Recession Proofing Your Finances #055

We think she's she's pretty smart, she's pretty sharp, she's pretty with it, and get her on that potty train. Band wife, Yes, exactly. Well, she's got two older sisters, and we thought with her seeing it all the time,

she'd be ready for it. And I was really excited about being able to cut diapers from the budget because we spent around fifty bucks every month on diaper and Kate and I talked about it and we decided that if we were going to cut diapers, that we would keep that amount of money in the budget and then just be able to eat a little bit nicer. So we're not actually increasing our food budget, but we would be able to get say, nicer cheeses, nicer meets the

sharkutie to get to eat the diaper money. Yeah, exactly, but man, we totally failed. We we came back at the beginning of the year, beginning of January, and we're hoping that, yeah, we'd be able to kick it off. But that's not on you. That's on Dotti. Okay, that's her fault, and I will talk to her about it. She needs upper game. In all fairness though she's only twenty four months, and with the other girls, we waited until I think like twenty six and maybe twenty eight months,

but we just we just thought we were ready. We thought she could handle it. And really we're most excited about being able to cut diapers from the budget. So who knows, man, it might be a few more months now that we're gonna rock those diapers and no nice cheese. Is any parents out there listening, They totally know or remember the potty training stage, And it's different for every kid. Like I swear, our first outer Selma like overnight, she

like one accident maybe, but no overnight accidents. It was amazing. And then our second daughter still did pretty well, but it was completely different. It took a lot longer than we thought, and we had to keep wearing the pull ups at night. And so it's different for every kid, and some kids don't get it till later, and some kids, well boys as well, Like yeah, with boys it takes much longer. So typically, I mean a lot of times, I think boys are around three years old before they

even consider potty training. But yeah, like it said, it's different for all kids. So you're just hoping that Dottie was like a bathroom Mozart, like a proud of basically, yeah, we we were even ambitious enough to say, do we even need to pull up the little toy potty, you know, like the little kid one, because she would climb up onto the stool and hop up on the on the toyle that like the big girls do. Nope, Yeah, huge fail.

Are speaking of goals, So we're you're well into January at this point, but I think it's okay for people still to set a goal to kind of improve in a way in one way or another. And I think sometimes maybe at this point, maybe you're two and a half weeks in and you've already failed at a goal or two like Dottie did. Right, Dottie completely failed. I just fell flat on her face. Yeah, so maybe you

haven't met your goal. I think, like we talked about in the Creating a Money roadmap, sometimes it's those little things. It's it's not necessarily the end goal that is the good goal to have. It's it's the little incremental things that you can do along the way. They're going to help you achieve that bigger goal. And one thing I wanted to mention that's been kind of helpful to me recently is when I really need to buckle down and get some work done is putting my phone in airplane mode.

And just like I mentioned a long time ago that it's been helpful for me to put my phone in gray scale mode because I just want to look at it less. It just makes me less interested in looking at Instagram or Facebook. In the same way, get if I really want to buffle down at work, it makes it look like a kindle. Yeah, exactly, tell you that I got my kindle by all right? Anyway, sorry to interrupt.

So yeah, I mean, I think for anybody that really wants to buffle down and get something done and they feel like their phone is constantly distracting them, you know, set an hour or two hours or even just thirty minutes in a row of having your phone on airplane mode, you'll just kind of forget that it's even there, and you'll you'll actually get more done because we don't realize how how often we're interrupted by our phone, by a text message, by notification, by an alert, and so just

kind of putting it completely out of sight, out of mind is like a great way to kind of boost your productivity. Yeah, man, I totally agree. You know, and the past few months, I've actually had my phone on when it's on silent mode that it doesn't vibrate, so it's basically completely silent. Which the reason I did that was because I would have my phone sitting on my desk, and you know, you get all the spam calls and you can recognize them because their area codes that you

