Are we going to have a recession? We do have a recession, and I believe many questions are being asked, such as what the future holds and what actions can be taken. The purpose of this blog is to share my thoughts and hopefully provide some tangible takeaways concerning how you think about and manage your money.
First of all, I read that over 80% of people have a negative outlook on the economy. Credit card balances are at an all-time high, and interest rates continue to rise. At the time of this recording, the market is falling, though I'm not concerned long-term about the stock market. However, short term, the confidence meter indicates that people are not very confident about the future, and the market reflects that.
Additionally, some companies, especially in the real estate sector, are laying people off, largely due to inflation, high gas prices, war, and the repercussions of money printed during the pandemic and supply chain shortages, which has created a perfect storm of uncertainty.
On a positive note, there are advancements in technology and efficiency. But it makes me wonder, are we financially better off today than two years ago? If you look across the board, the majority are not, mainly due to high inflation, which impacts the middle and lower classes, benefiting those who can invest.
We have rising interest rates, which directly reflect in real estate prices. People are starting to lose jobs as interest rates increase. This helps control inflation, but poses the problem of accumulated national debt, which becomes more challenging as interest rates rise. It's reported that we have an over $2 trillion deficit, suggesting a lot of uncertainty.
When you ask if there's going to be a recession, I think there will be. While I can't predict its severity, things are starting to hit the fan, especially when inflation is combined with job losses. Here's what I propose if you're nervous:
It's okay to have cash sitting on the sidelines. Despite inflation reducing its value, there's wisdom in maintaining an emergency fund and financial margin. This allows you to take advantage of future opportunities and face unforeseen challenges.
Many have over-leveraged to acquire things they shouldn't buy. Understand the power of leverage, and use debt as a tool; only purchase something if it's within your financial means and aligns with your goals.
Be clear on the results you expect from your investment strategy. Understand how your investments translate into future cash flow and don't panic over market fluctuations. Focus on long-term outcomes that align with your goals.
Reassess expenses and avoid overspending. My wife and I are considering renting, despite being able to afford a bigger home, because our financial resources are better utilized in business ventures and investments.
Ultimately, during a recession, money can be made by those with the right mindset and preparation. Remember, cash flow is king, especially when times are tough. Emphasize thoughtful financial decisions that align with your long-term objectives.
I hope these insights assist you in navigating economic challenges. Please share your thoughts in the comments below or reach out with how you are preparing for what lies ahead.
Thank you for reading. God bless you, and we'll see you on the other side.
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