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In the United States, the yield curve has inverted. The 90-day T-bill interest rate is now higher than the 30-year T-bond rate, barely. And so we now have an inverted yield curve, which is an excellent sign that we look to to predict a future and coming recession. So today on Radical Personal Finance, I think it's timely that I talk to you about how to prepare for the coming recession.

♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. Today on the show, we're gonna talk about avoiding catastrophe because I'm gonna talk to you about avoiding the catastrophic or potentially catastrophic effects of a recession on your financial life.

I'm gonna give you the strategies, the steps, and the actions that you need to take to prepare now. ♪ If you are not familiar with the concept of the inverted yield curve, it has been in the past decades one of the more reliable indicators of recession. And the most important thing is when the 90-day T-bill rate rises above the 30-year Treasury bond rate.

So I want you to imagine what that means. That means that if you give money to the United States government, you are promised a lower rate of return if you give that to the government for 30 years than if you give it to the government for 90 days. That violates all of the normal expectations about investing.

You say, "Well, I'll give you my money, but pay me 2% for 90 days, but pay me 6% for 30 years." Well, when that gets out of whack and you have people saying, "Pay me 2% for 90 days, but pay me 1.5% for 30 years," it signals that people are more interested in the return of their money and safety than the return on their money.

And this particular inverted yield curve has historically, fairly predictably, been a signal of coming recession. Now, it's not exclusive. There's no guarantee. I always try to keep in the back of my mind that quip that economists have successfully predicted 28 of the last seven recessions or whatever your version of that is.

And I think it's true. I think certainly fears and concerns over recession can be overblown. All a recession means is that the gross domestic product decreases for, what is it, two quarters, two consecutive quarters? That's all it means. So it doesn't mean that the end of the world is here.

It doesn't mean that people are going to be pointing guns at your house and stealing your food. It doesn't necessarily have to be extremely catastrophic, and we don't necessarily have to even be right. It's possible that things could change, and there may not be a recession. Predicting the timings of the movements and the aggregate indicators of hundreds of millions of people's individual financial activities is, of course, a very difficult and risky business.

So I want to start today by talking about recession and talk to you about my planning philosophy when it comes to things like recession. You'll notice that in that intro, I said, "The coming recession." Long listeners of the show know that I actually have a course called How to Survive and Thrive During the Coming Economic Crisis.

And that sounds extremely sensational when I say, "The coming recession." And I intend it that way. I want to grab your interest. I want to be sensational. But astute listeners will always notice that I never personally assign a specific time period. And although I have a fairly catastrophic-sounding course, How to Survive and Thrive During the Coming Economic Crisis, that course is extremely practical, and there is not a single prediction of a single date.

And just like today, I'm not making, I'm not competent to make any prediction of any certain date. All I know is that a recession is coming. When it comes, I don't know. And it could be, you could allege that's kind of a weasely statement because you can at any time say that a recession is coming, even if you're in the middle of a recession, and you may be right.

You're gonna be right, bear with me. It might take 10 years, but you're gonna be right at some point. There will be a recession. We live in an economy where, due to the way the economy has managed and influenced, we go through periods of boom times and bust times.

So that's where we live. That's what we do. But it is important to remember that recessions are nothing new. They come along just like buses, pretty regularly. But yet it's been quite a while since we've had a recession in the United States. It goes back to 2008, 2007, 2008, 2009, that period there was the last time that we officially had a recession in the United States.

And so if you think about it, there's actually a whole generation of people today who have never experienced a recession, who haven't gone through a recession. And I want to prepare you for that by talking to you about the planning steps for you to be thinking about to prepare for recession.

Because recessions can be really, really difficult. Now, I will never make my bets based upon something that has to happen. I, with the exception of perhaps some speculative moves that you want to make, which there is a place for that in your investing life and your business life, I generally, being a fairly conservative person, I want to have a plan no matter what happens.

So I'm not going to make my bet upon recession coming in 2019, or recession coming in 2020, or recession has to come in 2021. I'm not going to give myself over to a prediction of recession coming in 2020, and then find myself in 2021 with a booming economy and then I've got no participation in that.

I make my bets based upon being prepared for whatever comes. And everything in this show, every step I'm going to talk to you about will be practical and useful, and it will not hurt you to do, even if recession doesn't come. The only thing that you will lose, at the worst case scenario, by following the recommendations that I give in today's show is some time from your schedule.

Perhaps you won't quite get through the latest series on your subscription TV plan because you're doing some financial work instead. Or perhaps in theory, with some of my suggestions, you might pay a few more dollars in interest on maintaining some of your debt or something in the coming months.

But beyond that, I'm not going to give you a single suggestion in this show that will cost you, that will be bad for you if recession doesn't come. So I am concerned that recession may come. It may come fairly soon. And I think there are very good reasons to think that the next recession in the United States could be a very significant and deep one.

But I'm swayed by the arguments in that direction, personally. But I'm not going to bet the farm on that being the absolute guaranteed plan. I'm going to be prepared if there's a deep, long, hard recession. I'm going to be prepared if there's a mild, short recession. I'm going to be prepared if there's no recession.

And I'm going to make sure that I have plans in place for all of those. And that's what I invite you to come along with me in today's show. I want to give you additionally a few important reasons to prepare for recession. You may not remember the depth and pain of the most recent recession, because perhaps for you, it wasn't a deeply painful experience.

But it was a deeply painful experience for many millions of people. And recessions hurt. People get hurt during times of bad economics. And those hurts can go deep, and they can have broad ranging ripple effects. There was an entire generation that was transformed for their entire lifetime by their experiences in the Great Depression.

If you interact with your parents and your grandparents who went through the Great Depression, almost every person could, for the rest of those people's lives, point to the things that they did because of their experience in the Great Depression. It transformed an entire generation. It transformed the politics of the nation.

If you go back and you study US American history, the Great Depression was a deciding point in the change in the direction of the US political system. It turned my grandparents into diehard lifelong Democrats. Franklin Delano Roosevelt and his work during the Great Depression turned an entire generation of people into lifelong diehard Democrats.

And it completely changed the political system. Now, it's interesting to look and say, "Well, what actually happened?" But the reality is none of that matters. It did change people. And recessions hurt. When people are in financial distress, there's almost nothing good that comes from it. As your stress levels rise, your health is likely to go down.

The stress creates acid in your body. It causes you to be unhealthy, causes you not to sleep well. People start drinking more, abusing drugs more to try to escape, watching more TV, doing things that are unhealthy to try to deal with the stress. All of that has a ripple effect in their life.

Family relationships are often harmed. It's a whole lot easier to yell at your children and abuse your children when you're feeling stressed than it is when you feel good. It's a whole lot easier for the things that your spouse does that, in good times, they don't really bother you.

It's a whole lot easier to blow up and yell at them when they do something, when you're feeling intense stress. The financial impacts of a recession go long and deep. If you start missing payments, your credit score is destroyed. That has an effect for years. You lose your house, you get foreclosed.

That can have an effect on your family for years. Can have an effect on your ability to buy another house for years. When you lose your job, it can have an effect on your career for years. And if you lose your job in the middle of a recession and you have several years of either no earnings or subpar earnings, that will have a dramatic ripple effect throughout your life.