don't recognize. But I still would reach over towards it to silence. It would hit the little button to make it stop vibrating because I don't want to burn my battery. But just the fact of reaching towards my phone, I would kind of pick it up and then hop over to an app and it would Yeah, it was another distraction. It's a total attention breaker. Yeah, but that being said, it doesn't break my attention nearly as much if it just kind of pops up if I see the notification,

because I won't reach for it. For for me, it was the physical act of reaching towards it is what threw me off. But I can kind of dart my eyes over and see that it's just an unknown caller or a number I don't recognize and keep moving on with life. But yeah, with you, man, if I need to really buckle down, flipping it over to airplane mode is is truly the only way just to to get quality,

deep work done, which is which is key. Yeah, And sometimes honestly, doing something like that actually means you might have fewer hours of work that you actually have to put in because if you're more productive while you're working with your phone and airplane mode, you might not have to work as many hours in the day because the hours you're working are so much more productive. Now you

don't have that restart time. They say that anytime you have a break in your concentration like that, sometimes they can take up to fifteen minutes. They kind of get your train of thought back completely where you're back in the groove. And man, I completely agree with that, sweet Matt, So let's tell everybody the beer we're drinking in today's episode. Today's beer was sent to us by a listener, Philip,

from Chico, California, which is where Sierra Nevada's base. So I don't think he works there, but he lives there, and I love that he sent us this beer. In particular,

Maths Homer. Yeah, this beer is called Resilience, Butte County Proud I p A. And if you're not aware, there have been a lot of wildfires in California, UH, and a lot of the employees of the brewery Sierra Nevada, which is one of the biggest craft breweries in the nation right were affected, were displaced by the wildfires surrounding

their brewery and surrounding where their employees live. And so Sierra Nevada decided to brew this beer Resilience UH and donate all the proceeds to a fund that helps those that were impacted by by the fire. And the really cool thing, Matt, my favorite part about this story of this beer is that other breweries, hundreds of other breweries around the country have banded around Sierra Nevada to brew this same recipe at their breweries and they're selling it

and doing the same exact thing, So totally awesome. I went to a brewery recently and they had their own version of Resilience. It's the same exact recipe because Sierra about to put the recipe out there for everyone to use, and they say so, they're calling it Resilience and and they're saying that all the proceeds are going to to the same campfire fund helping people that were impacted by the by the fires in California. Yeah. Man, I love that.

And even if you don't love craft beer, right you and admire the community and the support that is rallying together in order to help change people's lives that were affected by those fires. I love that. Yeah, such a cool way to use the beer. And I already love the packaging. It kind of reflects the beauty of that part of the world. And also just like those roots kind of coming out of the name Resilience on the can reminds you of that community, grassroots effort, the roots

run deep. I love it. It's got the Yosemite look, which is basically my favorite place on Earth. So I already love it. But let's go ahead and taste it. Man, cheers, Man, dude, that's awesome. And before we mentioned our one word, I wanted to share why we have a beer every week, which is craft beer is something that you and I love, obviously, and so we have a beer while we talk about money, and it's just one of the things that we care about, and it's one of the things that we're not depriving

our life of. It is something that we value and because that we spend money, right, Like we we're not looking to cut back in every single aspect of life, but we try to be intentional with our money. Craft beer is one of the ways that we are intentional and do spend money. So just keep that in mind when you're seeking to kind of get your financial life and order right. It's okay to spend money, just make sure you're spending money on the things that matter to you, alright. Also,

what's your one word to describe this beer? Alright? My word is gonna involve the use of a hyphen So I'm going old school. I don't even know if that's hyphenated, but I'm going for it. That's not only way to get both those words. You just say Yeah, you just wanted it to be hyphen it is so you can get two words and cheater. Alright, Matt, what word would

you use to describe this week's beery? Man, My word is multi, So a little bit later on the show, we'll get into why we use those words to describe this beer, but for now, let's get to the subject

