Preparing for a Potential Recession: Thoughts and Strategies

 Are we going to have a recession? We do have a recession and I think a lot of questions are, Caleb, what do you think the future is going to hold and what are you doing about it? And the purpose of this video is to share my thoughts and hopefully it gives you some tangible takeaways as it relates to how you think and what you can do with your money. And so first of all, I think I read something today that over 80% of people had a negative outlook on the economy. You look at, I think I read something the other day that credit card balance is at an all-time high. You have interest rates continue to rise. Right now at the time of this recording, the market is falling, which I'm not concerned long-term about the stock market. I think short term, that confidence meter that essentially says that people are not super confident about the future right now and the market is showing that. And you just look at, I just saw the other day that some companies, especially in the real estate space, are laying people off, which is terrifying because inflation is affecting a ton of people. You look at gas prices are high, you look at war, and then you look at, you know, the amount of money that we printed. And when it comes to, I don't know if I can say it, but the pandemic and the supply chain shortage, and it creates a perfect storm that creates a lot of uncertainty. It's interesting because I didn't fully understand when there was this thing like the great resignation and people were like demanding more pay and people were throwing money at things. And it just was like, everything was booming. And by the way, I'm as an optimistic person, I think there's no greater time to be alive and technology. And there's so much efficiency that's happening. And I think that's a really important thing to look at. And I think that's happening, but there was just something that I just never understood. I was like, okay, like you can't tell me that we're better off today financially than we were two years ago. Like not a chance. If you look at what's happened, like I know in prices are inflated, but people are not in a better place across the board. I know some of you probably most people that are watching this are, it's the opposite. But if you look at across the board, majority of people are not better off mainly because when you have high inflation, it crushes the middle class. And it's not just the middle class. It's the lower class. And it benefits people that can invest. This is not a, not a political statement. It's just, it's just reality. Inflation is a tax on everybody, but it's, it's a big time tax and affects the people that are living paycheck to paycheck. The people that have margin can benefit from low interest rates and the printing of money. So it's interesting because there's potential perfect storm here. So you have interest rates are increasing, which are directly reflecting in real estate prices for the first time in a while. It seems like prices are starting to come down. People are starting to lose their jobs as interest rates increase. That's good from the federal reserve standpoint, and it might tone down inflation. But the other problem is think about how much debt we have as a country. And so when we increase interest rates, that affects the interest that we have to pay on the national debt. That's interesting. We brought in a $4 trillion plus in tax revenue, but yet we spent so far over $6 trillion. So we have an over $2 trillion deficit as it relates to just spending. And there's just, there's just a lot of uncertainty. So, so when you ask, do you think there's going to be a recession? I think so. Yeah, I don't, I'm not going to predict of like how bad it's going to be, but I think things are starting to hit the fan. Things are starting to get real for people. And I think it's a perfect storm when you have all these right, like inflation is not good, but it's really not good. If you lose part of your income and lose your job, that's, that's when you're like, a lot of people can't afford. Their life in general on one income. And so as a result, they're one job away from having things dramatically changed. And so here's what I would do if you're nervous or whatnot. The first thing, and I've been saying this and I've been pretty consistent is it's okay to have cash literally sitting at zero. Like it is okay. Having your money sitting on the side. A lot of people are freaking out inflation. You're losing the value of your dollar. Answer is yes. All money is its currency and it's getting less and less valuable. Cause we continue to print it, but there's wisdom in having an emergency fund. There's, there's wisdom and having margin in your life. There's wisdom of having that cushion. And as a result, you can maybe show up more intentionally at work. If you're a business owner, you can like double down on your business and you'll have access to capital to take advantage of opportunities. Warren Buffett has billions and billions of dollars that he's sitting on. And I bet you when everyone's freaking out and losing money in the markets, I bet you Warren Buffett's going to deploy some of that capital and buy things that, you know, are going to be able to sell for a great value and a great price. And so there's benefits of having liquidity and you might be watching this or listening to this and may have made a mistake in the past and have very little liquidity. And you're feeling that pain of like, yes, I have massive opportunity, but the problem is I don't have access to capital and I'm like one deal from breaking up or one job from getting laid off to having to start over. And so I think remember these times. And it is okay to have cash. Especially if we're continuing to look forward and looking for opportunities. And so that's the first thing. The second thing is like utilize debt properly. A lot of us have used debt to enable us to buy things that we shouldn't buy. I think there's a healthy balance of the understanding the power of using leverage and debt and using that as a tool to over leverage and buy something that you shouldn't afford. So I've always said that number one, figure out what you want to buy, figure out the house that you want to get and figure out. How you want to finance that. Do you want to pay cash or you want to use use debt? A lot of people say, oh, interest rates are so low. I'm going to I'm going to get in this house. That might be a little bit on the high end, but we can pull this off. And as a result, if it's a 30-year fixed mortgage, it's not like the payment is going to go up. But as things as inflation and gas continues to increase, it can hurt. And so I would say there's there's wisdom in that two-pronged approach of getting really clear in what you want and then figure out the most efficient secure way to purchase that. Versus the other way around. And I think anytime when interest rates are low, people tend to spend money is just just human behavior. I think that's where when people like Dave Ramsey say all that is bad, I obviously disagree. But I think there's a lot of wisdom to say, hey, like, don't