How to Prepare for a Recession in 2020

Hey, watch out. The sky is falling. The recession, it’s on its way, and it can’t
be stopped. What are you going to do about it? Well, I’ve been through this more than once,
and this time, I know exactly what I’m going to do to prepare for the recession. I’ve got five defensive moves I’m going to
make, and I’ve got five offensive moves I’m going to make. That’s what I’m going to show you today. Before we dive in though, click the Subscribe
button, ring that notification bell because you don’t want to miss any of the cool stuff
that I post here each and every week. Ready? Let’s do it. This is Theriault Media. Is the sky falling? Well, I suppose it depends on who you listen
to as there’s seemingly never a shortage of people predicting an economic recession. Most of them, they predict that it’s going
to happen the following year, and most of the time, they are wrong. But it is a numbers game. Eventually, they will be right. At some point, a recession will happen. History tells us that the longer we go without
a recession, the higher the probability becomes that one will occur. Today, no surprise. We’re seeing a lot of hand wringing, a lot
of people anxious about this possible recession 2020, and by all the usual suspects even. But here’s the thing: This time, they might
be right. There are some concerning economic indicators
that suggest that there could be a significant correction on the horizon, the Federal Reserves
actions, or lack thereof, banks are laying off large numbers of employees, and mid-sized
companies are starting to see their credit ratings drop. Worse still, job growth seems to have hit
a wall. Even with all these factors taken into account,
a 2020 recession is by no means a certainty. What is a certainty, however, is that there
is enough uncertainty to proceed with a modicum of caution. Not fear, but caution. Here’s what I mean by that. You see, there’s going to be people out there
who seek to take advantage of the anxiety that always accompanies periods of economic
uncertainty. Some of these people, of course, will be offering
you advice, and perhaps some of that advice will be sound, but how will you know? How will you know which advice is worthy of
your attention and which isn’t? Well, first, of course, consider the track
record of the person doling out the advice since many of them will be the same people
who have spent the last decade predicting recessions that never happened. Another subset of would-be advisors to be
careful with are those who are too young to have yet lived through a recession. I mean, they may know how to thrive during
a boom, but that’s not particularly difficult. Can they survive or thrive during a downturn? How will they really know until they experience
one of these themselves? Well, my own rule of thumb, I did the math,
is that if the person offering you recession-oriented advice is under the age of 35, just nod and
smile and take it in with a grain of salt. A healthy dose of skepticism wouldn’t be a,
that wouldn’t be a bad idea in this type of situation with that type of person. As someone who is, shall we say, a bit older
than 35, although I usually don’t feel a day over 18 or act it, according to my wife Mercedes,
and as someone who has had a front row seat for both the dot-com crash in 2000 and the
2007 housing collapse, I can assure you that even the most well-read and well-intentioned
mentor cannot adequately prepare you for the reality of recession if they haven’t lived
through one themselves. They can read all the books, they can analyze
all the charts, and they can understand all the mechanics of what happened, but they still
won’t understand what it actually feels like and what it means to make the sort of adjustments
someone has to do to survive a recession. Even having been there myself, I’m not going
to pretend to have all the answers, but I’ll give you some really good answers in just
a minute. I mean, I do have recession experience, but
I don’t have any insider information, and I’m not an expert in economics. No, not in the micro or on the macro levels,
so I’m not going to give you any direct advice. Instead, I’m going to tell you what I am going
to do myself in preparation for a possible economic downturn because I’ve been through
this twice before, and both times, I did pretty well. I came out okay. I’m going to look back at what I did after
2000 and what I did after 2007, and I’m going to analyze the consequences of those actions. Then I’m going to do more of what worked,
and I’m going to eliminate what didn’t. What I’ve done is I’ve divided my plan into
two parts: offensive and defensive, and I’ve got five moves for each. Let’s start with the five defensive moves
that I’m going to make. Defensive move number one: Stop buying dumb
stuff. I know, super scientific. But if we’re approaching a time when money
might be tight, the very first thing to do is to stop wasting it on frivolous things. As obvious as this step sounds in theory,
it can be very difficult to implement depending on your habits or your vices. For me, it starts with no longer indulging
in my appetite for Air Jordans and designer sunglasses. I don’t even know where I got these habits. I only have got two feet, I only got two sets
of eyes, or no, just two eyes, but I have enough shoes and shades to outfit a small
army, so that stops. It also means I’m going to put my ever-ending
expanding collection of wine on hold. That’s going to be tough, because I do love
a good Cab. I can certainly, I can afford to chill on
the fine dining thing too. My waistline’s probably going to thank me
for that as much as my wallet will, and there are a few other things that I can cut back
on, but you get the idea. That’s number one, stop buying dumb stuff. Number two: I’m going to pay off my high-interest
consumer debt. I don’t have a lot of it, but I can afford
to pay it off, so I’m going to. In fact, I’m going to pay off all of my debt
that doesn’t pay me. I’ve got good debt too, but I’m keeping that. In fact, I might actually go out and get some
more of it, and more on that in a second. Number three: I’m going to bump up my emergency
fund. See, I’ve got a six-month safety net right
now, and that feels good, but I’m going to bump it up to 12 months, just because. I mean, it never hurts to have some extra
cash around during slower economic times. Finally, there’s one thing I want to mention
that you shouldn’t do as a part of a defensive strategy. It doesn’t really apply to me this time around,
but in past recessions, it certainly did. Number four: It’s don’t panic-sell your investments. The primary reason for massive losses during
economic adjustments is panic-selling. It’s offloading investments due to fear that
you’re going to lose it all, and then waiting too long to buy back in. I don’t have many ancillary investments this
time around, but if I did, I’d think twice, maybe even three times before selling out