at hand, Matt, recession proofing your finances. And we really wanted to tackle this topic, Matt, because there are so many people doom and gloom naysayers that saying that the economy is gonna crash any moment, And truly, the economy has been doing really well for the past pretty much decade, right, And I think it's really important for our listeners to know that that we shouldn't be paying super close attention to these predictions of a recession, but it is good

to be prepared right for whatever might occur, And in particular, preparing for a recession is really more than anything being prepared for short term bumps in the road. And so that's kind of what we're going to cover in this episode. Yeah, there can be two extremes when it comes to our outlook towards the coming years of our economy. Right, you can either be overly positive and optimistic due to near sightedness, thinking that our current situation will continue on like it

has forever, which is like human nature, which is human nature. Yeah, so you might think you will continue to get those raises at work, you might get great returns to the stock market, might think that gas prices are going to continue to go down because that's what's happening right now. Or he might be overly negative in thinking that the market is going to crash. You know, just like you said, you like the naysayers. We think that it might just be too good to be true. And either way, we

can't control our economy. We can't control the markets, but what we can control our our personal finances. This reminds me too of Stephen Covey. He's got that that classic books, Seven Habits of Highly Effective People, and he talks about how you have your circle of concern. Right, there's a lot of things that impact you and that you are interested in and that concern you. However, within that circle of concern, there's a smaller circle, which is your circle

of influence. And the idea is to focus on the things that you can control. Focus on the things that you have influence over, and that's personal finance. Right, Like you can read all the news reports, you can follow the stocks and the charts all you want, but that's not going to change what the market actually does. What

you can change, though, are your own personal finances. And before we get into the nuts and bolts of how you can prepare your personal and your families finances for a potential recession, I did want to just quickly address to like a mental mindset shift that needs to take place for a lot of people. If you're somebody that logs onto CNBC every day or has the news on and here's people crying about potential recession and predicting the

all the potential bad things that can happen. That can be a recipe for you making moves that are not in the best interest of your long term financial future. So be careful about the news that you're consuming and people that you're listening to, because if you adopt more of a long term strategy towards your personal finances, those day to day naysayers, it really they have a lot less impact on what you actually do with your money.

And so after the break, we're gonna talk about some specific things that you can do to recession proof your finances. And again, these are things that you can do proactively versus reacting to the news and the market. So there are a lot of important things you need to consider when your recession proofing your finances, and the first one is to build a strong emergency fund. If you feel like a recession might impact you in a meaningful way,

it's really important to squirrel away more cash. When the economy is roaring, an emergency fund is still meaningful, right, We've talked about that before the show, but it's even more meaningful when we're talking about a potential recession because in the event of job loss or decreased pay or fewer hours that you're able to work for your incurrent employer because of a recession, it's important to have kind of more money, uh scrolled away in your bank account

so that you can be prepared. So how much we're talking about here, we're talking about like a hundred bucks bucks that won't get you very far usually, and so typically the sort of initial emergency fund that you want to put together is like a thousand bucks, right, A thousand dollars will get you far, but ideally we're talking three to six months, maybe even a little bit more if you like to have a little more margin, a little more of a buffer, and when it comes to

your finances, but at least three to six months of expenses is what you want to have when it comes to setting aside money for a strong emergency fund. Yeah, for a lot of years, cash has been considered like a terrible investment, and rightly so, it's not an investment at all, right, right, and for rightly so right for that reason, and because returns on cash have been really low, right the low interest rates paid out on cash accounts.

But in the current state of things, interest rates are rising on the savings accounts, and so it's not actually a terrible place to put your money right now. Um. So, at the same time that it's not a terrible place to store your money, it's also more important to put your money there because of a potential recession and because of the impact that could have on you and your family. And we did an entire episode dedicated towards setting aside

money for an emergency fund. And again, that might mean investing less and saving more in the short term, and that is okay, But but look that one up. That's episode number twenty one where we talk about everything you need to know about an emergency fund. Yeah, and speaking of investing less that it might make sense to potentially back off your IRA contributions or your four oh one

K contributions through an employer. Let's say you're investing tend to twelve percent of your pay in a four oh one K, you're backing that automatic deduction off to like six percent or wherever it is, you know, just making sure you of course get the company match through your employer if priority exactly, and then after that making sure that you're not investing any more than that until you feel like your emergency fund is where you want it

to be, excellent man. And the next you want to attack high interest rate debt and don't take out more debt. And so this makes sense from a number standpoint, right, from a number is an interest rate standpoint, you want to attack the loans that you have to have the highest interest rate. If a recession hits, it's so important to tackle that high interest rate debt. That's the most important.

