Ep. 185 — Is It Time To Prepare for the Next Recession?

like do laundry, unpack I had. I was very proud of myself because we took a cab ride from the airport and it's a long ride, and I was like, let me order. Let me make sure that I order delivery groceries, like get groceries delivered to our doorsteps so that they arrive before, like right the same time that we do. When I got home, had grocery on the doorstep. I had seamless delivered dinner.

they have similar like geography. They were formed by volcanoes, so there's like really beautiful volcanic lakes and hot springs and thermal springs and just vistas on vistas. I mean every place we went it was just another gorgeous scene. And then we went to the capitol Lisbon, and then and then to like a little wine like a little bed and breakfast in the wine valley.

And when I decided, I was just like, and we're doing it.

rate that you earn. And what they found was the ten year bond of the yield on the ten year bond was actually lower than they yield on a two year bond, which you know, realistically doesn't make sense because why would you yield less on a bond where they're holding your money longer. And they said, the last time this happened was in two thousand and five, two years before the recession started to really kick off. And so I don't mean it doesn't mean that a recession is

happening in a year or two. But I mean that was like the headline everywhere, and I just remember reading everywhere. People were like messaging me and texting me like what does this mean?

term anyway? So it's supposed to be a pre recession trigger warning that happened in two thousand and five, but there were a lot of things that happened the last major recession that are not necessarily happening now, Like we're you know, people are not lending folks like literally there were like waitresses who were getting with who are making I don't know, fifteen thousand an hour, who were who are being approved for mortgages for three hundred thousand dollar houses.

That's not happening now. So we're not in the same situation because it wasn't it wasn't just that warning that triggered the last recession. Really the last recession was triggered because the housing bubble burst, and I don't think we're in that same position again. But so regardless of a recession is happening in a year or two or three or four. I mean, no one knows really, but what

are some things that you can do now? So I just wanted to kind of talk about that, like, hmm, not that you can completely resession proof your life, but did we learn anything from the last recession? And what are some things that you should and could be doing to put yourself in a position where if a recession does happen, it's not as detrimental to you as it was during the last resession because the last recession was whoa,

it was a doozy for me. So I'm just curious, like, you know, what did you learn during the last resession? And do you feel not recession proof, but at least recession smarter.

the US for so long. People are just waiting for the other foot to drop, which it'll it will eventually happen, yes, but you're right, I mean, and not to freak people out like if you you know, really do you know, go out there and read, you know, some articles and get educated, because if you really read what economists are saying is it's not going to be on the scale

of the two thousand and eight housing crisis. I mean, there are you know, there are you know, safety measures or safety like regulations in place that have really changed, that have really trained things and made it, you know, made it less likely that will have a recession in the same way. But it could be like a more mild recession than what we saw before, which is normal. And so I guess for me being a millennial who I read an article today that said millennials are having

PTSD from their recession days. With all this talk about the recession, what I remember is because you know, I lost my job. I moved to New York, I got a job, and I lost it like two months later. I had a hard time finding another job. I came in finally took a job that I was wildly underpaid, but I took it anyway, and I it took me probably the next five to seven years to job hop and skip around to the point where I had caught up with where I really should have been salary wise,

and I do attribute that to the recession. How I feel about this pending recession is one because I work in a lot, Like a lot of people, you work for companies. And one of the one of the reasons that people are looking at and pointing to, Okay, recession is coming is that if you if you look at the number of companies and who are publishing their you know, their earnings reports every quarter. They have to talk to shareholders and they have to say what their company outlooks

are like. And a lot of them are being more conservative or speaking more conservatively about the labor market, so like speaking more conservative conservatively about their plans to hire through the end of this year. And because of that, like there's been concern about okay, well, companies are slowing down hiring, like what does that mean for employers? And there's like another sign where more there's been an uptick in the number of companies finally bankruptcy and having layoffs

as a result. And I think if you're someone who works for a you know you work for you know, any employer, whether they're private or public, you are a little you are at risk. You're at the mercy of your company's own success and if they decide to whether it's or they start to tighten up their hiring. They're