You can't save as much money, can't invest as much money. Even things like your social security credits are messed up by that. So recessions hurt, but they don't have to hurt you as much as they might hurt other people if you are prepared. And always remember this, the best way to help the poor is to start by not being one of them.

The best way to help those who are hurting is to start by not being one of them. So collectively, you and I have an opportunity to prepare so that we are positioned to help our neighbors during what could be a very difficult time. I've worked hard to strengthen myself so that I can help you if you are in a weaker position.

Now I want to strengthen you so that you'll be in a position to help your neighbor if they're in a weaker position. And that's how one by one, we can impact one another and we can help one another and we can collectively build stronger communities. I'll repeat for you again, one of my favorite lines from my friend Jonathan Walton's poetry.

"We are people pebbles tossed into a pool. "Every ripple I create in turn ripples you. "So in unison we are rippling, "a type of ripple rhythm, "but we need to ripple in a way that benefits our living." So I'm hoping to impact you in today's show with some very useful, thoughtful things that you can do to prepare for the coming recession.

The number one most important thing that you can do to prepare for the coming recession is to focus on maintaining your job, maintaining your employment, maintaining your income. That is your number one highest priority in a recession is to maintain your income. If you do nothing else that I recommend, but you maintain your job, your life and your lifestyle during a recession is likely to be just about the same as it is now.

But if you lose your job, everything else in your life is impacted. So your highest priority in a recession or preparing for a recession is to maintain your job. Now, how do you do that? Well, there are a number of things that you can do, but first recognize there's not the time to be a slacker.

And if you're gonna slack off at work, this is not the time. You want to make sure that you are on the list of employees who is always seen as the most valuable employees. If people are gonna be cut, you wanna be the last to be cut. Because if you can maintain your income through a recession, the recession won't personally impact you all that much.

But if you can't, you will remember the recession. So how do you maintain your job? Well, this is gonna be one of the most important things I'm gonna release in the coming days. I'm gonna re-release a replay of three shows I recorded several years ago that's entirely focused on this specific question.

It's that important. So I think that that three to four hours of audio on this one question is going to be sufficient to answer it. So I'm gonna breeze over it today. But recognize that you are in competition with your coworkers and with all of the other potential people that are available in the marketplace.

Remember that employees compete with employees for work. Employers and employees are not in competition with one another. They collaborate, they work together. But employers do compete with employers and employees do compete with other employees. When you go and apply for a new job that you're trying to get, you simply have to be better than all of the other applicants for that job and show that you're a better fit, you're a better candidate.

That's your job. That's how you get the job. And so the same thing happens when you are on the list for being cut. Corporate executives and leaders look down and say, we're having problems. Sales are going down. That's what, when gross domestic product contracts, what that's measuring is that sales in different companies and different industries are decreasing.

Companies are not able to sell and produce as much product as they otherwise are. So when sales contract, that starts to eat into the profit margins of a company. And so the managers of that company start to look and say, well, what's happening? And as they look at their profit margins being squeezed, they usually will wait a little bit to see whether this is just a temporary thing.

After all, sales can wander around all the time. Some people have seasonal sales problems. They sell more in winter than in summer, et cetera. And so they wait to see what's happening. As the managers see that the sales decline is continuing, then they start to make plans. Now they may not act right away.

Most companies would maintain some kind of reserves. They may start to eat into those reserves because they've built a company infrastructure that they feel serves their needs, and they wanna maintain it. They don't immediately wanna start axing things. But if sales continue to go down and to stay down, then company management has to make changes.

They have to start cutting expenses. The only way to maintain profitability if sales are going down is to either increase sales or to cut expenses. So if the company managers can't figure out a way to increase sales, they then have to go to expenses. Now, when you look at expenses and you look at many companies, if not most companies, the single greatest expense that most companies face on an ongoing basis is generally going to be the cost of employees.

Employees are extremely expensive. Not only is it your salary, but it's your benefits. It's also the plant and equipment necessary for you to do your job. And employees are also some of the most easily adjusted, maybe too strong of a statement, but there's some things that can be easily cut off.

If a company has a big factory and they need that factory to produce their wares, it's easier to lay off a third of the factory workers and then plan to hire them again in two years than it is for them to sell the factory. 'Cause building a factory is generally a lot harder than hiring new factory workers.

Now, don't get me wrong. Hiring and training good employees is very difficult. It's extremely expensive and time-consuming for an employer to do. But in general, human capital, the employees, is going to be easier for them to decrease and increase to keep pace with the times. So company management is going to sit down and they're going to look at the cost structure of their company.

The first thing they'll do is they'll try to trim off any non-essential workers. Now, if you are in a job that you don't think is fundamental and core to the productivity and the profitability of that company, that probably means you as a non-essential worker. And so you should be prepared for that.

This is why if you're involved in a highly compensated position where you are directly impacting the productivity and profitability of the company, you're much more likely to keep your job than if you're just an ancillary assistant. If you work as an assistant to a mid-level manager, chances are that mid-level manager can get by without an assistant, or they can lay off three assistants and bring on and have one assistant serve four mid-level managers.

But if you're a key and star salesman for the company, they can't lay you off. First of all, of course, you have the benefit that your compensation is directly tied to the profitability of the company. They know how much to pay you because they only pay you when money comes in, and they need you because they need income to rise.

They're going to maintain profitability either by increasing income or decreasing expenses. As a salesman, you help to increase income. So non-essential jobs, non-essential positions are largely going to be cut. The other thing that's going to happen is the managers will look at a recession as an opportunity to conveniently, without a lot of stress, without a lot of bad press, to conveniently make the company more efficient.

What tends to happen during periods of expansion in a good, booming business cycle is managers, in preparing for future growth, tend to overhire. And they wind up with people who, yeah, they're doing something, but they're not particularly important. And so when you go into a recession, you have a convenient opportunity to get rid of the people who are poor performers, to get rid of and streamline some of the jobs and make things more profitable.

And so it's a really unique opportunity where you can do that where people understand. If you start laying people off when there's a good economy, et cetera, then the workers say, "What's going on here?" But if you lay people off in a recession, the rest of your workforce is going to be more understanding of your moves as a manager.

So if the CEO says to each of the department heads, "You need to trim your expenses by 20%," well, the department heads can simply sit down, look at their employee roster, and trim off the 20% of the employees that they don't like, that aren't productive, that aren't team players, or whatever their personal criteria are.

So your first job is to make sure that you're not in that bottom 20%. This is why it's so important in any job that you're always in at least the top 20% of the workforce because almost no company would ever cut positions in the top 20% of workers. The company has to go totally bankrupt in that situation to cut people there.

But if you're in that bottom 20%, there's a very good chance you're out. So your job is to be a more important, valuable employee to your employer than all of your fellow employees. You're competing against your fellow employees to be higher on the list and thus later in the cuts to be laid off.

Now, this may come in and be a factor also with regard to your pay. You can't necessarily predict in all circumstances it's just based upon performance. It might be that you are a very highly paid employee. And this is one of the biggest challenges for older workers, workers who are established, who've been at a company for a very long time, they've generated increases in pay, they have a lot of pension benefits, et cetera.