Let's say you've got five thousand dollars in student loan debt at a three percent rate and ten thousand dollars of credit card debt at a nineteen percent interest rate. I think it makes right, which could be I think it makes a lot more sense for people to try to tackle that credit card debt because a three percent interest rate isn't gonna kill you, but nine interest rate is. Ultimately it's gonna crush you because it's really hard to

gain an advantage. I would recommend putting every extra dollar that you have towards a really high interest rate debt like that before attacking anything with a super low interest rate. Yeah, you definitely need to be smart about it. Yeah, and you also mentioned not taking out more debt. I think a lot of people think that taking out a home equity loan or refinancing your house that now is a good time to do that. And if you're actually gonna lower your rate and get better terms, it might still

make sense for you. But you don't want to take on more debt, and so doing a cash out refinance on your personal home in order to have some extra cash to pad your lifestyle, well, that ultimately is going to bite you in the end. Usually you're refinancing into longer term debt at a higher rate and with a higher principal balance, So you definitely want to stay away from taking out more debt when we're talking about recession

proofing your finances. And the next make yourself an invaluable employee at wherever you work, right, and then just make hay while the sun shines. Like you're not guaranteed to keep that job. You don't know how long that's gonna last. Right, And so now is just not the time to slock off focus on your career, especially if you start to see signs of a potential recession potential bearer market coming up.

You don't want to slack off at work, right, Like, this is the time to maybe leads initiatives and do something where you're even stepping beyond the role that you currently have to take on more responsibility and hopefully that will just cement your position in your place at your employer. Yeah, you never want to be the person that says, that's not my job description or that's not really what I do, and taking any opportunity to make yourself invaluable to make

your employer realize that they need you. You want to be the least expendable person there. That's that's your goal and I think that's a really important thing to to think about in the line of a potential recession. Probably wouldn't hurt Ntill like SHOWU with doughnuts either, right, you know, like if Joel's always showing up with donuts but Matt never brings the donuts and they both do equal amounts of work, well we know who's on the chopping. Matt

might get axed again. On the topic of employment, Matt, if you can create an additional stream of income by putting together a side hustle, that you might even be able to convert it into a full fledged business in the event of a job loss. I think having some sort of side hustle, side income, multiple streams of income. You know, we talk about real estate on the show, and that's been helpful. If you could rent out a

room in your house on Airbnb, whatever it is. A side hustle and multiple streams of income, those are great things to to think about, really, And we've got a whole episode dedicated to side hustles. That's episode number thirty five.

You can check out creating a Dope side Hustle, which is kind of funny, right, Like the reason we titled it that is because not all hustles are created equally, and we wanted to shine a light on that, because there are some side hustles that are kind of dead end, right, and then there's some side hustles that could lead, like you said, Joel, to an actual business. And dude, this is exactly what Kate and I did ten years ago,

back when the Great Recession hit. And you know, two thousand and eight, we started our photography business in the midst of a recession, which is crazy, right, but that's the whole reason we went that direction. The company I was working for is a small advertising agency. We weren't doing so great at the time. We were losing some clients that we you know, we lost a couple of big ones, and I kind of saw the writing on the wall. I didn't necessarily think I was gonna get fired,

but I also knew it wasn't my calling. I wasn't having a great time in my position there, and so finding an outlet where I can make money and find all the things that you're looking for in a job

