Everyone has been throwing around their favorite R-word lately, recession. No one likes to talk about them, but recessions are inevitable. Many analysts are saying that we are about due for one as well. After all, we can’t have the kind of growth we’ve been experiencing forever, that would be too good to be true! How do you prepare for the 2020 recession? I’m glad you asked, here are some tips:
Pay off Your Debts
This one should be a no brainer. If you are expecting the market to take a turn for the worst, then paying off your debts should be priority number one. You don’t want to have that car payment looming over your head when times are tough, so just pay it off. It is probably in your best interest to work towards paying off any car loans, credit cards, and any other form of unsecured debt. Don’t go paying off your house yet, until you take a look at tip #2.
Refinance Your Mortgage
Right now we are experiencing some of the lowest interest rates we have ever seen. This makes now a perfect time to refinance your mortgage. Refinancing your mortgage is the perfect time for you to get a lower rate and possibly extend your term. If you expect that your head may be on the chopping block, when it is time to lay people off, you may want to consider paying off your mortgage entirely, if feasible. This will guarantee a roof over your head, should hard times fall on you and your family!
If you have been investing heavily in these past few years of turbulent growth, there is a good chance that the majority of your money is tied up in the stock market right now. If there is a chance that you may have to cash out some of your investments when the recession comes, it may be a good idea to move some of your investments from higher risk assets to lower risk assets, such as bills and bonds. This will lower the overall volatility of your portfolio, and ensure that you still have some cash left over, should the market decide to go belly up.
Diversify Your Income Streams
If you are preparing for a recession, it may be a good idea to get another income stream up and running. When it comes to your income, you don’t want to have all of your eggs in one basket. Picking up a side hustle is a great way to do something that you love, and make money while doing it! The more income streams you have, the lower your overall risk level will be when it comes time for the recession!
A recession is coming. It may not be next year, or the year after, but recessions are inevitable. You should always be keeping an eye out for your best interests, and hedging your bets for when a recession finally hits. The harder you work to recession proof yourself now for the 2020 recession, the more comfortable you will be when it hits!