Those workers can be very expensive for a company to maintain. And so that's also a risk. So I'm gonna release replay of three episodes into the podcast feed that are hours and hours on this subject to help you prepare for to not get laid off in the coming recession.

I think the titles are how to not get laid off in the coming recession, what to do if you just got laid off in the coming recession. And the third one was, or how to prepare to get laid off in the coming, if you get laid off in the coming recession.

And the third one was what to do if you just got laid off in the recession. So we'll deal with some of these career strategies exhaustively. The key thing for you to recognize is your number one target, your number one goal is don't lose your job in the coming recession.

So start thinking about what you can do now in your current job so that you don't lose your job in the coming recession. Now, if you do lose your job, recognize that this is not necessarily a disaster. A job loss can be an opportunity in and of itself. I personally was laid off just prior to the 2008 recession.

And it turned out to be a great blessing for me. I did not see it coming. I had been working at a marketing and brand management consulting company. I was working as a mid-level analyst, junior analyst, whatever. And I had decided that it wasn't a good fit for me.

Basically the industry, the corporate structure wasn't a good fit for me. And I was planning to leave in January of 2009 because I just didn't see how I had any long-term career there. But I was sticking it out because I was trying to fulfill my, I wanted to leave on good terms.

I wanted to have worked there enough to make my boss a lot of money for the risks that they had taken in hiring me. And so I was planning to leave in January of 2009. I was unexpectedly laid off in June of 2008. And at the time, I couldn't believe it.

I had gotten great performance reviews. I had, I thought I was doing, I'd just gotten a nice pay raise. I thought everything was good. And I don't think it was really my fault. They reorganized the company and they eliminated all of the people that were at my level. And they kept the senior level management and the junior level employees.

And they kind of cut away my level, but it was a shock. I did not expect it. I didn't know what to do 'cause I didn't have a clear plan. I had some ideas of what I wanted to do, but it wound up in hindsight being a tremendous blessing for me because the recession hit in the fall of 2008.

And that was when the world was falling apart. And I remember that in, as I looked in January of 2009, I looked around and I said to myself, "You know what? If I were still working, I would not have the guts to quit in January of 2009. I would be so scared by the economy and the recession and whatever that I wouldn't have been able to follow through on my own plans." And so it turned out to be a great blessing to me.

And I remember in the fall of 2008, I had decided to become a financial advisor. I'm driving to classes and taking classes. And every day I'm driving home. I was commuting back and forth to Miami and I'm driving home, hour, hour, hour and a half in the car, listening to NPR talk about TARP and deal with the financial crisis and everything.

And I started my career in the depths of a recession as a financial advisor. And I built it all through the period. And so I just simply say from personal experience that if you do lose your job, it can be an opportunity. But it's most likely to be an opportunity if it's one you're prepared for.

Because if I had not been financially prepared for being laid off, I was out of debt, I had a big emergency fund, I had a very simple life at the time, I had few obligations, was a single man, but being out of debt, having a big emergency fund, six months of expenses, et cetera, that made it possible for me to pivot, to start a new business where I didn't earn any income in the beginning and build to where I ultimately do today.

But financial planning makes a difference. And so that's why we're gonna talk about financial planning in detail now. Step one of preparing for a recession is make sure you focus and don't lose your job. Step two is this, today, make a plan of what you would do if you lost your job.

If you're a dual income household, what would you do if you both lost your jobs? What would you do if today, you got called into your boss's office and your boss said, "Thank you very much for your service. You've been a great worker, but unfortunately we can't keep you." And you're laid off.

You have a cardboard box, you pack up and you're ushered out the door by security. What would you do in that circumstance? I want you to think this through very, very carefully. And what we're doing here is called war gaming. I want you to imagine and plan what you would do in that circumstance if you had to.

And that way you'll be prepared to do it when you have to, if you have to. And this mental exercise makes all the difference in the world. I'll tell you too, I thought it was funny, an embarrassing anecdote of how big of a deal this makes. In 2008, when I got laid off, prior to that time, I had been deeply influenced by Dave Ramsey's books and his programs.

I had organized, I bought his Financial Peace University program. I organized a group of my friends. I paid for all this stuff and I took a group of my friends through Financial Peace University. And in that iteration of Financial Peace University, I have no idea if it's still in his current versions of those courses, but in that course, when he was talking about the value and the importance of an emergency fund, he made a humorous anecdote about what it would be like if you got laid off and you had an emergency fund.

And he said something analogous to this quote. He said, "If you've got a six months of emergency fund "and you get called into your boss's office "and you get laid off, you can just laugh and say, "'Well, that's okay, how big's the severance?'" And it was a funny joke 'cause, hey, I'm not so concerned about losing my job because I have six months of expenses saved up.

And I'm out of debt. And it stuck with me. I remember things very easily when I hear them and it stuck with me. And so I remember I was so shocked when I was getting laid off. I'm sitting there looking at the president of the company and the executive vice president or whomever.

I'm sitting there looking at them. And at first I didn't understand what was happening. I had no concept that I was being laid off. And then I realized I was being laid off and they were very solemnly going through and saying whatever their politically, oh, we can't, I don't know what their political stuff was, you know, that HR cover your butt stuff.

And finally I realized I'm being laid off and I just, I laughed and I said to their face, I went, "How big's the severance pay?" And they both looked at me. I still remember, they both looked at me shocked at my joke and I immediately backpedaled and I said, "I'm sorry." And I explained that, "I'm sorry.

I just spent the last couple of years of my life getting out of debt. I worked really hard and I've done nothing but save money. And I, you know, just a few months ago, I saved six months worth of expenses." And that was, I did it to be prepared in case I ran into a significant financial problem like this.

And I explained that I heard Dave Ramsey say this thing about how big's the severance. And so it diffused it, but that's how big of a difference. That's how big of an impact war gaming can make on your life. You might even just say verbatim what I just said.

But if you will think things through in advance of what would I do in that circumstance, you'll be prepared to move quickly. So here are my questions for you. That's what we're doing. Thus, the scenario is simple. You just got fired. How would you cut your expenses immediately so that you could live on your income?

If you're a dual income household, how would you cut your expenses by 50%? What would you do? What would you cut? How would you get another job quickly? What would you do if both you and your spouse, if you're a dual income household, if both of you came home and you said, "Hey, I got news." And she says, "I've got news." And both of you lose your income.

How would you do that? Or if you're running a business, what would you do if your business revenues would decline by 50%? And I think 50% is a useful metric to use. There's nothing precise or academic about it. Just that it's a lot. It's pretty severe to lose 50% of your income.

It's really severe. It's a lot harder to figure that out than what would I do if I had a 10% cut. You could have a 10% cut immediately, but it's not so desperate as 0%. So it gets you in the mindset of cutting. It's also very useful to think about because many people might be able to, let's say you're gonna get laid off and you're concerned about it.