hiring plans for the year. If you're someone in the past couple of years who has felt like, woo, I can skip around and pick a knee job I want because the market is so amazing and there's so many jobs, which is how it's been in a lot of industries, even including mine, Like there's been so many jobs that that may slow down, so it may become like less of a I don't know, like an employee's market to like shop around for the perfect job and get negotiate

the crazy high salaries because all these companies are like competing to get the best talent. That may slow down a little bit. Yeah, I would say, like, I don't think you should jump. I mean, I'm personally I'm not a financial advisor or an investment advisor. I personally am not getting out of the market. I'm thirty two years old, I have a few decades ahead of me. If there's a recession in my investments in my four to one

k for example, take a dive a little bit. I'm based on what happened in the last recession, pretty confident that they'll bounce back. In fact, all the investing I did when I was twenty two, twenty three, twenty four in those really lean recession years, Like, that's what I talk about when I say how my money is working for me now that I invested like ten years ago, because it was the bottom of the market and it's

just grown so much. Not leaving the market. But what I will say is, start sharing up your emergency fund, Start shoring up your you know, well, what if the what if I get laid off fund? Just have that money set aside so you have peace of mind because it's not entirely in your control. You know, your company's your company's help.

all that you've got toward your debt. But if you're not, if you don't kind of have like this active debt plan in place, I would and just being a little bit more proactive of like, you know what, I'm actually not going to to finance that chair I really wanted, I might say for it and buy it. So I wouldn't enter into new debt unless it's absolutely necessary. And I definitely would have an automated plan in place where I'm like, Okay, my debt is being paid down, because

the lower your debt can be during the recession the better. Honestly, during the recession too, cash is queen, So I mean that's when things go on sale, quite honestly, like you'll be I know. For me, one of the things I'm keeping an eye out is one thing my husband I want to do is we really would love to buy because he does property management now for the city where we live, and we would really love to buy a

smallish apartment building or complex. And so if a recession does hit and housing prices drop some what or people just thought are not going to have the income or the funds to be able to purchase large pieces of real estate like that, I want to make sure that

we could take advantage of that, you know. So that's something that I'm keeping in mind of not being completely liquid, meaning completely cash, but keeping that in mind, like stocking away money that I can, I can take advantage of a deal more quickly than having not having money as liquid and and as as I guess, as readily available. So I'm balancing what that looks like. I'm also leaning into my financial planner. So I finally hired one Angelie.

We actually have our second meeting with her, I think tomorrow or the day after tomorrow. Right now, we're in like the collection phase of She wanted everything from my husband's benefit employee handbook to I had to link all of our accounts to whatever that back end office is.

So just even leaning into her, and this is one of the one of the homeworks you just emailed me today, and Angeliae, I'm a dealer, Well, is she really wants to understand what our goals are, and like not just my goals and not just his goals, but like our goals individually and collectively, so that way she can really advise us on Okay, based upon this, then you need to be more liquid than maybe I would normally suggest or based upon this Typanally, you really don't have enough

money in your retirement account. So I definitely would lean into professional guidance, more so now than ever, especially if you're worried about you're not being prepared during a recession. So yeah, but I wouldn't freak out. I would go about life as per per usual, but go about life per usual, but be responsible, save a little more, pay down your dad. Think to yourself, if things don't do go on sale, what would I want to purchase that

could really set me up for a while later. And make sure that you are a dope and hiable employee. Is your is your resume tight? Does it look good? Do you have your your your your people who you can out to, who can give you references? Because if your job does downside, are you are you easily able to be hired someplace else because your your resume just looks that good and you've got, like I said, really great references. So those are some things that I would

just suggest. But yeah, they've been talking about recession is coming, session is coming? What session is coming?

place where I put my retirement money. But what I do like about robin Hood is that you can sign up for their email newsletter, which they call robert Hood Snacks, where they kind of break down these big meaty topics into like easily digestible snacks so you can What I love is that you could literally read like a line or two, or you could dive deeper and eat the

whole meal. So I would just suggest that because I enjoyed them, I read them regularly and if I feel like diving deep, I will, And sometimes I'm like, hey, I'm not really that interested, but I tried to. I think you can get them as freaking as daily, but at least I would sign up for some weekly stack robinhood snacks.