just buy things because you can using debt. Use debt if it's a more efficient way to buy something that you're you're going to buy. And it's a wise decision that you're going to buy that. And so I think some people need to hear that. But the next thing that I've said a ton is get really, really clear on what results you want. Out of your investment strategy, out of just your strategy in general. A lot of you are investing in the markets. A lot of you are investing in crypto. I've even investing in very speculative assets that you have zero understanding of how they actually work. Number one, but actually what the end goal is like people are freaking out in the market like, oh, the stocks are down. Do you know why your money's in the stock market to begin with? If you're investing through the stock market, you should understand in the future how that's going to translate into cash flow. If you don't understand that, understand it. So number one, don't panic because you can't spend a rate of return anyways. And so when the stock market is going up and you're saying you're doing so amazing, you can't spend that rate of return. Well, when the stock market goes down, yes, your value goes down. But at the end of the day, if you're locking up your money for the next 10, 15, 20 years, why do you care? That's what that's what I'm saying is like, don't put your emotion in a rising and falling asset. More importantly, understand how that asset is going to get you results today and in the future. I historically have been very. And I the typical approach because I just don't understand the value that it brings across the board. We have we do assets as a part of better wealth. We do it. I believe better than majority because we're like, hey, let's keep fees as low as possible. Let's make sure that you're in investments that are aligned with your risk tolerance. But we also understand how those assets play into the full picture. And as a result, we try to optimize what really matters, which is cash flow on the back end. I'm getting passionate right now because a lot of people. You know, are calling me and say, hey, no, you're right about the market. And I'm like, no, I'm not right the way you think I'm right. Like the market's going to go up and down. What result are you going to get? But that's that's across the board for everything. Like, why do you do what you do? Why do you invest in real estate? Why do you put your money in crypto? Why do you invest in business? Like when the going gets tough, get really clear on why you did it in the first place and then measure based on that result. I've historically said that cash flow is the most important financial metric for you. And. In times of trouble, we will see that become ten times more true than when times when everything is good because cash flow can be tighter. And we realize that without cash flow, you can have a net worth that's high. But if the bank won't lend you money or if interest rates are super high, you can't access that money cash. And the flow of cash is king, queen, whatever you want to say. And so that's that's another point that I would make that it's just like get really, really clear on why you're doing things and make sure you optimize cash flow. The last thing that I'll say that it will be the last thing. Unless something pops into my head is live below your means. Right now, my wife and I are looking for a house and I'm undecided at this point. But we're not even we're not going to buy a fraction of what we could afford for many reasons. Reason number one is buying a bigger house doesn't make me happier. It doesn't it doesn't make me a more successful person. In fact, it probably may be a horrible decision based on where we're at in business and what I am hoping to accomplish in my life. Because. It's it's putting some of my flow of cash each month into a an activity that may not be the best result for what I want to accomplish. You see what I did there? Like I every decision goes back to this framework of where do you want to go? And is this time money getting me to where that is? I think also I just I've just known a lot of people that have overspent money on things when the going was good. And that we just have such a desire to say, wait, we might be able to afford a X value house. But should we actually get that? And this might shock a lot of people, but I would consider renting. It really comes down to what cash flow is it costing me to live my desired lifestyle for a lot of times owning is very strategic. And then you get the appreciation of that asset. But if there's massive a difference in rents versus payment due to interest rates, I'm going to be okay renting knowing that the real result. The real wealth is coming from building businesses, investing in businesses, creating opportunities and making sure that I can take advantage of that. We're still leaning towards buying well because as interest rates increase the price of the house, hopefully will decrease. But we're not going to make a rational decision. We're not going to jump into something if we if we don't have peace about it, and we're not going to put all our eggs in a hypothetical basket. I'm going to put as much cash. And And and cash flow into things that are financing intentional living in the movement of helping people live more intentional. And so those are just some of the things that I personally am thinking about and I just want people to to win. I want people to capitalize in a recession. This is the time where more money can be made. If you have the right mindset more opportunities can be made. If you have the right mindset when a lot of people are panicking and are afraid. This is the way for you to capitalize not on their fear, but capitalize when everyone is focused and and running you can really double down and get years and years of results based on the decisions you make before a recession in a recession and out of recession. Appreciate you. I appreciate all the people that share like this share in the comments below or reach out to me if you're listening to this and tell me what you're doing what your thoughts are as it relates to are we going to have a recession more importantly, what are you doing today to allow you to capitalize and get closer to? Where you want to go in your life and the mission that you're living? What are you doing in the midst of that? And maybe we'll have a part two of this podcast video where we're going through some of that as I'm just talking right now. Thank you. God bless you and we'll see you on the other side. Hey, I want to thank you for watching till the end. If you enjoy our content, please like share subscribe. It helps other people find our channel and we really really appreciate it. I also want to let you know that we have this thing called the better wealth efficiency quiz. And, our goal is to give you a wealth efficiency score in less than three minutes and really highlight and get you to start thinking about the potential inefficiencies that you have in your life. So you haven't taken the quiz go check out. It'll be the link below. Check that link out. Take the quiz and then let us know your score.