You might be able to negotiate simply taking a pay decrease. Perhaps your company would like to keep you, but if you'll take a 35% pay cut, they'll keep you, but they won't at your current salary. So you might be able to keep some of your income. It's also an important number because many people could replace 50% of their income through either taking another job quickly or through taking some kind of side work, side hustles, part-time work, putting together a mishmash of part-time jobs and just personal hustles in some way.

In general, it'd be unusual, you'd probably be pretty lazy to go from 100% of income to 0% of income and not be able to make anything. So most people that are motivated and willing to work at doing whatever is available could at least make some money. And so thinking 50% of my pay is gone, how do I live on 50% puts you in the right mindset.

So I want you to think about that. What would you do? How would you cut your expenses by 50% overnight? I want you to make a plan. I want you to imagine this through and ideally write it down. The scenario is simple, you get fired. And so just take a few minutes on your lunch break today and make an action checklist.

You go home, honey, I lost my job. You walk to your home office and what do you do? Well, on the way maybe you crank the thermostat up a few degrees. Sorry, we can't run the AC at 72 degrees, we gotta run it at 78 because we can't afford the electricity bill or flip the AC off or the heater or whatever.

You pull out your cable bill, you call the cable company, you cancel the cable, you cancel Netflix, you cancel your subscription boxes, you cancel the cell phone plans. We can't do $300 a month on our family plan of cell phones, we just can't do it, we cancel them. By the way, if you're ever in that situation, that's one of the things, most people don't do that 'cause they don't know how to keep their number.

You can do that by just simply porting your number either to a prepaid plan or what I recommend is port that number to something like Google Voice or some other solution where it's super cheap. Google Voice charges either 10 or 20 bucks to port your number in, but then there's no more ongoing calls and you can swap your cell phone out all along the way.

It's one of the biggest savings that many people could have is going from two or $300 a month to $0 a month. There have been many months where I've maintained a cell phone just through using apps, Google Voice, Voice over IP phones, MySudo, and then switching everything to messaging apps, whether that's WhatsApp, Facebook, Wire, Signal, that kind of thing.

By switching everything to messaging apps, you can cut your cell phone and that's a big one for many people when you got a family plan at $200 a month. So you cancel the cell phone plans that day, you call the internet company and you say, well, we're gonna have internet 'cause I'm gonna be looking for work, but you drop the internet speeds to slow and cheap instead of fast and expensive like they are now.

You cancel the lawn service, you cancel the pool service, you cancel the house cleaner, you cancel the kids tutors and the piano teachers, you call the kids private schools and tell them you're pulling them out at the end of the semester, you're not gonna make next semester's premium payment or tuition payment.

You call your life insurance company and drop the additional premiums off your life insurance policies and drop them to the basics. You cancel the restaurant budget, you drop the food budget by 50%, you say, we're going to basic foods, staple foods, cheap foods instead of the fancy pre-prepared foods that we normally enjoy eating.

You park the second car in the garage immediately, you drop the insurance on it immediately 'cause you park it. You file for unemployment that day, you sign up for food stamps that day, you go to the food bank that evening and you get some food, et cetera. The point is that plan out what you would do.

That's just cutting the tip of the iceberg. I'm trying to use generic examples that would be broadly applicable. But you look at your budget, you look at your expenses and say, I've got to cut my household expenses by 50%. How do I do that? And the thing is, you want to be ruthless and move fast.

If you lose your job, be ruthless and move fast. That is painful, but it's less painful to be ruthless and move fast than it is to kind of say, well, this is bad and I don't want to upset the family and I don't want to upset the family budget, I don't want the kids to be scared.

And so we're just going to wait and keep things as normal to try to maintain some semblance of normality. Maybe I'm wrong on this, right? Maybe 10 years from now when I'm dealing with teenagers, I'll think differently as a parent. But as a financial planner, I have watched this again and again and again.

And there's this idea that somehow parents are immune from circumstances and if they just hide from their children that things aren't going well, we just lost our job, that things will be, that it'll help their emotional equilibrium. I don't buy it. I think emotional equilibrium is maintained by the quality of the relationship, the confidence of the person.

And I think that children are perfectly capable of engaging and helping the family. It may be that you say, son, I lost my job, you're out of private school, we're homeschooling, and what's more, you need a job this afternoon, let's go start, 'cause now you got to pay for your clothes.

That's fine, that's not child abuse. And yet from a financial planning perspective, when people move slow, they wind up paying for their slowness for years. Giving you probably the hardest example. You lose your job. I think it's better for you to pull your children out of school, out of the private school immediately.

Finish the semester or whatever you have with the tuition you've paid up and then pull them out of school right away. And so let's say you pull them out for the next semester. It saves you the tuition payments. That can be hard to predict based upon school payments, but the point is you pull them out and you pull them home and you homeschool for a semester.

And then wind up two months later, you got a job, another job, and you're in a situation now where you can easily make it, well, put them right back into school. They'll still have all their friends. They just were at home for two months and make up the tuition payments and get them right back in two months later when you get a better job.

That is a far better scenario to be in than for you to say, well, I don't want to upset the kids. And so we're just going to go ahead and put this semester's payment on the credit cards. And then all of a sudden now you can't get a job.

The recession grows deeper and longer and you can't get a job because your industry is roiling and you weren't prepared to pivot to another industry. And so now six months you're out of work and now you've got $15,000 of additional credit card debt for the kid's tuition payment. And now you got to pull them out six months later.

And then it takes you another six months to find a job. And now you've got to take six months, 12 months, 18 months paying off your debt. As I talked about in a recent episode on the Back to Basics where I talked about the problem with debt, the problem of not moving slow is that you extend the pain to a long period of time.

If you followed my plan, you pulled the kids out immediately whenever your tuition runs out and you homeschool for two months, you can put them right back in. You had two months of pain or maybe your kids had enjoyed two months of pleasure. I don't know, sitting at home instead of going to school.

You had two months of pain versus two years of pain because you move too slow and you were super stressed the whole way through. So be ruthless and move fast. Next, resolve to move quickly and resolve to make at least enough income to keep your lean budget going forward.

Resolve to make enough to pay the basics and set those plans up now. How would you do it? If you say, well, I'd go and drive for Uber or whatever the competitor is at the time that the recession comes, then make that plan now. Research, make sure your car qualifies.

You may even go ahead and get signed up, become an Uber driver, get the inspection on your car and drive once every month or two. That way you're ready to go. And so you lose your job, the next day you're in the car for 12 hours making $4.25 an hour.

But hey, $4.25 an hour might be enough to pay your mortgage bill. So make that plan now. If you're gonna do freelance consulting, then go ahead and keep those contacts alive. Make contacts with the person and keep it ready so that you could, on your way home from your job, you could call somebody and say, hey, I know you wanted me to do that gig and I didn't have time, but I just got laid off.

Can I start on this tomorrow? Keep things fresh. Think now about how you generate some extra income from your house. Would you rent out the spare bedroom? Would you move the kids into one bedroom and rent out the spare bedroom to somebody who needs it? Then make plans for it now.

Think about it now so that you're ready. You may not wanna do it now 'cause you don't need the money, but hey, an extra $500 a month coming in from a part-time tenant could make a big, big difference for you. Resolve to make at least enough income and resolve not to go backwards in the recession.