And what I mean is like making sure that I don't have a ton of debt, or at least debt that is unmanageable for me, and that I have liquid assets like cash in the bank that I can tap to give myself a cushion. And I'm so excited because I was gonna do it for my boost. But I'll

just say it now. But we finally we took out like last this time or I don't know, like the fall of last year, we took out a zero percent APR credit card to finance some of the like the finishing touches for the house, because it made all of sense in the world. And I thought, oh, I don't want to tie up my cash if I don't have to, and blah blah blah, and I realized I just personally don't have because I think because of what I went through during the recession, I have lost my tolerance for

any debt zero percent or otherwise. And I thought, we finally paid it off this past week, so I am like so freaking excited, like debt is gone, I'm debt free, ugin and life is good once again. And to me, debt free savings in the bank, a mortgage payment that we can comfortably afford if one of us loses our job like those you know, no car payments. We don't have a car payment. That to me makes me feel very secure if the worst were to happen. I mean,

of course, eventually we'd run out of money. We're not like incredibly wealthy people, but we at least will not be immediately like going insane, you know, and feeling really vulnerable and that.

in journalism. We got to make money somehow, y'all. And with them clicks. So the click here the headline, the more money we make. So everyone's scrambling to write about, you know, the next big recession. But I give it a week, it'll quiet down and.

take our questions. I know, We had a really great ques question today and I'm excited about it, so we could dive deep into a question on if you have questions, you can always take us up. We love them, we love them, we love them. Sometimes you send them to us via Instagram and our instagram is Manby will tell you.

I finished up grad school and had federal student loan debt, but it never really occurred to me to use that money to pay off that debt. Cut to now, since graduate school, my student loans with interest have ballooned up to ninety five thousand dollars, although in the last years I've taken on side gigs and I've managed to bring them down to seventy eight thousand dollars. And I'm just now, because of all this interest, just now barely getting close

to putting money toward the principal loan balance. I'm knocking down the student loans slowly, but it's really frustrating to see that interest hurt is hurting the speed of my progress. Right now, my loans have interest rates of six and a half to seven and a half percent, so I'm paying almost five hundred dollars a month on interest. But for all the last few years, I've had this settlement money that I've left in my checking account without knowing what to do with it, and I've been missing out

on gaining any interest. Recently, I did learn about money market accounts and moved it into an account that earns two percent epy. I don't have any investment accounts, and I only recently started to be more aggressive with my four one K. So her question is should I pay out my student loans in one lump sum and move on with the settlement money or slowly pay them slowly pay them out over the next few years and invest

some of the settlement money somehow. Is this I can keep going and is the next step of financial advisor? Or should I wait until my loans are paid off? Thank you for your help, good amazing, lovely question.

and you can do that. You want to make sure though you're consolidating them via direct consolidation loan like this is something that the federal government will work with you to do because you don't want to refinance them out

of federal student loan status. So their company is like so Fi, which is a great company, but they would make your if you refinance it with like a Sofi, it would then be a private student loan, and then you lose some of the protection that you get under federal student loans, which is like deferment for barans, even forgiveness. Even you're able to well. One, it takes much longer

to default on a federal student loan than a private loan. Two, if you're sick, you've lost your job, there are things that are in place to protect you against protect you if you're not able to afford your student loans. So I would see if I can get my interest rate consolidate my student loans to get my interest rate to the lower the lower federal loan interest rate that that

you're being offered. So I would start there to see if one can you lower your monthly interest rate payment of five hundred dollars even into like you know, four or three by consolidating. So that's what I would do, first things first, And I wouldn't put the lump sum toward. It's so tempting to do that because me and Mandy are so debt adverse. So you know, my hand is itching to be like stut that student loan down with

all that money. But quite honestly, it's just not the wise choice because one, your interest rates are pretty loan as far as federal student loans go. I mean, I know people who have interest rates nine percent or more. But then you can earn that meaning that it would behoove you to put that money to work. I know you don't know how, but you can certainly hire someone

to help. It would behoove you to put that money to work because you're likely going to earn more having that money be earning money because it's invested than the six percent or seven percent that that your student loan is losing you, so you're likely to earn. I mean, I think I can't remember what my last earning work. I was just looking at my retirement account. I think it was like up twelve percent, and I think even the market is up twelve percent. I have to look.

