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Plans for coping with a recession?
394 sats \ 20 comments \ @k00b 10 Jul 2022 bitcoin
My main financial priorities are health and safety. Everything else I’m pretty happy sacrificing and I try to line these up with my wife.
e.g. I convinced my wife to get a more expensive flight to visit a sick friend, rather than take a red eye, and don’t sweat it. Convinced her to stay in a hotel, over a motel for safety. Also happy paying for my yoga membership. No car payments. No vacations. Minimal eating out.
How do you think about this stuff?
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500 sats \ 1 reply \ @orthzar 11 Jul 2022 freebie
The standard advise is to:
  • Have at least 3 months of income (not just expenses) in savings (fiat or BTC is up to you).
  • Pay down/off your debts (car, house, student loans) as much as you can.
I'd add the following:
  • Get out of any industry which is likely to experience tons of layoffs during a recession (e.g. construction, real estate). But no matter what your job is, assume that you're going to be unemployed sooner than you expect. It's better to be cautious than sorry.
  • Go read Meltdown by Tom Woods to see what happened before and during the last recession. It's a quick read. (https://ia601601.us.archive.org/17/items/WoodsMeltdown/Woods-Meltdown.pdf)
  • Sell stuff you don't use (e.g. that guitar you don't play, those boots you don't wear). Maybe put everything in one room; when you use something, put it in another room; and sell everything that is still in the first room after 1 month. Be willing to sell things for less than market value, because the point is to get rid of stuff, not turn a profit. If you lose your home, it will be very painful if you have to leave possessions behind.
  • Downsize now while you have choices, so you don't have to downsize when you have no choice. For a lot of people that will mean selling your big, overpriced house for a smaller house. Look into van-dwelling; do your homework; many love it, but it's not for everyone. If you lose your job and home, you don't want to have to move into your 1993 Mazda Miata.
  • Attend a Bitcoin meetup and see what advise they have.
  • When unemployment starts rising, people will start dumping their cryptocurrencies (including BTC) to pay rent and buy food. The current dip is, IMO, just the beginning. So please, for the love of God, don't borrow money to buy BTC; pay off any such loans now. Stack sats with humility, not fragility.
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100 sats \ 0 replies \ @nout 11 Jul 2022
I'm not following much on the logic of selling all your stuff ahead of time? What is the logic behind that? In a situation with high inflation you would want to keep the loans and any assets, especially if you have locked low interest rate.
If the fiat is quickly losing buying power, then the last thing you want is to get and hold fiat...
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107 sats \ 2 replies \ @vijo 10 Jul 2022
I honestly think recession fears are mostly overblown and caused by the constant negative media barrage to get more clicks/views...
Will we have a few bad months/years? Most definitely. Will Central Banks countersteer if things get too bad and open the infinite money valves again? Yeah, what other choice do they have?
The National Bureau of Economic Research dates recessions on a monthly basis back to 1854; according to their chronology, from 1854 to 1919, there were 16 cycles. The average recession lasted 22 months, and the average expansion 27. From 1919 to 1945, there were six cycles; recessions lasted an average 18 months and expansions for 35. From 1945 to 2001, and 10 cycles, recessions lasted an average 10 months and expansions an average of 57 months.
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95 sats \ 1 reply \ @k00b OP 10 Jul 2022
Bad months (ie recession) when economic fundamentals are this bad can runaway into depressions. You're kind of assuming we know how to avoid them because we haven't had one in our lifetimes - and we are primed for one IMO.
I agree though that money printing will resume eventually, but that just creates another problem. As inflation does, it will make the economy feel like it's growing - and many people will feel relieved, specifically asset owners - but it will accelerate wealth inequality. So then we'll need a treatment for that which is likely debt forgiveness and UBI, which will definitely lead to even more inflation.
Regardless, the fundamentals of the economy are in rough shape; it's inflation or recession and possibly depression. Either is nasty and requires caution for me because I run pretty lean financially.
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101 sats \ 0 replies \ @vijo 10 Jul 2022
Bad months (ie recession) when economic fundamentals are this bad can runaway into depressions. You're kind of assuming we know how to avoid them because we haven't had one in our lifetimes - and we are primed for one IMO.
