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I don’t beleive in “recession proofing”

March 18, 2008

What am I doing to “recession proof” my life? Nothing. I’m focusing on how much I drive, but I’d do that anyway. I’m saving more cash, but I should have been doing that anyway. You can’t waterproof your shoes after it has started to rain, so why is everyone talking about “recession proofing” now? The keys to recession proofing your life seem eerily similar to standard personal finance basics: Live within your means, build an emergency fund, invest for retirement, and invest in yourself to help stay employable. These are things most personal finance bloggers and readers probably already were doing. If they weren’t, they should have been, regardless of the recession.

I don’t know what to say about the fed rate cuts or the bailouts. Which seems to be fine, since no one asked for my opinion anyway. From my vantage point, earning 5% on my savings was better than 3%. On a very personal level, I don’t like the rate cuts. However if they truly are saving the economy, then I’m glad they are happening.

Are they though? That is a big “if” up there. I don’t know. I’m pretty well versed in personal finance topics. But economics at a national/global level? Please. I haven’t had an econ class since high school, and I have to cross my fingers and hope that the fed knows what they are doing. If I were an economist and had convincing arguments on why they were wrong, I would feel responsible to speak out about it. There are economists doing this (I think) but not loudly enough for mainstream media to pick up on it. Many personal finance bloggers are speaking out against the fed’s actions, but to be honest, I don’t give most of them (including myself) much credit, unless they have some credential other than writing a blog.

I don’t understand why average people feel the need to cut spending in a recession. And by “average people” I mean responsible people who already live within their means, which I suppose aren’t “average” after all. However, they are the average blogger and my average friend/acquaintances. They are the average person that I know. I understand trying to use less gas or maybe buy a little less to offset food/energy prices, but… I guess i just don’t get it. If I wasn’t overspending before, can’t I just continue not overspending?

Perhaps I’m being too snooty about this, and I apologize for that. To me the recession really only means higher gas/food prices, so I put just a little less into savings this month. For some families, it might mean they eat a little less this month. I don’t mean to be unsympathetic, but I’m (so far) quite insulated from the more painful effects of a recession. I hope I remain insulated. In the mean time, I should find a reputable charity and donate something to help those who are more heavily impacted. What do you think about a local food bank? I’ll put it in my April budget.

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4 Comments leave one →
  1. March 18, 2008 5:55 pm

    recession proofing means modifying your investments to profit or atleast “not suffer” from the recession and hoarding your cash so you don’t starve if you get laid off.

    you’re basically saving for the rainy day. check out this link:
    http://www.livingoffdividends.com/2008/03/14/gold-cracks-1000oz-investing-for-a-recession/

  2. March 19, 2008 5:46 am

    I agree with your post. I don’t see anything my fiance and I could be doing different to help us in recession. We are already saving alot more then most people. Sure maybe we could push off our wedding but that’s not going to happen. Sure maybe we could cancel our netflix subscription and save $10 a month but we are already saving 80 times that towards our emergency fund which is already probably 10 to 15 times most other peoples emergency funds.

    The only thing I can see changing is that now is maybe not the best time to buy a house. But, our mortgage payment, insurance, and property taxes will only be about $200 more then we were paying in rent. I’ve been pricing insurances and if we get our auto policies with the same company we’ll save $200 a year in car insurance so it really balances out.

  3. March 19, 2008 4:13 pm

    Thank you!

    This morning I was listening to Glenn Beck’s radio program. He was telling people to pay off all their debt, save money and stockpile food. Then we went to break and got to hear a commercial for why you should buy gold. Admittedly, Glenn Beck leans toward the paranoid fringe these days but he’s only the most shrill among a lot of people who constantly seem on the edge of panic.

    Personally, I’m not doing anything special at all. In good times or in bad ones, some simple things like being thrifty and saving money make sense. If you are being smart with your money there really isn’t much you need to do just because the broader economy might be headed in one direction or the other.

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