Don't borrow money. Earn it. I repeat, don't borrow money. Earn it. Again, back to the pain. Problem with debt. Go back and listen to that episode called "Back to Basics, The Problem with Debt," something like that, about five, six, seven, eight episodes ago. If you borrow money in a recession, you wind up coming out of the recession broke.

If you work and cut expenses in a worst-case scenario, you at least come out of the recession where you were before it. And then as soon as you get well-employed again, you can get back on track instead of having to spend a year or two years or three years making up for the recession.

This is the exact same problem that governments have and that the US government is going to have. If the government would simply let, back to 2008, if the banks had simply been allowed to fail and all of the malinvestment and the badly placed capital had been allowed to be destroyed and taken care of through the markets and the courts and the bankruptcy process, the whole thing would have been over.

But because everyone said, "Oh, we're gonna bail it out," it would have been a lot of short-term pain. But within the bailouts, what we do is we extend the pain out and now it's decades and decades and decades of pain. Take the pain, take the pain now, make it short, make it fast, make it deep, and then on the other side, rebuild.

So resolve not to go backwards in the recession. Resolve to work at least enough part-time to make your way forward. Don't go backwards, don't lose net worth. You may not, let me rephrase that. You may not be able to affect your net worth because your investments may go down in their current market value.

So you may not be able to keep from losing net worth, but don't go cash backwards. Keep your cash cushion and work, earn, do whatever is necessary to keep going forward. Don't go backwards. Next action step. If you see recession coming and you are preparing for recession, pay attention to the indicators and start stockpiling cash.

If today you would be in a difficult situation, if you lost your job, you need this to be stockpiling cash. I gave this advice recently to a consulting client, was paying thousands of extra dollars a month towards a mortgage payment, very focused on getting the mortgage paid off in a couple of years.

I said, "Good job, stop, stockpile cash." Didn't have enough cash, didn't have enough in emergency fund, and was too much at risk of losing the job. And if he'd lost his job, it would have been potentially very, very difficult. So stockpile cash. You may not be able to predict with certainty when the next recession is, but when there are giant yellow lights flashing all over the economy, when there are giant yellow lights and this says, "Hey, this is the inverted yield curve." And we got the interest rates of 90 day T-bills above 30 year bonds, that is a giant warning light for imminent recession in the coming year, months, years.

But you have enough time to stockpile cash. So stockpile cash. If you are not currently stockpiling cash and you're not currently in a very comfortable situation, significant investments, significant cash stockpiles, fully funded emergency funds, et cetera, this is your time to prepare. Stop paying extra on debt. As long as your debt is at reasonable interest rates, paying 25% debt, credit cards, things like that, stop paying extra on debt.

Now, keep your momentum towards your debt-freeness, but stockpile your cash instead. And it'd be much better for you to stockpile cash for a year, and then all of a sudden all the yellow lights go away. Eh, it was once again, the economists were predicting recessions and it was, eh, President Trump fixed it all, right?

So at that point in time, you just go ahead and take the cash and pay off your debts. What was your cost? Well, your cost was 12 months worth of interest payments in that situation. That's why I say, as long as your debt is at reasonable interest rates. What is the actual cost of that?

In most cases, not much. Most listen to the show, that wouldn't be all that much compared to the safety of having that 12 months of cash. So stockpile cash, stop paying extra on your debt and pile it up. You can always take the cash and pay off your debt, but you can't always easily borrow more money in the middle of a recession.

Stockpile cash. Next, refinance now any debt that is not intelligently set up for long-term low-cost maintenance. This is the time to refinance. This is the time, back to that 50%. Let me give you a real problem. How would you solve this? Your household budget is currently $5,000 a month.

Your monthly mortgage payment is $2,000 per month. And you have other expenses. You have utilities, you have food, just basic expenses of life. And so I say to you, how do you cut your budget by 50%? I give you $2,500 a month. So you go through and you say, well, I could drop my electrical expense by 30%.

That would save me $37. We could lower our food expenses by $200 a month. And you go through all this math with all these little frugality things and you look at it and you say, but the reality is there's no way we could adjust our budget to go from $5,000 a month to $2,500 a month 'cause I got a $2,000 mortgage payment.

You're right, you can't do it. It's not gonna be possible for you. But what you can do is refinance your mortgage. So if you have 12 years left on your mortgage and you're in a situation, you say, well, I got a $2,000 monthly mortgage payment. Now's not a bad time to refinance your mortgage.

So refinance your mortgage to a 30-year payment. Drop your monthly payment from $2,000 to $1,100. But if you want, either stockpile the cash now, but stay focused and pay that thing off fast, but make a $2,000 monthly payment. What you've done in that situation is you've increased your safety because you've lowered your mortgage payment.

So you lower your mortgage payment by extending the terms, that buys you more time. Now you can live on less money, but you can still pay the mortgage off fast. Now today, that's probably pretty easy for you to do because you are well-employed. But the day you lose your job and you call up a mortgage broker and say, I'd like to refinance my mortgage, and they say, what's your income?

$0. That is a whole lot harder to do. It's tough to refinance a mortgage when you're unemployed and current. Yes, you can go behind on your mortgage, miss months of payments, and then they might work with you and rejigger the mortgage for you. But you don't wanna do that.

So refinance your mortgage now. And that cash may be extremely valuable for you. In a moment, we'll talk about bankruptcy planning, just a second. But pulling that cash and that equity out, as long as you're not an idiot and spend it, can be very much within your best interest.

Talk about that in a moment. Remember, you can always pay down a mortgage again as long as you have the cash and you haven't spent it. So set aside the cash and stockpile the cash, refinance the mortgage until you're in a position where you can just simply pay it off.

If you can show a check and pay off the mortgage, that can be a great thing to do because now you have the house debt-free. And now you don't have any monthly payment coming out, which is very safe. But if you got 12 years of payments coming out and $2,000 a month that you owe, and you don't have a huge amount of savings, that could be a very precarious situation because you can't make a $2,000 a month mortgage payment driving for Uber.

But you could make a $1,200 a month mortgage payment driving for Uber. So refinance any debt that isn't properly set up for easy, comfortable, long-term maintenance. This is the time also to refinance your credit card debts. It's much easier to do what I teach in my credit card course, to apply for higher, you can get easily approved for much higher credit limits when you can report income.

But the day you lose your job and you have to fill out that application that says what's your annual income, and now you say, "Oh, well, it was $150,000, "and today it's zero." Whole lot easier to get more credit limit when you got $150,000 income that you can honestly, truthfully report than $0.

So maybe you use the cash from your mortgage refi, take my credit card course, refi, take the cash, pay off your credit cards, raise your credit score, and then re-borrow the money at 0%, they're much more favorable terms, stack the excess capital up in a bank account, and have it available to you to pay off the credit cards again or pay off the mortgage.

So take my credit card course, or at least listen to all the free shows I put out a year ago when I launched that course, and you'll get the idea of some ways to do it. So refinance any debt that isn't intelligently and comfortably set up for the long-term.

