- I was sitting around
and asking myself a question the other day,
is it possible to actually make yourself
100% recession proof if you don't have tens of millions
of dollars sitting in the bank?
The conclusion I came to is probably not because a recession
actually impacts and really affects everyone
in some sort of way,
even the person with large sums of money in the bank.
But what if we could get you pretty darn close to 100%
would you be happy with being, I don't know,
70% 80% or even 93% recession proof?
Let's go through some things that you can do with your money
right now to help get you in a better position
to weather the potential storm coming down the pipeline.
It's gonna have to do with the overall economy
continuing to decline, you losing your job,
the possibility of a decrease in income
in the future for yourself or whatever other scenarios
that you can think of.
If you feel like you have a nice overall plan
in place right now,
then that's great and you should continue down that path.
But when we get into an environment where a ton of things
are unstable and their short-term future is unknown,
then you'll usually wanna make a few minor shifts
in the overall details.
Think of this like adjusting your route to work
when you see that the highway is backed up.
Now you might notice a traffic jam
right where you normally hop on the highway,
so you decide to skip that on-ramp
and drive a little bit further to the next one.
Now if the traffic still looks kind of bad
when you get to that next on-ramp,
then you might move on to the next one
where traffic looks a little less congested,
you're still going to get to work before the short period
of time today, a couple of days, maybe a week.
You'll wanna adjust the route.
Hey, I'm Jarrad with an a and in this channel
we talk about all things puh puh,
personal finance, investing,
and we try to have some fun in the process.
Continuing to dollar cost average into our investments
is going to help you take advantage
of the market's going up and going down.
This is not investment advice,
but I prefer to invest in low-cost total stock market
index funds, but you might prefer picking, I don't know,
individual stocks because somewhere in your past
your mom told you that you are so much smarter
than everyone else.
Therefore you (giggling)
you know the exact companies
that you need to own a piece of to beat the market.
Either way, keep doing what works best for you,
but just continue dollar cost averaging.
I mentioned in a previous video how no one
can truly predict where the bottom of recession is.
If someone could then that person wouldn't have
endless amounts of money
and I probably wouldn't be talking to you.
You wouldn't wanna be learning from me,
you'd be wanting to learn from that guy and that person,
they just don't exist.
Dollar cost averaging is where you take
a fixed dollar amount and spread the investment
of that money over a fixed period of time.
So, for example, if you were gonna dollar cost average
into your IRA and you plan to max it out this year,
then you might consistently invest $500 per month.
You could also do it in a way to where you would invest
$250 every two weeks or $125 every week,
hashtag math.
Now, how you break it down is all gonna be dependent
on you and what you prefer.
By dollar cost averaging you're taking advantage
of a very volatile time in the stock market right now
and you're pretty much saying,
hey, I don't know when the bottom of the market is,
so instead of trying to time it,
I'm just going to invest a little bit here
and a little bit there to hedge my bets.
If you have an employer sponsored for one K,
then this is naturally already being done for you
since they most likely contribute
that money at the same time that they pay you
and you have your account set up
to auto-invest that money, then you're good to go.
But if you have an IRA,
then you'll need to do this on your own.
I personally use M1 Finance for my IRA,
which I'll throw a link to learn more about them
down in the description of this video if you are interested
along with some more resources that I've put together
on investing just for you because you're awesome.
The next way to recession proof your money
is to do a simple double-check of your spending.
When life is really good and the money is flowing
into your bank account,
it is so easy for lifestyle creep to take over.
That one night per week of eating out
turns into two days per week, then three days per week.
Then the next thing you know you've gained 30 pounds,
you get out of breath walking up two flights of stairs,
you're just a little bit closer to diabetes
and you're spending four times the amount every month
just on food.
Things can get really out of control when you put life
on autopilot and ignore what individual choices
are doing to the overall direction of your money.
It's like when I take my dog to the park on a hike
or a trail run.
Now nine out of 10 times she'll run alongside me
and she'll chase squirrels as we trek along down the trail.
Now, life is great and of course (blowing)
nothing can possibly go wrong during this time,
but one out of 10 times when I'm not paying attention,
I'll look over and she's rolling in deer poop
or a dead animal or who the heck knows what else?
All I know is that she smells absolutely horrible
and the day is ruined or ruined,
however you say it, ruined or ruined.
Log into your credit card or bank account
and look through your transactions.
It should be pretty easy to spot trends
so that you can see where things
are kind of getting out of control.
If you do a monthly budget,
then this should make things a lot easier.
If you don't and you never plan on doing one,
then that's fine.
In my opinion, 99% of people should have
some sort of budget, but I'm not your dad,
so I'm not gonna sit here and tell you what to do.
I'd suggest everyone watching this set a little extra money
aside if you are able to.
Before a fight, Mike Tyson was asked
what was going to happen in one of his
upcoming boxing matches.
Now the interviewers would mention how his opponent
is going to dance around,
how he's gonna do a lot of lateral moves,
whatever that means.
I think it's back and forth.
(giggling)
How he's gonna do this, how he's gonna do that,
Mike Tyson's response was,
"Everybody has a plan until they get hit.
"Then like a rat, they stop in fear and freeze."
I know we all like to feel like our jobs are safe,
but if you work for someone else, then it's not safe at all.
If it's not even really safe if you don't work
for someone else, honestly.
But you may have your job today
and feel absolutely positively untouchable,
but you need to ask yourself what you do right now
if that job was instantly taken away from you.
Would you be like a rat?
Like Mike Tyson said, that freezes in place in fear?
Even if you are not completely laid off,
you might be asked to take unpaid leave
or even be asked to take a pay cut
for a short period of time.
If you haven't heard,
we've been seeing a lot of companies do this recently.
DSW Shoes' parent company placed 80% of their workers
on unpaid leave.
