IN TIMES OF A RECESSION

The U.S. keeps threatening the “R” word - recession. While selling the fear (and the public is buying) it creates a lot of confusion for many. I have lived through previous recessions (as most of you have) but I’ve learned what to do, what NOT to do. I would like to share some ideas with you.

It is important for you to understand what’s causing the situation as you may even be part of the problem and don’t even know it.

It’s not your fault that the United States is in a recession - we’ve all heard about the adjustable rate mortgage crisis, the downsizing industries, etc. However, you may be contributing to the ‘current’ situation because the economy is in an downward spiral right now. Let’s examine how this Economic Downward Spiral works and how you may be contributing to it.

When I was kid, and we were going through a recession, I remember my father (an accountant) once told me that if I save my money, I have nothing to fear in a recession. If I have little savings and panic in a recession, that is where the problems come into effect. The problem is, most people don’t save FOR a recession - they save IN a recessions. When people fear a recession, most people tend to stop spending. This is not good for the economy because we are all dependent on each other.

I don’t suggest that you go out and buy new toys, because this can get you into trouble. When times are tough, people start cutting back on things that are nonessential, such as eating at high-end restaurants, going to amusement parks, getting pedicures, training, purchasing new vehicles, etc. You get the idea.

All the people who are supplying these items are making far less money and therefore can’t afford to buy the products and services they were used to buying either. Any products or services that other people would have bought are now cutting into the product or service provider’s income, and now these suppliers have less money to spend and thus will have to cut back.

Notice the trend. This becomes a vicious circle and will continue to keep going in this direction UNTIL someone in this chain does something different and breaks the downward spiral. If you have been spending less money, then most likely it’s because people aren’t buying your products or services, your hours at work have been reduced, or maybe you’ve been downsized!

As you can see, you’re actually feeding the problem. The only way out of it is to get the spending moving. But it’s about spending your money the smart way that will produce higher returns for you, so that you can start buying the products and services you’re used to buying again, and the ones you have wanted to buy but couldn’t afford. You must do something different from what you’ve done before.

Obviously what has gotten us to this point isn’t working. If you continue to do the same things you’ve been doing, you will continue to get the same results you’ve been getting.

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