Take a look at every bit of debt that you have. Next, protect your assets. This is the time to do pre-bankruptcy planning. Do it now. This is the time to do pre-bankruptcy planning. Most people who wind up in bankruptcy never expected to be there. Yes, some of them made foolish decisions where they said, "I'll have this great thing," and they just didn't think.

But many people wind up in bankruptcy through circumstances that they didn't anticipate. A recession came along right when they had a major health crisis, and now all of a sudden, they're deeply in debt, and they wind up in bankruptcy. This is the time to do pre-bankruptcy planning. So sit down, take all my shows that I did on credit or asset protection for, can't even remember, you know you have bad show titles when you can't even remember the names of your own shows.

Asset protection for mere mortals. The whole series of show, I work back and forth with bankruptcy planning. Read a book on bankruptcy planning. You can do it yourself. Consult with a bankruptcy planning attorney, and do pre-bankruptcy planning when everything is good, when you're well-employed, et cetera. This is the time to think about what would happen if this recession forced me into bankruptcy.

See, we get used to three-month recessions, six-month recessions, year-long recessions. What if the next recession is three years long? What if it's twice as bad as the one in 2008? What if that was the great recession, and now this is the greatest recession? Are you prepared? Do pre-bankruptcy planning now.

So what do you do? Well, you re-finance, let's say in the mortgage example, you have 12 years left on your mortgage, $2,000 monthly payment, normal household income, $5,000 per month. Pretend you don't live in a state that protects 100% of your homestead. You don't live in Florida. You don't live in Texas.

You don't live in Kansas. You live in Georgia or North Carolina, where they give you this measly little $15,000 homestead exemption. Well, what I say is in that situation, re-finance your mortgage. Re-finance it to strip the equity off the homestead, and make sure that this year you fully fund your 401(k), fully fund your IRA.

If you're worried about market declines, just keep the money in a cash account inside your 401(k), inside your Roth IRAs, et cetera. But the money in your 401(k), your Roth IRA, depending on the bankruptcy laws of your state, should be protected in bankruptcy. And so it's a very safe place for you to keep it, whereas the money in your home is not protected.

Now, if you live in Florida, Texas, Kansas, et cetera, some of the states that are generous with homestead exemptions, then that advice is different. But you still maximize your 401(k), and in that situation, make sure that you maximize the amount of equity in your house, because now that's protected.

So do the pre-bankruptcy planning in your state now. Fund your 529 plans, fund your health savings accounts if they're protected in your states. Let's say your state gives you bankruptcy protection on one car. Well, pay off the one car that you'd keep that comes in within the appropriate values for your state's bankruptcy laws, and then just pay minimums on the second.

Take some of the cash from a non-bankruptcy-protected account and stock the pantry full of canned goods and long-lasting food that would see your family fed in difficult times. Pay minimum payments on the credit cards, but maximize your 401(k) and IRA contributions. This is the time to do bankruptcy planning when you're long away from it, when you don't think it could ever happen.

Now, what's the worst that could happen? Well, worst that could happen is, of course, that three years you're into a recession, you've been unemployed for two years, and you wind up in bankruptcy court. Well, you're gonna be happy with the advice that I've just given you. But in a better situation, yeah, you don't even lose your job.

What do you do? You don't lose your job, you continue stockpiling cash, you're out and already you have enough money to comfortably pay off the house, you refinance, you just keep things going. And when the recession indicators lift, your career seems very stable, you've got plenty of money, plenty of savings, just simply pay it off.

You paid a few thousand dollars of mortgage interest, hopefully paid relatively almost close to zero on your credit cards, car payment, whatever. Protect yourself. I'm not advocating for you to borrow money. I'm not advocating for you to go into debt. I'm advocating for you, if you're in debt, to be intelligent and understand the law.

This is the time, when you're not anywhere near bankruptcy, to do pre-bankruptcy planning in the preparation for the unfortunate circumstance of three years from now, you wind up in bankruptcy court. You don't wanna be there and not have maximized your opportunities. Now, the other reason for you to be doing what I'm encouraging you, stockpile cash, refinance debt, et cetera, is to prepare for opportunities.

If you see recession coming, yes, you want to be defensive, correct, but you also wanna be prepared to take advantage of opportunities. So as the recession nears, as you see signs, start cutting expenses and stockpiling cash to free up money for either making good use of the recession for your personal benefit or to free up money for your investment.

Let's talk about personal benefit before investment. Think now about how you would creatively use the recession for your personal benefit, to advance you in the direction that you desire to go. I'll give you an example. Pretend that I'm working a job. It's good, it provides for me, but it's not necessarily what's been on my dream list, but it has seemed irresponsible for me to quit my job at this point in time.

But I've always had a dream of starting a publishing business. I've always had a dream of starting a media business or something online, et cetera. And I'm using that just to give an extreme example here. Maybe I've always had a dream of starting a carpentry business or opening a restaurant or a coffee shop or a plumbing business, whatever your thing is.

I'm just using an extreme example for fun. So it's never seemed intelligent for me to quit my job, but I recognize that I don't necessarily wanna do this forever. But I've got a mortgage, I've got a car payment, I've got some credit card debt, and my kids are in private school, and that's important to me.

So now I go in, boss says, "Sorry, buddy, today's your last day." I lose my job. And my industry is in turmoil, employment's down or unemployment's up, sales are down. And I just think, you know what? I'm probably not gonna get another job in my industry. So what would I do in that situation?

Well, conveniently, of course, I've tailored my example to fit my radical personality, but here's what I would do. I would immediately pack up my stuff and I would rent out my house. I would sell all my cars to pay off as much of the car payments as I possibly could.

I would pull my children out of private school and I would use the money from the sale of the cars or my savings or whatever, and I'd fly my family to Thailand. I'd rent an apartment in Chiang Mai, Thailand. I'd homeschool my children, and I would work day and night to start my publishing business.

Because with that move, I've probably just adjusted my budget, my household monthly budget, from $5,000 a month to being able to live on $1,000 a month, including a perfectly nice place, beautiful beach, lots of food, just because of the change of the costs of living. Now, in that situation, how do I do it?

Well, remember, most people, we're talking about normal situations, most normal houses can be rented out at high enough rates to cover the mortgage payment with some extra. Maybe you had that house where your monthly mortgage payment was $2,000 a month, but by refinancing now, you've dropped your monthly mortgage payment to $1,200 a month and you've freed up several tens of thousands of dollars of extra cash, which you've then gone ahead and stuffed into your 401(k) and your Roth IRA to do good bankruptcy planning in place and have some protection, and you keep a bunch of extra money in your checking account as well.

I'm not saying don't have money in your checking account, but now your mortgage payment is $1,200. Well, most houses in that range could probably be rented out for 1,800 to $2,200 a month across the, at fair market rents across the country, sometimes higher, but very comfortably. So you rent out your house for $2,000 a month and you got a $1,200 mortgage payment.

Selling the car, so that creates $800 of income that I didn't have previously. Because I had to pay that mortgage payment of $1,200, but now I rent the house out, I've got 800 extra dollars of income. Selling the cars clears out a massive monthly outflow. Maybe I had two car payments at $400 a piece.