Good point, I really cannot imagine a depression. Central banks have always intervened as long as I've been on this planet.
I agree though that money printing will resume eventually, but that just creates another problem. As inflation does, it will make the economy feel like it's growing - and many people will feel relieved, specifically asset owners - but it will accelerate wealth inequality. So then we'll need a treatment for that which is likely debt forgiveness and UBI, which will definitely lead to even more inflation.
Yeah, the inflation ponzi can only go so far. Hopefully Bitcoin lives up to its role as a hedge against this scenario.
Regardless, the fundamentals of the economy are in rough shape; it's inflation or recession and possibly depression. Either is nasty and requires caution for me because I run pretty lean financially.
Agreed. Let's hope it doesn't get too bad.
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100 sats \ 1 reply \ @Majjin 11 Jul 2022
I'm reconfiguring my budget so that I'm much more consistent with it. I'm trying out the cash envelope method. When I need to do an online purchase, I have to make the effort to deposit the money first.
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11 sats \ 0 replies \ @k00b OP 11 Jul 2022
That's a neat idea. I have a friend that forces himself to record all of his spending in a google spreadsheet before he spends, which is a similar kind of friction.
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100 sats \ 0 replies \ @cozy 11 Jul 2022
Stay optimistic, and i'm with you on the health and safety! Problems are inevitable, problems are soluble.
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100 sats \ 1 reply \ @0391398253 10 Jul 2022
take a loan using your btc as collateral when btc dip to 10k, hold on until next halving(2 years away) and profit.
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0 sats \ 0 replies \ @k00b OP 10 Jul 2022
Back testing this seems to work, but it’s only been 10+ years.
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100 sats \ 0 replies \ @higuyslol 10 Jul 2022
Holding mostly cash for now, also interested in stocks that will likely rebound after a newsworthy crash. Naturally I’m stacking sats as well.
Im also spending a lot of time learning about the lightning network. It feels like by the next bull cycle, new nodes will be mostly be managed by publicly traded companies, so establishing yourself as a contender early may keep you afloat much longer, similar to mining operations.
I agree health, safety, food security and rest are some of my highest priorities.
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100 sats \ 3 replies \ @thrown 10 Jul 2022
Honestly I have no idea. I'm holding USD and waiting for an actual nose dive so I can swoop in and buy a house in cash / buy a bunch of BTC.
In terms of investments, I've had analysis paralysis and haven't done anything really.
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3 sats \ 2 replies \ @k00b OP 10 Jul 2022
Seems to be what Buffet advises when uncertain, but the cash ice cubes were melting a lot slower back when he was active.
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100 sats \ 1 reply \ @thrown 10 Jul 2022
I figure that even if inflation makes it worth less, I'm still likely to be holding more of it than most other people, which would make me a competitive buyer in that situation at least.
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0 sats \ 0 replies \ @k00b OP 10 Jul 2022
Yeah, I agree that holding cash looking six months out is wise. I just suspect other people are thinking that too, which makes me think it's unwise.
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100 sats \ 0 replies \ @kim 10 Jul 2022 freebie
Living minimalist is something I do since more than 10yrs now, the recession strategy on my side is buying dividend yield stocks that will be around in 5 tot 10 years while stacking bitcoin.
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10 sats \ 0 replies \ @alvaraaltopelti 11 Jul 2022
All in on Bitcoin. Like a true, reckless psychopath. Eat grass for nutrition if it comes to that.
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0 sats \ 0 replies \ @Ge 13 Jul 2022
We all know tough times are ahead and fast approaching however I think of the community how strong it is now and how we can't be afraid to lean in on our community asking when neccessary and well compensating for service and or goods....tbh if everything does start to spiral and go crazy here soon then and you still panic then obviously you havent don't enough research and reading to understand 1 sat is 1 sat. :)
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0 sats \ 1 reply \ @ember 11 Jul 2022
My main guiding is to remain as flexible as possible during times of uncertainty so now I'm always weighing every big decision against whether it improves or hinders mine and my immediate family's flexibility.
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0 sats \ 0 replies \ @ember 11 Jul 2022
*guiding principle
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