on the side was incredibly valuable for us. I was able to keep those both going for gosh, maybe about six months, where I kind of had this side hustle going on, but after that we went full on, went full time and I've been doing photography full time for over ten years now, which is honestly crazy to even say allowed that I haven't had a real job and ten years, but man, I wouldn't have traded it for

almost anything. That's awesome, man. And And also on the work note, it's important to have your resume ready and to you know, reach out to the people in your network if job loss is a real potential for you. So if you haven't touched your resume in years, it's it would be good to spend a few evenings kind

of getting up to speed. And also, you know, you don't have to obviously ask people for a job, but just connecting with people in the business that work at other companies, set up a coffee date, whatever it is, staying in touch with people that you've worked with and that do similar jobs to you that could be helpful to you in a potential, you know, economic downturn. Keep those relationships alive and invest in them right now while

things are good. Yeah, definitely doesn't hurt. The next thing you want to consider is to not make big, expensive plans you might be thinking about taking a sweet European vacation that you've been saving up for. Well, it may not be the best time, especially if you're not in a strong position. It comes to say, like your emergency fund. You want to make sure you are set up and your finances are in a healthy place. But yeah, I think twice when it comes to making some big purchases

or making big expensive plans. Yeah, especially purchases that have a lot of recurring expenses, right, Matt and we we talked about that in the Everything Costs More Than You Think episode, that that everything that you buy comes with secondary costs. And if you're buying something that I think I can afford this it works into my lifestyle, Well, make sure that you've really factored in those secondary costs, because that can come back to bite you if you

haven't planned well. And I agree that making expensive plans for the future is just a bad move in line of a potential recession. If you're booking a vacation that feels like it's at the top of your budget, well, you know, maybe consider doing something way cheaper this year and saving more money so that you can do it without any guilt or remorse. Next year and you can actually afford it. I think it's just really important, more than anything, to not count your chickens before they hatch.

But what if you like guilty vacations, Joel and unhatched chickens. That's not a good idea, man, it sounds like an omelet. And then finally, to consider your credit score. Work on boosting your credit score. You want to make sure you have as healthy of a score as possible when it comes to a downturn in the market, because guess what, man, this is something I learned firsthand, which is that when there is a huge downturn in the market, lending standards

get really, really strict. And if we didn't have a high credit score. When we were trying to apply for a mortgage for our first home because we were self employed, right, it's about the same business I mentioned from ten years ago. We'd only been in business for one year and when we had saved up enough money to put down for a down payment on our first house. But banks like to see multiple years of business tax returns, and because we only had one year, it's severely limited our options

when it came to a mortgage. And dude, if we didn't have a decent credit score, we wouldn't have been able to qualify at all for a mortgage, and we would have missed out on that suite eight thousand dollars from the government. Remember that, Do I remember that? Because you got that too? Of course, Yeah, that that was Who knows that that that will probably never happen again

in the history of our country. That was just kind of a crazy tax credit eight thousand dollars for buying a house that you didn't never have to pay back, and there was one before that, right that you did have to pay I think all those folks felt a little short changed, right understandably, so I would have been

so pissed. Yeah, So, so I think it's really important yet to work towards the increasing your credit score, because as lending standards tighten, you want to make sure that if you do decide to buy a house, or do for some reason need financing on a car, we would tell you not to do that. That's not a great idea to finance a vehicle. But if you do find yourself needing financing, it's really important to make sure that you have a tip top credit score because banks are

just gonna be in general more nervous to lend money. Yeah, it makes me think of you know, back in two thousand eight, where where were you sort of financially or just kind of in your life at the very bottom of the market. Well, I was completely just getting started really in the work world. You know, I've been looking for a couple of years, still very very low income, but I was at least a high saver. I'd saved

a lot, and so saving been my priority. Investing was a little bit of my porty, but saving was my main priority because I wanted to buy a house, and in the downturn, I was able to to take advantage with a stockpile of cash to buy a house and then increase my savings rate even more and trying to