Oh, I sell both of them. Now I've dropped my expenses by $800. I've also possibly freed up some equity that was locked in that car that can be put to better use. By moving to a place where I don't need a car, I can easily bum around on a scooter or hitch a ride on the rickshaw and pay a taxi.

It's very affordable, take Uber, whatever. But I've freed up, I don't even need a car. So I don't have to solve that problem anymore. So I've lowered my expenses, both now by clearing the car payments, and I've moved to a place where I don't need the car. Now, I surf my credit cards around with small minimum payments, keep all that at 0%.

Just keep that stable, but keep those payments current. And now with my big move to Thailand, I've lowered my cost of living from $5,000 a month to $1,000 a month, because of moving from a high cost of living place to a low cost of living place. My rent, instead of paying $1,200 a month on a mortgage payment, my rent is $400 a month for a two bedroom, three bedroom on the beach.

My food expenses dropped massively. I can eat out my whole family for $300 a month. We've probably potentially dropped other expenses. Maybe you don't need health insurance because you're in a place where the cost of doctor bills, et cetera, is not nearly so catastrophic as the United States. So I can drop my health insurance.

That saves me $900 a month that I would be paying with COBRA. There'll also be a massive change in my taxes. Pretend I've got two or three children. Well, if my income goes from, say it was $120,000 per year before, and now it's zero, all of a sudden this year, instead of paying $30,000 of income taxes, I'm gonna get some nice big fat child tax credits and earned income tax credits back on my tax returns.

And yet I can still live on this lower amount. I've got $800 a month of cash flow from renting out my house. And now with extra savings, freeing up some cash, I just need another couple $300 a month for a couple $300 a month from my (smacks lips) savings, just pulling from my savings to cover me.

So then I pour myself into the business, get the business really building successfully. It takes me two years. I bring it back to three, $4,000. We call up our tenants, say you're out at the end of this year, and we fly back from Thailand. The biggest added expense of that is plane tickets.

And in my example, you had to want to move to Thailand. Now, I've used an extreme example just to show you what can happen if you think ahead about this. Some of you would hear that example and say, why didn't I think of that? That's exactly what I'm gonna do.

And some of you are looking at that and saying, I've always wanted to start an online publishing business, and now you've just showed me how I can do it. I chose Chiang Mai because there's a bunch of, it's kind of an internet entrepreneur hotspot in today's world. But some of you listen to that and say, I'd never moved to Thailand.

But think about what you would do. That can be done locally. That kind of movement can be done locally. And so now you can have the opportunity to use a recession and a job layoff. That's what I was forgetting. You got severance pay. So I've just taken your months of severance pay, and I've stretched it out where previously you're gonna get $4,000 a month of severance pay for six months.

Well, that $24,000 was only barely gonna keep you in your house for six months. Whereas now that $24,000 mixed with the cost of renting your income out gives you, even after plane tickets to Thailand, $4,000 to plane tickets, that still now gives you two years of runway where you don't have to make a dime in your new business for the next two years.

And so you invest in your business, take those business expenses, keep your taxes really low, maximize your refundable tax credits in the United States, and now I've freed up extra money and we've got three years of runway. And you can build the business, keep it very, very profitable, enjoy hanging out on a Thai beach, taking your kids all over on scooter tours of Thailand, enjoy learning Thai, it's a wonderful place.

So, but it can also be done locally. You don't have to go to Thailand. I've done this, I've taught people how to do this in the United States. I had a consulting client one time, got laid off from a very high level job. Their entire life and their entire lifestyle and structure was built around this high paying, high status job in a major metropolitan city.

Well, they got laid off and they got an extremely generous severance package, but that severance package wouldn't have gone all that far in that high paying metropolitan city. Convince them to get rid of their stuff, buy an RV, they'd always wanted to write a book, convince them to write a book and to adjust.

And now that one year of severance turned into three years of runway to make this life change. And you can always get another job. You can always get another high paying job and move back into the high status lifestyle, but you can use a recession as an opportunity in your life.

You can use severance pay as an opportunity to start the new business, buy the subway franchise, do, you know, build the, write the book, become a public speaker, become a circus performer, what, become a meditation guru, I don't know. You can do it, you can do it locally. You don't have to go to Thailand.

You can do it right in the United States. You can do it right in downtown Chicago. Next, if there's a recession, think about what deals you may be able to get that would fit your personal desired goals. Always wanted to buy an RV, too expensive. People start selling RVs in recessions because they got to dump their monthly payment.

You step in, take over their loan even, but solve their problem for them, take their RV off their hands, you've solved their problem, get yourself a nice deal. Always wanted to buy a boat. You can get some really nice deals a couple of years into a recession. Always wanted to go on a cruise.

Well, the time to do it is a couple of years into a recession. Do your buying when people are hurting so that you can get your deals. Do your selling when people are doing well. So plan ahead and free up the cash so that you're in a position to take advantage of the recession.

And then finally, this is the time for you to prepare for investment opportunity. Recessions, depressions, generally create buying opportunities for those who are prepared, for those who have an idea, for those who have money, for those who have a plan, and for those who have the clarity of purpose to move.

Now, that might be buying stocks. You wanna be, maybe you do this in your 401k. You pull your money out and you're sitting there waiting. And that day when all your fellow coworkers, you hear just the listening over the wall of the cubicle, man, I sold, I got out.

That's the day you click buy and you move back in. So maybe it's buying stocks. There are throughout history, many investors who made their mark buying stocks when everything was bad. My favorite is John Templeton. He started in the midst of the Great Depression buying companies that were considered worthless.

So maybe it's stocks. Maybe it's real estate. You can come in during, usually real estate seems to decline a couple of years after a recession starts. People start, they lose their jobs and there's an ongoing cycle. People lose their jobs and they start getting behind on their mortgage payments.

Then they move in foreclosure. And now you may be able to come in, take over the mortgage, negotiate short sales, negotiate purchases, a whole long world into that. But it's a really great time to get started building your investment portfolio when you come in in the middle of a recession.

The trick is you either gotta have cash or have access to cash. So that's the time to do it. Maybe it's starting and buying a new business or expanding one. You can get great deals on rents because in the middle of the recession, landlord was renting out this storefront space for $2,500 a month, but he drops to $1,500 a month because he cannot stand to have his strip mall vacant.

That just makes everything go down. So you come in and you get a very significant discount on renting his space, or you start a business on the side and all the new tools of your business are super cheap because the competitors are going into bankruptcy. Whatever your investment opportunities are, whatever your investment plans are, plan ahead and try to be prepared to take advantage of them in a recession.

I close out with this. I don't think that you should wait on a recession in order to pursue your plans. If you're ready to go now to invest in real estate and you find a deal that fits your parameters, buy. If you're ready to start a business and you're ready to make that transition now, go.

Make the transition. But if it just so happens that the recession aligns with your personal movements, and if it just so happens that you're ready to buy real estate and then a recession comes along, make it happen. This is the time. Don't miss the opportunity. What does Rahm Emanuel say?