But meaning that if I earn twelve percent but my student loan is costing me six percent, I'm still up six because I'm up six but the student loan brought me down six But still you know, there is a six percent difference, so I'm still earning. Like if your student loans were like like a credit card and it's like thirty percent, then I'm like focused on paying off that credit card because it's what you owe to. The

credit card is super expensive. Right now, your student loans are not super expensive, and you can certainly out earn them with the interest from putting money aside for a retirement or growing wealth. So that's just like the second thing that I probably would. I don't know if she has it doesn't sound like she kind of has a debt. Well, does that sound like you have like a debt paid

on plan in place, so I would continue that. I think one of the things the mistakes that we make, because I know I've made this mistake, is that I make debt free the focus versus learning and earning, and if you learn and earn, it kind of leads to debt free. So, like I just paid off my student loan debt, I owed fifty thousand or fifty two thousand, something like that, and I remember at one point I was aggressively paying it down more so than investing in

my business, the Budgetista, and investing in learning. And so when I finally said, okay, enough, Tiffany, you are focusing so much energy on getting debt free, but you're not growing wealth in any sort of way. So instead I made my regular payments to my student loan debt, acknowledge that they probably weren't going to go away anytime soon,

put the energy toward learning and earning. And then at a point it took probably about five years when I finally made that decision that I was able to actually pay off my student loan debt in one lump sum because I had earned so much the budget Nista that I had more than enough in savings to be able to do so, and so that's what I want. Would like for the focus to be the focus to me. I know, the focus was should I pay off my

student loan debt? To me, the focus should be what should I do with this tremendous amount of money that I have, which I'm proud of you for still having. You know, what should I do with this tremendous amount of money? How do I grow this money? Because you can outpace with the student loan that is creeping up to like, how do I grow this money to a space and a place where I can effectively handle this student loan debt and still have money left over? Is

the goal? How do you eventually pay down debt and still have money left over that continues to grow.

even start investing with. But at the same time, I agree, and I also like, in my mind and this is my personal mandy as a person with and I told you earlier, I've you know, I've got I'm a verse to debt emotionally, I have a hard time sleeping at night if I have it. And you'll have to sort of ask yourself to like, what what makes the most financial sense and then what can what really helps me sleep at night? And for me with her interest rates, so six and a half percent, seven a half percent.

Typically when people talk about, you know, expected returns you could get if you invested in the market, it's it's based on historical returns. And you hear you see the number seven or eight percent thrown around as like a conservative estimate of how much you could stand to gain

if you invested in the market. Yes, in the past few years, like especially you know, and I agree with my investments, I have been earning like double digits, you know, twice that much even you know, sometimes fifteen, sixteen, seventeen percent annually. But that can change, and you can't always guarantee that you will earn you know, double digit interest rates.

And we're sitting here just a minute ago talking about the recession and it could be in the next year that the market and especially the last this past few weeks, it seems like the market has really been on a downturn. And I, you know, I haven't I don't check my four one K every day, but I guarantee you, because I'm like ninety percent in the market, that my investments

have gone down in the last few weeks. So I like, I only I'm like a little bit I feel more cautious when it comes to saying, well, if you you know, invest in the market, you'll definitely earn more than you would like you would earn more in the market than you would, say, by paying down your student loan debt, because the rate six and a half seven and a half percent is so close to what I typically hear as like a you know, an average or typical expected

return in your investment. So for me, they're kind of like, I'm like, I don't know, I mean, it's net net around the same. But another thing that I'm thinking is like with student loans, you know, with federal student loans, you do have protections in place if you were to fall on hard times, if you continued making your payments with your side gig. You've already managed to pay off twenty thousand dollars in the last few years by having

side gigs, which is really freaking impressive, it is. And you resisted the temptation to blow your settlement to do that, and I commend you for that. You've already proven that you can aggressively paid on these loans. You've got seventy eight K left. If you keep at this pace and you're able to pay off twenty k per year for the next four years, you could eliminate it on your own, far ahead of what the standard you know, the you know, the standard repayment plan or you know expectation is for

paying off your student loan debt. And if you were able to stay as disciplined as you are aggressively paid on your debt, I think there is a case to be made for investing some of your settlement money. I just don't want to, like, I just don't want I definitely wouldn't feel comfortable like promising that you would earn like more than that seven percent, then you would if you then you would be paying on your student loans. Like I'm I just can't. I just don't have a

crystal ball. I can't like really predict that much. But it's not a bad it's certainly not a bad problem to have. I encourage you. I mean, you've got your money that you finally put at least in something. You set a money market account earning two percent. Okay, that's better than nothing.