buy another one two years later. So yeah, if you want to be able to take advantage of potential opportunities to in a recession, because there are opportunities for people to make a move, to make an investment at a discount that they don't come around all the time. So I think it's important to be prepared financially to to take advantage of anything that comes along. And if you don't have that cash and you don't have that high

credit score. Chances are you're you're not gonna able to take advantage of something that of an opportunity that you might even see you right in front of you. That's right, man. We're gonna talk more about that specific thing, right, taking advantage of opportunities in the market, and we're going to talk specifically about investing in light of a potential recession right after the break. All right, So let's talk now specifically about investing things that you want to consider and

the steps you want to take. How about you kick it off, all right, Matt. Yeah. The first thing is to consider your asset allocation. And so we've talked about retirement investing before. Yeah, And Matt and I are firm believers that if you're in the wealth building stage that we think it's important to continue investing mostly in a stock type portfolio. And we've talked more about that in episodes past, and I'm sure we'll talk more about investing

in future episodes. But in particular, there's a Vanguard quiz that can kind of help you understand your risk tolerance, and so we'll put a link to that in the show notes. But I think if you're in that wealth building stage, it's super important to to stay the course and be invested in mostly stock type choices because even if there's a potential recession, we're talking about your portfolio

for the long term. When you're investing, you should be thinking about that money staying put for ten years or longer. And so if that is the case, you should be investing in mostly stocks. So we'll put a link to that Vanguard quiz to kind of help you understand your own risk profile. But I think it is important to mention that that stocks are a great choice for people if they're in that wealth building phase. Joel, And you mentioned are you hinted at the sort of ten year

time frame right, follow that ten your rule. So if you know that you won't be accessing your funds for for ten years, definitely you know, stay the course. You want to stay heavily invested in stocks. If you do expect to be tapping into that portfolio. You want to make sure your portfolio is balanced with bonds and cash. You want to maintain that balance if you're getting closer

to the point where you're gonna withdraw some of those funds. Yeah, Matt, and like we kind of briefly mentioned at the top of the show. Mental preparation is key as well. So if you're gonna make changes based on data day news, turn off the news. If you aren't willing to stay the course despite difficulty in the stock market, you'll likely need to make changes before a recession occurs. Like giving somebody else the password to your Vanguard accounts so that

you don't make any knee jerk cells. That's a great way to do it, honestly, Yeah, I mean for real, Like if you have a spouse, uh and who is way more levelheaded, maybe they should have the reins for the next few years if if you see a downturn right completely completely, and I think some of the best advice ever given to any investor is to not look day to day and honestly not even look a month

a month, just don't even look at your portfolio. Be resigned to look at your portfolio only once a year, because I think, yeah, day to day, month to month, we see, we see a balance dropping, we see the harmful effects of a recession hitting our investments, and we want to take action, We want to do something. But the problem is when we do something while the recession is in full swing, we actually hurt our long term

financial future. So mental preparation is key, and whether that means handing off your Vanguard password to your spouse or typing in something random and you can't remember it and just not opening the statements. If you do get statements in the mail or to your or to your email inbox, that is going to make it so much better for you because you're not going to make decisions based on

the day to day whims of the market. And again, from a mental standpoint, right, it's easy to say that you'll write it out when the stock values are near all time highs. Things are great. If you feel good, you're like, oh, of course, I'll do the smart thing because mentally you know you know that that's the right thing to do. But however, it is much harder to do. If you're watching your portfolio drop with no end in sight, you might start to panic, and so you need to

prepare yourself to stomach the ups and the downs. And so this is why Joel, that we're talking about this now, we're talking about this ahead of time, because if you can and sort of do the mental exercises of what it might feel like to to see your portfolio drop by. It just prepares you and hopefully that will put into better position when it comes time to continue to stay the course. Yeah, and not all recessions are created equal.