of fear like I did during the last recession. Number five: Don’t play to not lose. It’s not a time to huddle when there’s so
much opportunity in front of you. It just looks different, that’s all. You can make quantum leaps in your finances
by playing to win during a recession. On that note, let’s talk offense, because
the strongest defense in the world is not going to win any games. Because to win games, you gotta score points,
and points are scored when real estate is purchased at a discount. To do that, you want to have ready-access
to cash in order to take advantage of those types of deals, because they’re coming. Offensive move number one, what I’m going
to do is I’m going to refinance. I’m going to cash out refi as much equity
as I can. This might seem like a defensive move to some,
but it’s not. Well, I guess it kind of is, yet it is also
my first offensive move. See, it’s defense because you now have pulled
your cash out of your real estate, and you’ve got it in your hand, and in the event that
the real estate market starts to tank, they can’t take it away from you. The market can’t take it away from you. But I don’t plan on stuffing that cash under
my mattress for safekeeping either. No. If an adjustment does occur, I want the ability
to take advantage of any opportunities that arise, and if the banks are already lowering
customer credit ratings at this early stage, as I mentioned earlier, I don’t want to have
to rely on them for money if the economy really tightens up. If an adjustment comes, real estate values
will most likely drop, and if that happens, I want to have all that cash with me ready
to seize that moment. Then offensive move number two: network. I read a great book some years ago called
Dig Your Well Before You’re Thirsty. I can barely remember the contents or who
even wrote it, but the simple brilliance of that title has always stuck with me. At the moment from a networking standpoint,
I’m not particularly thirsty. In fact, I’ve been a bit of a hermit lately
channeling my efforts into things that don’t really require much social interaction. Things have been good, and I haven’t felt
driven to seek out too many new opportunities. Opportunities, they just kind of been coming
to me instead of vice versa. But what if that stops happening in a recession
as it’s inclined to do? Now, the whole point of that book’s title,
of course, is that the best time to find opportunity is before you need it. If there’s an economic downturn coming, I
want to have opportunities lined up, so I’m going to make some calls, I’m going to rekindle
some old relationships, and I’m going to find ways to create new relationships. Offensive move number three: Keep buying real
estate. It’s said, “Don’t wait to buy real estate. Buy real estate and wait.” I think it was Mark Twain that said it, and
if it wasn’t, kudos to whoever did because truer words have never been spoken. Also, it’s a bit of a myth that the market
slows down during a recession. Historically speaking, they don’t necessarily
go hand in hand. The right way to look at this is that as people’s
circumstances change, so will the opportunities, but there will always be opportunities. The shift won’t be to fewer opportunities,
but rather in what you’re looking for and where to look for it. My deal standards, won’t change those, but
I’ll be adhering to them much more strictly than I might have in the past few years, and
I’ll be blaming the market for everything. I’ll be blaming on the market for my lack
of flexibility. It’d be like, “Mr. Seller, hey, don’t blame
me. I’m not the bad guy. The bad old market, that’s the bad guy.” That brings me to offense move number four:
more follow-up. Going to follow up more. As people watch their financial realities
change, they naturally get anxious. They constantly reevaluate their decisions. They might draw a line in the sand one day,
then erase it the next, and then draw it somewhere else the next day after that. For this reason, it is incredibly important
to focus on follow-up during periods of uncertainty. You want to be in frequent contact with your
sellers. This is not the time to disengage. That is offensive move number five: stay in
engaged. If the recession comes, I’m not going to fly
to the Maldives to wait it out. I’m not going to pull down my blinds and curl
up next to my money either. A little extra caution can be a healthy thing,
and I’m going to use it to my advantage. I’m going to let it motivate me to double
down on my focus and my energy. I’m going to keep investing in myself. I’m going to be strengthening my skills. I’m going to be expanding my contacts, and
I’m going to be looking for new opportunities. This is why right now, what I just said, that’s
why this could be the most important thing that you can take away from my personal recession
plan. You see, a long time ago, I was in business
with a guy named Ethan. We were good friends. We’re really good friends. When we decided to go different directions
professionally… I mean, we parted amicably, and we kept in
touch. But somehow Ethan, he ended up over in Russia
doing real estate seminars. I have no idea how this happened because I
know he’d never been to Russia and I know he didn’t speak the language, but there he
was. Ethan was the sort of guy who could really
just kind of make weird, improbable things happen. I really had admired him for that. When he came back, he had a lot of great stories. He had a lot of great stories about people
who had flourished in the aftermath of the Soviet Union’s collapse. These people, they were few and far between,
but they all had one thing in common. All of them were either business owners or
property owners. The most successful were both. This was some years ago, but that fact always
stuck with me, and it’s something that I think about even more when we seem to be on the
verge of a downturn ourselves. You see, while nothing that happens here is
likely to resemble what happened in post-Soviet Russia, I do find it comforting that property
ownership was resilient enough to provide security, even in a situation of that magnitude. Even in the face of a full-scale collapse,
the property owners, they came out okay. Thinking about that, it reminds me of how
lucky I am to live in a country like the United States. It also confirms for me that recession or
not, come what may, I’m in the right business. Whether the sky does fall in 2020 or not,
I’m ready. With these defensive and offensive moves that
I’m making, I’m going to off either way, regardless of what happens. If you’d like, you can start getting ready
to by just watching this video right here. This is 10 strategies to find off-market properties
regardless of what the market is going to do, and if you’d like to brainstorm some ideas
about your real estate investing and the potential of working together, I put a link to a video
for you just down below, and you can watch that in the description. All right, bye for now.

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