It’s pretty clear that we are now in a recession, and, without going into the doom and gloom of recent job loss and foreclosure statistics, I’d like to discuss what goes on underneath all the talk of the recession.
Fear. This seems to be a pretty common theme in recent talks about the recession around friends, family members, even the media and internet. Negative reactions and mindsets have developed in an environment where we should remain still and adhere to conventional financial wisdom and save more, spend less. But so many are wired to the news outlets which preach mostly doom and gloom which then fuels more fear and concern.
Job Loss and Unemployment
The truth is, many are afraid they will be the next ones on the chopping block. And, unless they have F-U money, with recent lay offs, everyone is concerned on some level or another. Walking into work everyday has become akin to putting their necks on a chopping block and hoping their bosses ill spare them yet another day. For some, this has become unbearable, often wishing they would be the first to go so they won’t have to endure the uncertainty of an impending lay-off or downsizing.
So, while friends may seem ok, some may be concerned about the recession, perhaps more than they let up on the surface. Now is the time to open up dialogue amongst friends and co workers in efforts to support one another and discuss alternative financial plans. You’d be surprised the comradeship that develops once people begin sharing fears and concerns and then discuss how to move past them.
Rising Costs of Gas
I don’t know about the rest of you but that $4.00 a gallon of gas is looking like a real possibility with the $3.37 per gallon I racked up last night. So many are frustrated with the high cost of fuel and even the truck drivers striking in an effort to call attention to their plight.
Weâ€™re talking about independent truck drivers who say prices are out of control. If you’re a diesel truck driver, it’s closer to 4-something a gallon and now you’re paying anywhere from $700 to $1000 to fill up and independent truckers say that’s too much.
People are frustrated every where you turn. Here in DC, many more are turning to carpooling with neighbors and co-workers in an effort to save money on gas, and even the metro looks more attractive even though I really hate taking it into my internship site. I’d rather drive but the fact remains that it’s becoming really expensive to drive into my site and then to class and back home.
I don’t know that I’ve lived through a time where personal finance more important to me than it is right now. While the psychology of the recession has me focused on the fears of many, this has also been a time of reverting back to solid financial wisdom:
- Save more by paying yourself first
- Spending less than you earn
- Seek out ways to increase your bottom line and/or paycheck
- Save for retirement now and not later
- Keep abreast as to career news and opportunities. Ears to the ground as I like to call it. Keep a fresh copy of your resume handy and network with others about openings within your field
I think it’s safe to say that we have hit the proverbial iceberg, but this is an opportunity for us to understand and change our patterns of consumption and undesirable financial habits. Fears of unemployment and stocks plummeting abound, but personal finance wisdom remains the same. Try to find alternative methods of coping through downsizing, getting part time job and/or paying down debt.
Silver Lining. Keep in mind that the market is cyclical. We have on average experienced recessions every 9-10 years.
- January-July 1980: 6 months chart (worst quarter GDP Growth -7.8% spreadsheet)
- July 1981-November 1982: 16 months chart (worst quarter GDP Growth -6.4%)
This time around, it came a bit earlier than even I had anticipated, but with the housing market booming the way it did, this was bound to happen. The upside is that we always get through it and hopefully this has gotten most out of the routine of complacency. Times like these often force people to re-evaluate their career paths, often choosing for change instead of complacency.
Times are hard now but saving money, living below your means is key and keeping your options open are key. That’s it! Even if you lose your job tomorrow, if you’ve been saving wisely then you have a cushion to get you through the next few months or perhaps the rest of the year. If you recently lost your job, look at this as a reason to evaluate your career path, perhaps this is the time time to return to school and complete your degree or catch up on the latest certifications in your field. So while this is a depressing time, know that as with everything, this too shall pass, just be prepared to weather the storm.
Have you been through a recession prior to this? How did you make it through? What advice do you have for younger readers on how to get through these tough economic times?