sense for the money. So they won't hopefully they won't tell you to put all one hundred and twenty nine k all in the market. They might say, Okay, what do you need to live on for six months? We'll set that aside in a regular savings account, which, by the way, you can definitely earn two percent or close to it at a you know, it's high yield savings account, and that's going to be your emergency fund. Okay, then

we'll take the next chunk. Maybe we'll open up the five year CD or a three year CD, and then we'll take another chunk and we're going to invest that. And you're in a in an IRA.

extremes rarely are are the way to go. So balance and diversity is the way to go. Because Mandy's right, if you have that, that's These are exactly the questions that Angelie, my financial advisor, asked one what are your goals? And based upon what are your goals are? What your goals are? Then She took a temperature of where do you currently stand, how much do you have set aside for emergency? How much is in your retirement account? You know, how much do you have for insurance? All these kind

of things, and then allocating I'm in a similar place. Well, I mean, I don't have debt, but I've got like a chunk of money kind of just sitting in a savings account. And so now we haven't even moved it. It's just what are your goals? Where do you currently stand? And now let's kind of put these things into into

into different buckets. I just don't want Yeah, I just I know, any financial advisor worth your salt is not going to tell you one this lump sum should go here, and this huge lump sum should go or this huge lump sum should go here. They're gonna say and and and in and you know what I mean. So, but honestly, like, what's the what's the listener's name? Mara Mayra is killing it? First of all, the fact you still have like this money basically, and that you've paid down twenty thousand, I mean,

you are ahead of the game, Mara. So I don't want you to think like, oh man, I'm doing something wrong. You're you're more right than most people will ever get a chance to be. And so now I mean, and you're moving costlessly and I totally get that. So yeah, I mean, I'm I'm glad you reached out to us, but now it's time to sit down with someone who can intimately get to know your your financial and personal life as to really see your finances and help you make the best choices exactly.

you see this Instagram hoax going around? People are like sharing this some this like Instagram post today about how they have this new rule being released that says they can take advantage because they can use all your photos and publish them and your d ms and stuff like that. It's a hoax.

keep it where it is? I have no idea. Thank you so much.

it over to a new account. Go ahead and open up, you know, a brokerage accountant like Vanguard or Tralish FOB or something, and roll that puppy over and leave it. You really don't want to take it out. One, if you're under fifty, I'm gonna guess you're younger than fifty nine and a half years old. And if you are, if you withdraw that four one K money before that, before that fifty nine and a half year mark, you can get hit with early withdrawal penalties and you have

to pay taxes on that money right away. Yeah, so don't do it. And you know, if you're becoming a stay at home mom, you're giving up your income, so you need you need that money to work for you and continue working for you, which it can only do if you leave it invested in the market. So that's my two cents.

The recession hit, I had about thirty thousand dollars or maybe more and in my retirement account and I withdrew it. So you get that hit hit with that ten percent penalty plus taxes. So I lost like.

I hear like I feel like the new entrepreneurs. The thing is that people will tell you like, take the money out of your phone. I've heard people say take the money out of your four and one K and invest in your your your startup or your business. And doesn't work out for some people. Absolutely? Does it work out for most people? Absolutely not so to me, unless it's like we don't know what we're gonna eat or we don't know where we're gonna sleep. Then I tell people,

leave your leave your borrow one k alone. It's your younger self's job to look after your older self, Like you have the capability to earn money now in a way that you're not able when you are elderly, So don't I don't put the onus on your elderly self to have to work the way you can now. So do what you can now to avoid taking from your old self.

to check out. Thank you guys for your questions. Again, we're brand Ambision Podcasts on Instagram or we are Brandabisson Podcasts at gmail dot com. I gotta say I love those Instagram questions because people get tired after they type all they text a lot, you know, so they're shorter. So funny, but uh, just just an observation. But anyway, you guys want to ask us questions, go for it.

gonna look better once I got home. I didn't try it on the store. Now I'm stuck with it, like those clothes that are brand new that just end up in your the bottom of a box. So I found them and I listed them on Poshmark, and I just forgot about it. And in the past like month or so, I've sold like three dresses, a couple of old tops, like and I made over one hundred dollars just from selling this old junk on well not junk. It's nice stuff, very nice stuff.