You know. The last one that we went through in our country ten years ago was was really hard and it affected a lot of people, a lot of foreclosures, lots of job loss, So many terrible things can happen during a recession. But one of the biggest things that average people who didn't lose their job, didn't lose their house, did that actually hurt them in the long run was changing their allocation of their portfolio while the stock market

was experiencing its greatest discomfort. I mean, I had a friend who at work who told me that he was selling his stocks and going into cash because he couldn't handle it anymore. And while I understand in that mental reaction, you have to be able to kind of close yourself off from that possibility because that is when you bake in losses, and that is when you harm your long term potential financial future. That's right, That's that's when you

actually realize those losses. Hopefully he didn't sell in summer of two thousand nine, because I don't remember what it was, but it was not it was not good. It wasn't at the very bottom of the market. It was pretty close to it, somewhere around there. And and yeah, like that's that's how people ultimately hurt themselves the most, because if you look back, and it's actually helpful that we've had one so recently to look back and see how quickly things turned around. And you know, we don't have

any prognostication tools. We don't prognostication. I like it, right. We can't read the future. I don't have a crystal ball. But it's important to kind of see that history. It's actually helpful to note that it lasted for you know, a couple really hard years, but what ultimately happens, Things kind of come back to a state of normalcy. That's right, man,

you gotta write it back up. And then one last tip is that you need to have your cash ready and so now is the time to work to be in a position to invest more r the next recession. Warm buffet encourages people to be greedy when others are fearful, and fearful when others are greedy, and honestly, what that means is not listening to the news because people get scared and they freak each other out, and there's this

herd mentality and everyone starts selling. That's the precise time that you want to take advantage of the market being on sale. You don't just want your finances to be recession proof. You don't want to just get by. But what we're talking about here will allow us to be ready and prepared and to excel and do even better the next time there's a downturn. You have to take advantage of opportunity that comes along this episode, Matt, we created it not to worry people. We don't want to

free people out. We're not making any predictions even that a recession is going to happen. I think it's important to to realize though, that there is a potential for a recession to come, and it isn't something to be worried about, to be on pins and needles, to be on the edge of your seat, but it is something

to be prepared for. And if you are willing to take, you know, just some of the steps that we mentioned above, you're gonna put yourself in such a better position to kind of handle personally whatever difficulty may occur during a recession, while at the same time just getting a personal finances in a good space. Another thing to consider too is

know your individual situation. Right, If you are in an industry that is greatly affected by the market, that sees a lot of ups and downs in conjunction with the ups and downs of the market, you might want to say, build a fatter emergency fund, right. Or you might be in an industry that is not affected by the market, like doctors, right, the medical industry really it isn't affected

that much by swings in the market. No, your specific situation and just trying to be smart about take that into account when it comes to how you are going to prepare for a potential downturn in the market. Yeah, I think about when oil prices hit a super low price of close to like forty dollars a barrel, maybe maybe it even went a little bit lower than that. I just remember he reading stories about so many job losses that were completely unexpected from people working in Texas,

working in the oil industry around the country, ghost towns. Yeah, completely overnight. And so think about what industry you're in, how long you've been at your employer. It's obviously important to take some of these steps anyway, but it's really important to kind of take stock of your own situation. It helps you kind of factor in how much effort you need to put into some of these things. Yeah, that's right, some folks just might be more at risk.

All right, Matt, Let's get back to the beer. The beer that we drank today was Sierra Nevada Resilience. I P a may Man. This was a delicious beer and it poured a nice clear amber with a beautiful head, sort of like an old school beer. Right, Yeah, that was the word I used to describe Sierra Nevada's Resilience, I pa. And by the way, I would drink so much of this beer just for the cause. I love that that my money is going to to help people

that were affected by the wildfires in California. But the word I used to describe this beer was old school. It really reminds me of their winter beer celebration. Oh yeah, it's got this just truly iconic old school. I p a vibe. And I feel like, honestly, if you had poured this class for me and you hadn't have told me what brewery was from, I would have said that's a Sieran Nevada. I feel it's like they're beers are

iconic in a way. And this beer, while not the style I necessarily trend towards at this moment in time with what I like to drink, it's refreshing to have this. It's such a good beer. It's so distinct and flavorful. I love what's hearing about it does and and this is just another really really good beer from them, ye man, in my word was malti because yeah, it just has a huge malt backbone. In my in my opinion, so many of the i pas that we're drinking today are

very florally and citrusy and hazy. Uh it's the new school. It's the East Coast I p A. And this is certainly, uh more of an old school, not even a West Coast IPEA, but more of the old school sort of flavor profile. So a lot of malts. It's a darker beer.

