry pack and put it in a sealed container and pop that in the freezer. You can add oil for good fat. all you need to do is put these ingredients into a bread machine. If you don&#x27;t have a bread machine you can buy one at your local thrift store. I bought mine that way and it&#x27;s been going strong. It only cost 7 dollars. I see a bread machine almost every single time I walk into a thrift store, which is quite often. They are rarely more than 10 dollars. The cost to make a large, very dense, 2000 calorie loaf of delicious whole wheat bread (real whole wheat, not the hybrid garbage you would find in a super market) is 50 cents at the highest. This includes the cost of water and the electricity to run the machine at a cost of 15 cents per kWh. To store my flour I have food-grade buckets with so-called Gamma lids. Its extremely convenient.<p>For essential vitamins I take a complete multi-vitamin. Just to be extra cautious, I eat a vegetable here and there. There is very little doubt that I get all the vitamins I need. The vitamins I get from Costco -- they are beyond cheap.<p>For essential fats I take fish oil, which provide Omega 3 EFAs, and for Omega 6 my whole wheat flour is enough. It would be trivial to adjust my EFA levels up or down if I wanted. The fish oil is also from Costco and is very cheap indeed.<p>Some might look at this diet and wonder how anyone could sustain it for long periods of time. I wonder how anyone does anything else. If you read up on heart disease I think that you will view this diet in a much better light. Most diets are high in saturated fat -- anything with saturated fat will stay with you. A portion of the food will literally stay with you, inside you -- it will collect on the inside of your arteries and cause them to harden. Then your arteries will crack, bleed and clot causing you to die in a very painful manner. This diet is very, very low in saturated fat. It has an extraordinarily good glycemic index. It is not only the best way to eat on a diet, it is a very, very good way to eat in general. If I had a billion dollars, I wouldn&#x27;t change it. This dual purpose makes me very happy with my diet. I&#x27;ve been using it for almost a year and I feel great.<p>edit:<p>if you live in an apartment, consider a portable washing machine. before, i had to pay four dollars to do a load of laundry in the machines that my complex provides. i dont own or want to own a car, and even if i did i wouldnt want to take my clothes to a laundromat. it turns out that they make washing machines for use inside an apartment. i have a 3 cubic foot model that hooks up under my bathroom sink. its literally ten times cheaper. i also air dry my clothes, which saves even more money. air drying clothes is amazing and i have no idea why it isnt done more in the US. its free and works just as well as machine drying. it doesnt require any more work or time (human engagement time) than machine drying, either.

Own property. You can always rent it out and you will never go homeless because of that.

Hold bitcoin

Stash cash.

1. Don&#x27;t have any debt<p>2. Lower your monthly costs as much as possible<p>3. Save money<p>4. Although we don&#x27;t know how cryptocurrencies will fare in a recession (I think it could go either way, if people cash out, for instance, to buy their daily needs), I think it could be safer to hold some money in solid&#x2F;proven cryptocurrency compared to say <i>a bank</i>. Modern banks, especially U.S. ones are built on quick-sand with their 100-500x leverage for their assets. If something goes wrong for them it will go wrong <i>quickly</i>. And if things are bad enough, the government will even ban people from withdrawing their money from banks.