Never let a good crisis go to waste. Never let a good crisis go to waste. This is your chance. I am concerned, significantly concerned, about the potential for recession in the United States in the coming months and years. It will be fascinating to see how it works out. If the recession arrives soon, it's arriving much later than I thought it would.

So I was wrong on my previous predictions. I thought we'd be in recession in 2017. I thought we'd be in recession in 2018. Here we are in 2019, we haven't been in recession. But just because I was wrong in my personal guesses doesn't mean that I was hurt by preparing for recession.

I'm convinced this is the secret to good planning, is be positioned as best you can for different things. Now you can't be positioned for all markets and all opportunities and be optimized for every one of those. If you are stockpiling cash, preparing for a recession, and you're not paying off debt, yes, you are paying more interest.

You are using up time, perhaps. But that cost is probably pretty low compared to the opportunities. So I'm convinced that there's a very decent chance that recession is coming soon, which is why I'm trying to seek to prepare you. But I haven't sat around and waited on, I haven't sat around and waited on recession to move forward, and I don't think you should either.

If you think back to the recommendations I've made, what you'll see is that, ironically, many of these things apply just as much in boom times as in bust times. I'm just trying to leverage the news and the concern, et cetera, to try to get your attention to break through with some plans.

I do think it's worth it to prepare for recession, but the time to prepare for recession is when things are going well. If you're gonna be a contrarian, then you've gotta think differently. So you prepare for recession when everything is going well. And then when everybody else is freaking out, that's the time that you're Mr.

Optimist, going all in on your plans for optimism. And if you can cultivate the psychology and then buttress that psychology with some good, useful, technical planning ideas, et cetera, like hopefully I've given you a handful today, then I think you're positioned well for success. I am grateful that you are here.

I would strongly encourage you, if your personal finances are not robust and prepared for recession, you have time. If you are not well-employed right now, I don't know what you're waiting on. Unemployment at record low levels, this is the time. So get busy. If you've got three months or six months of preparation time or a year, whatever, whatever, I don't know, I'm trying to stay away from prognostications.

If you've got three months, six months, or a year, and you use that effectively, then you'll be positioned to win in the next recession. That's what I want for you. So think carefully. If you've got additional suggestions, contributions, then go ahead and share those with me here. As I close, I would just really encourage you, I have two courses currently on the market.

I've pulled my career and income planning course off the market because it conflicts with something else that I'm doing. But I have two courses available on the market. Both of these courses are ideally suited for preparing for recession. If you have not taken my courses, I ask you to do it.

It is worth your money and worth your time to take my courses. I offer an unconditional money-back guarantee if you don't think it was worth your time and worth your money. I have had almost no returns or requests for a refund on those two courses out of many, many students.

They are good. If you liked any of the ideas in this show, you will like the ideas in those courses. The first one that I'm offering right now is called "How to Borrow Money Safely and Never Pay Interest Using Credit Cards." Most people use credit cards wrong. And they use credit cards as an emergency mechanism instead of properly understanding the system so that they can exploit it to their benefit.

Credit cards can be a wonderful tool for you if you know what you're doing and if you can exercise proper self-control so that you don't wind up spending money on consumption. But if you have a credit card today or you think you might ever have a credit card in the future, I would ask you to please consider taking my course.

I can potentially save you thousands and thousands and thousands of dollars on interest payments if you actually understand how to do the market, how the market works. Give you a very simple example. I did this recently with a consulting client. I have a consulting client, runs a very large business and uses credit cards in his business and generally has a six-figure balance month to month but pays it off month to month.

But he was annoyed, has a perfect payment history, uses six figures of credit every single month, but he's got a credit score, I forget the exact number, but it was, it was 686. He had a 686 credit score, FICO score. It was frustrating. Why do I have a 686 FICO score when I have a perfect credit history, great mix of credit, long, never missed a payment, et cetera.

Why do I have a 686 FICO score? Well, it's because he's got a six-figure balance on a monthly basis with all the money that's going through. Now, he has one simple practice. He uses a credit card and then on the day that the credit card payment comes in, he strokes a check and pays it off.

Sorry, the day the bill comes in, he strokes a check and pays it off. So he pays off his credit card balance every single month. But here's the trick that most people don't recognize. The balance that's reported to the credit reporting agencies, which is the data that's used to make your credit score, is the balance that you have on the date, the closing date of your statement.

So if you've got $100,000 balance on your credit cards and that balance is, and then they close the statement, then they send you your bill and then you pay it, you're reported as having $100,000 balance to the credit agencies. I made one simple suggestion. I said, very simply, this month, write your $100,000 check on the day before the statement closes.

So he did it. The day before the statement closed, instead of a week later, he just wrote the $100,000 check, paid off the balance, and thus the balance that was reported to the credit agency was zero. That month, after that was filtered through to the credit reporting agencies, his FICO score was 788.

He had over a hundred point increase in his FICO score from one little silly detail, one silly thing. And that helped him immeasurably to do some other refinancing that he was working on, because being able to simply show a 788 FICO score makes a huge difference rather than a 686.

There was no factoring of interest. There was no, he wasn't paying interest. He was paying it off before interest was due. There was no factoring of being in debt. He wasn't in debt. He was simply using the credit cards in his business. But the weeks different of the date of writing a check made a hundred point increase in his FICO score.

Now, that's just the tip of the iceberg of what's available with credit cards. But the key time that you establish a credit card infrastructure that helps you is when you don't need it. When you don't need it at all. When you're well-employed, when there's no recession, et cetera. But the time that that helps you is when you lose your job, when there's a recession, when you're trying to take advantage of opportunity, et cetera.

So consider taking my course, How to Borrow Money Safely and Never Pay Interest Using Credit Cards. If you've already taken that course, I think I'm selling, I can't remember, 40 bucks, 50 bucks, it's cheap. And I offer you unconditional money back refund. If you've already taken that course, take my course, How to Survive and Thrive During the Coming Economic Crisis.

Because everything in that course is applicable to surviving and thriving during a recession. Surviving and thriving during a personal job layoff. Now, I talk about some hardcore scenarios. If you wanna be prepared for the next Great Depression, how to survive and thrive during the coming economic crisis. That'll talk you through it.

If you wanna be prepared for the hyperinflation of the US dollar, I'll walk you through it. That's in that course. I'm not shying away from the tough stuff. But the techniques and tactics to prepare for losing your job in a recession are ironically very similar to the techniques and tactics for preparing for hyperinflation of the US dollar.

So if you haven't taken that course, I ask you to do it, How to Survive and Thrive During the Coming Economic Crisis. You can find both of those courses at radicalpersonalfinance.com/store. radicalpersonalfinance.com/store. Just go to radicalpersonalfinance.com and click on store. Got a lot coming in the coming weeks. I will be releasing the next three shows will be replays.

If you have not heard them, listen to them. If you have heard them and didn't do what I said, consider listening to them and taking action. Because just listening to these next three shows two years ago or three years ago, that won't prepare you. But taking some of the actions will.

Thank you for listening to my show, radicalpersonalfinance.com/store and I'll be back with you very soon. - The LA Kings Holiday Pack is back. The perfect gift for the hockey fan in your life. A three game pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional game for free.

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