recession?

[Jenniflower]

I've been hearing rumors about an upcoming recession...
I'm only 21 and and rather clueless about money and the government.
But I wanted to know what we should do to prepare for a recession if one did arrive. I'm worried about us losing our jobs, as both my husband and my jobs are "luxury" services that people don't necessarily need to have. (housecleaning and landscaping)
Or am I just freaking out too much??
Any tips and information would be appreciated, especially from the ones who have gone through a recession.
THANKS so much!

Jennifer

[lgslgs]

I think it's wise to bank as if one of you might lose your job tomorrow - not just when there is a lot of recession talk, but year in and year out.

I got surprised by a downsizing once, and even though I was in pretty good financial shape at the time it was stressful and took a bit of scrambling to get through.

From that I realized that my kind of work was in the department where companies always make the first cuts, and I was old enough and well paid enough that a clever manager could easily replace me with a new college graduate at half my salary. And they'd probably be able to get more hours per week out of them for a few years too. That's when I switched to banking as if the job would vanish the next day.

People used to joke about my packed lunches, older car, and fairly basic lifestyle. Then one day at my new company they decided to cut over half the engineering staff. By keeping my eye on being prepared for that sort of thing I was able to retire at age 46. All of the other folks who were cut had to scramble to find work, and all of the ones who weren't cut had to take on our work and stress out about how secure their own jobs were. I went home, had a cup of tea, checked my accounts, and my husband and I laughed about what a jerk my old boss used to be and about how I wasn't going to miss him a bit.

I don't think you need to freak out - but prepare seriously so that you can ride out a job loss for a year or two if you need to. The worst thing that will happen is that you might end decide to retire early and love every minute of it. That's more valuable than the extra dinner out or decorative doo dad purchased in your 20s.

Economic hard times come and go every few years. It's good to be ready ahead of time for the next round.

Lynda

[humandraydel]

I agree with lgslgs, it never hurts to be prepared! That being said, you can't have a recession with 4.5% unemployment rate and global economies booming the way they are now. IMHO, chances of a recession in the near future are slim.

[DebbieL]

I do believe the recession is coming. I like the advice from lgslgs too (and congrats on being able to retire at 46 - woohoo).

[scfr]

If you would like to learn about money, government policy, and the like, an excellent basic book is "The Wall Street Journal Guide to Understanding Money & Investing." [It has been reissued several times, and may have been renamed "Standard & Poor's Guide to Understanding Money & Investing."] You may be able to check it out from your library.

It is a very straight-forward and easy-to-read book that explains such things as recession unemotionally. I believe that when you understand something, you become less afraid of it.

lgslgs gave you some great advice. Living below ones means and preparing in advance for the next setback is the way to go. Start putting money aside if you haven't done so already. When you have a plan in place, you won't feel so freaked out.

There are many of us "older folks" on this board who have lived through recessions, downsizings, etc. and we can assure you that you can get through it if you prepare.

[disneysteve]

Originally Posted by lgslgs

I think it's wise to bank as if one of you might lose your job tomorrow

prepare seriously so that you can ride out a job loss for a year or two if you need to

Originally Posted by scfr

Living below ones means and preparing in advance for the next setback is the way to go.

I agree. Ideally, you should strive to live primarily on one income and bank the other. Or at least be able to pay all the true necessities on one income and use the other income for luxuries - vacations, dining out, cable tv - all the things that you could easily eliminate if you needed to for a while. By all means, don't buy a house that requires both incomes to support because if one of you suffers a job loss, you could lose your home.

[Saving in So Cal]

I was about your age when the economy went through a recession. I remembered being worried at the time, but I got through it without much difficulty. In addition to the advice given by the other posters about, I would add that it is important to keep your job skills current. People with good job skills can usually find work, even in a recession.

At about the time I started working full-time, the PC trend was just beginning. Several of my co-workers didn't think they needed to learn how to use a computer even though they had many working years left. Most of them were subsequently caught up in downsizings (they are pretty common in Corporate America even when there is no recession) and they never found comparable jobs/pay.

Not so long ago I ran into a woman in her late 50s. She had lost her job as a customer service rep/call taker when her company relocated and she could not find a new job, even through a temp agency. This surprised me because I thought customer service/call-taking skills were pretty marketable. When I mentioned my surprise, she told me she was a victim of age discrimination. However, as our conversation progressed, she told me that all of her prospective employers were looking for someone with computer skills and she did not know how to operate a computer. She also told me she had not taken any of the free courses offered by her temp agency. She felt that she should be employable solely for her customer service knowledge and that her prospective employers were overlooking her many talents by insisting upon computer skills. She also felt she could learn whatever computer skills she needed on the job.

While I have no doubt she was talented in many respects, I knew she was destined to be working low-paying jobs for the rest of her career because she did not keep up her job skills. Few employers want to provide the type of detailed training this person needs. That is true now and it is especially true in a recession.

All this is to say, if you look at job postings for your type of work (and you should do this on a regular basis) and you repeatedly see a skill/knowledge requirement you can't meet, then you should figure out a way to acquire that skill/knowledge because you will mostly likely need it to stay employed or find alternate employment.

[disneysteve]

Originally Posted by Saving in So Cal

All this is to say, if you look at job postings for your type of work (and you should do this on a regular basis) and you repeatedly see a skill/knowledge requirement you can't meet, then you should figure out a way to acquire that skill/knowledge because you will mostly likely need it to stay employed or find alternate employment.

This is an excellent piece of advice.

[Ima saver]

My husband is a builder and as everyone knows, building is really slowing down. I make sure that I have at least one year's income saved so we will be ok if he has no work coming in.(Actually, he is turning people away right now)

[Scanner]

I am of the opinion that a career should be diversified just like a portfolio for this reason.

It's one of the reasons I picked up a rad. tech. certification - the ups and downs of the my business rise and ebb with ins. reimbursement, discretionary income loss, and other factors just like a builder. Lately, my business has been doing so well, I don't have to pick up a lot of hours at the hospital (unless I want) but it's kind of nice to know it's there.

The challenges?

You have to keep current and put effort into 2 careers as you can't just neglect one for the other.

(just like a diversified portfolio, you won't get to rise the ups as well as the downs).

It may be a wise idea for one spouse (probably the man, if you have kids) to have an alternate income source.

It's funny in a cosmic way though - with building slowing down as one poster noted, all of the sudden I can find people to do handyman stuff - 3 years ago. . .it was all "beneath them." They didn't even show up for an estimate.