That's why I said old school. Yell, come on, But it's it's got that malt backbone where it's a little bready, and I think that's what a lot of people think of when they think of a of an old school beer, they think sort of malts, and so yeah, we're on the same page, man, old school malti beer. This is delicious. I want to think, Philip Man, thank you so much

for sending us these beers. This is fantastic. And because we were sent these, Joe and I promised to go out and we'll buy some of these ourselves as well to personally support the cause to Yeah, and yeah, if you see this on tap at your local brewery, because that brewery decided to to support Sierra Nevada and the employees of Sierra Nevada and the people affected by by the wildfires in California through this route by that beer, because first off, it's a good beer, and second off,

it's doing so much good. And yeah, I love that story and I love that Philip sent us is beer to drink, all right, Joel, these are our final thoughts when it comes to recession proving your finances. Number one, build a strong emergency fund. Cash is king. You want to make sure that you have enough margin, you have

enough financial buffer. You want to be ready with that cash to make moves when the time comes and you just don't know what the future holds, you might need that cash to float, you buy it for a couple of months. Matt. It's also important for folks to start attacking their high interest rate debt now before the recession hits, because in the event of a potential job loss or just to reduced income, it's gonna be so much harder

to attack that debt then. So attack it now and make sure you're on solid financial ground when it comes to the debt that you're carrying. Another helpful tip is to create additional streams of income. This is something that you can do with a side hustle, this is something you can do with real estate, with investment properties. But

find a way to diversify your streams of income. If you've got all your eggs one basket with a single employer, well you're kind of at the whims of whatever happens to not only that industry, but that specific company, and so yeah, find ways to diversify. Also, don't make super expensive plans for the future. You don't want to write a check that you can't cash, and you don't want to book an expensive vacation that you can barely afford

in light of a potential recession. Just cut back on expensive potential plans and think small for the time being. As you up your cash reserves, that will make it a little bit easier in the future to take that sweet vacation that you've always wanted to take. And then finally, when it comes to your investments, man, stay the course. If you are invested in low cost index funds and you're invested in stocks, you know that you're in this

for the long haul. Do not be affected by the news, be ready, try to prepare yourself so that you can stomach that. But in the end, you know, like Joel mentioned earlier, looking back at the great recession right ten years ago, and you can see the rise, and you can see where we've come from, that's gonna happen again. Right If you have confidence in our country and in our economy and industry and business, things are gonna be

all right. And as long as you do not sell and make any knee jerk reactions, your portfolio is gonna end up just fine. Yeah. So again, don't worry. We're not trying to freak you out. We're not predicting anything, but we are saying that preparation is key, and if a recession does happen, you want to make sure that you're on solid financial footing and that you can weather the storm and even potentially take advantage of opportunities that

come along. All right, everyone, thanks so much for listening. We will have show notes up for this episode at our website, how to money dot com. Yeah, and if you are a listener of the show, we would love to hear from you. I know it takes a minute of your time to hop over there to Apple Podcasts to leave a review, but we really do read them and it means a lot, right. It helps us to get the word out for folks that haven't heard the podcast yet, and it helps us to know maybe what

topics are resonating with you as listeners. We actually see the reviews as a feedback loop, and so for us to be able to see what you have found helpful will help us to be just a better podcast in general. So thank you in advance, no doubt, buddy. Okay, until next time, Best friends Out, Best Friends Out.