And I guess anyone who's liked your like that item originally, they'll send them an alert like, oh, you know, Mandy's reduced the price of her whatever by ten dollars. And that's how I sold, like, you know, a couple of things this week, just by knocking the price down a little bit. So not a bad way to make a little bit of extra money. I have to stop thinking about how much I lost, because definitely I'm selling them for less than I paid for them, way less than

I paid for them. But whatever, better to get them out of my house and in someone else's hands, in a little bit of money in my pocket versus have them just collect dust in a box.

and the Buganisa addresses more professionally. But so I had some great stuff that I just don't wear anymore as a bunchanisa because maybe I've worn it on TV already or maybe like I have a headshot in it, and you really just can't wear it over and over and over what apparently she was postmarking. I was like, oh cute. Oh so you've just been coming in here cleaning out my closet. Yeah, She's like, I mean.

do I'm the only one who doesn't. I'm like one more things I played don't want it, So yeah, you.

in the mail, I typically tell people not to. I mean, like big brands, that's one thing, but like sometimes smaller brands will send me oh oh typical I want to send you something, and I usually I'm like, honestly, I just don't have the energy for social media like I used to, so I know that the intention is I'm gonna send you this shirt and you're gonna wear it and then you're gonna instagram it and this and that, and I just don't want to not because your shirt

is not dope. I sometimes like, if it's dope, I'm probably just gonna wear it. So that's happened a couple of times where somehow someone has gotten my and it's what's so crazy is manny that I typically don't even I don't even give out my address. So sometimes people will find my work address, my business address and will send me something, which, like I said, it's always really nice. Creepy, no, but it is nice because I get it, Like you know,

it's always with some really nice message. Typically they'll say something like I took your liver with your challenge or I'm inside the academy and it helped me, so this is my gift to you, and I'm like, okay. But then in it at the bottom it says when you wear it, please tag me at I'm.

quote unquote influencer, you know. So that's one that's just a little just a little break of if you're going to send something, you know, unless I request it. And typically, honestly, what I just do is like I pay for it.

I will pay you know, the fifty dollars for the shirt, you know, versus like you asking me, and then in if I wear them, I remember I tag you and that's an extra bonus versus like you asking me to give you something that I charge you know, people for for free basically for the price of the T shirt. It's like when people want to pick your brain for a cup of coffee. I'm like, I've got coffee money.

could be a lot. So yeah, there's a sense of entitlement that sometimes I don't think people realize that they're displaying. That can be a little bit stressful, and that makes you just say I'll just buy the things I want. I don't need to just send me anything, thank you, but a boost. I actually want to boost Pottery Barn. I know it seems random, but.

I'm gonna do this. So I called Pottery Barn just to get the return flip and they were like, no, that not only do you like put it back in the box and leave it on the on the front porch and we'll pick it up. What When they started doing that, I was so impressed because I thought wow, So I ended up ordering the chair that I really went like, I went to Pottery Barn in person today to see, like what chair that I really wanted, And

so I ended up ordering that. But just I had never I mean as much furniture as I bought, I'd never had a company offer to come pick it up for me. I just yeah, I just thought that level of customer service was just amazing. And so because they already pottery barn, the way they do it is they

will bring it to any floor in the house. So I've had Tom bring things to the third floor, which I'm like, sorry, here's some water and a tip, and they will set it up for you, like open up the box, put the feed on whatever, set it up

and all of that for you. Honestly, their level of customer service is improgressive and the fact that they're going to pick it up for me, so I just wanted to do a little boost on that level of customer service of like, Wow, I would definitely order from them again because they made it so easy to receive and they make it really easy to get back all of it.