Macy's put most of their workers on unpaid leave as well,
which is definitely over a hundred thousand people,
I think I saw.
An American airlines offered partial pay
for some of their employees.
This might not be you now, but this could be you.
If this is what needs to be done
so that people can have their jobs long-term,
then it's better than getting completely laid off.
Trust me, the last thing your manager wants to do
is have that conversation with you.
If this hasn't happened to you yet,
then you just need to assume that it will.
I've decided to set a little extra money aside
for my emergency fund right now.
I'm usually good with about six months,
but I wanted a little extra runway right now
because I'm not so certain about the short-term future.
There's two ways that I'm coming up with this money.
First, I'm gonna pull a little bit from what I set aside
for my future rental property.
I'll talk about the second one in just a minute.
I still don't think that we can truly conceptualize
the economic impact of what's going on
because there are way too many unknowns.
I don't know about you,
but I don't believe the numbers that China has reported
on what's happening right now.
I mean it's China and if there's
one thing that we know about China,
it's that 95% of the time they are full of shit.
That's just my opinion.
Don't ever believe anything that they say.
If you haven't done it already,
please Hulk smash that thumbs up on you.
This is another way that I plan to come up
with some extra cash just to beef up
my emergency fund a little bit
so if you find it helpful, feel free to give it a try.
I'm going a whole month with minimal spending.
Now, I technically already live well below my means,
but there are still things in my budget
that I don't have to spend money on.
For the past couple of years,
I've been picking two random months
with any 12-month period and doing this.
Since I was planning on doing it anyhow,
I chose to do my first month sooner rather than later,
so I'm actually doing it
the month that you're watching this video right now.
It's basically exactly what I said it was.
It's where I'm spending the minimal amount of money,
so I'm really not going out even though I can't
because I'm stuck inside,
but I'm going the extra mile and not spending much money
at all except super super basic expenses.
I know I'm an F and weirdo for intentionally doing this,
so go ahead and roast me in the comments below about it.
But I've actually found that there's three main benefits
from doing this a few times a year.
The first is pretty obvious.
It frees up a little extra cash and who doesn't mind
having some extra cash in their pocket
when all you have to do is just tighten your belt
just a little bit for 30 days?
Number two, taking a full month where you practice
minimal spending is going to naturally cause some discomfort
in your life for just a short period of time.
Most people run away from discomfort
because who the F wants to intentionally feel uncomfortable?
No one, but what we always forget is that
we learn a lot during times of discomfort.
Unfortunately, I think that we've had things
a little too good for a little too long.
Everything has become so damn easy that we throw hissy fits
at these stupidest things going on around us.
You can go on Twitter every single day
and see people bicker back and forth
about these stupidest shit.
People make up reasons to feel offended or slighted
because every other area of their life is so comfortable
and if we don't have natural discomfort,
then it's important to intentionally create it for yourself.
It's a good way to build what I like to call life calluses.
Have you ever gotten calluses on your hand from working out?
If not, then you should probably take off
those stupid gloves when you work out
or go pick up more heavy things on a regular basis.
Just like with your hand, you can build the same kind
of calluses with your thoughts and emotions
to help you handle future hardships.
If life feels like it's kind of on
easy mode for you right now,
then that should scare the crap out of you.
I heard this from somewhere,
but I don't recall where I heard it from,
but it kind of goes along with this.
"Hard times creates strong men.
"Strong men create good times.
"Good times create weak men.
"Weak men create hard times."
I recommend Jonathan Haidt's book
"Coddling of the American Mind"
that kind of goes into more detail on this topic.
There's also an article on the Atlantic
that I'll link up down in the description as well
if you don't wanna read the whole book.
The third reason,
one month of minimal spending is helpful
is because of something called premeditatio malorum.
I'm gonna nerd out on you for a minute
because outside of money topics,
this is my next favorite thing to talk about
and also think about.
This is a concept that was written
about 2000 plus years ago,
so I can't take full credit for the idea.
Now, most of you probably don't know,
but if you follow me on Instagram,
then you'll know that I'd consider myself
a student of something called stoic philosophy.
I like to think of it like my operating system in life,
kind of like what's inside of a computer
that makes the whole thing work.
In stoic philosophy they indirectly talk about
premeditatio malorum,
which basically translates to the premeditation of evils.
It's the stoic exercise of imagining things
that could go wrong or be taken away from us.
One of my favorite stoic philosophers is a guy named Seneca.
In one of his letters he wrote,
"Set aside a certain number of days,
"during which you shall be content with the scantiest
"and cheapest fare, with coarse and rough dress,
"saying to yourself the while:
"Is this the condition that I feared?"
Let me translate that to current times.
He's telling you to intentionally take a few days every
now and again where you don't live your normal lifestyle,
where you live a little bit below your means.
What you'll most likely realize is that it's not going
to impact you as much as it might seem.
Premeditatio malorum is almost like a way to practice
for something before even happens.
No, you can't prepare for every single negative event
in your life, but if you can get,
we'll say 10 40 60 or even 80% prepared
then you're in a better position to handle
that potential hardship if it arrives.
In some cases, what you're preparing for
might never actually happen,
but even if it doesn't,
you still learn a whole lot in the process.
You're almost to learning how to learn
or learning how to think, process and react
when stuff hits the fan in your life
because in one way or another, it will.
If you do have a second source of income,
then the next thing you should do with your money
is to stress-test that income.
If a black swan event or even white swan event occurred
and you lost your main and second source of income,
then how would you make money?
Stress testing these two incomes will make you think about
two possible outcomes.
Number one, you'll need to create a third income stream,
or number two, you'll need to diversify your second source
of income from your first source of income.
For example, if your main source of income
is running a chewy candy factory,
then you most likely won't wanna have your second income
coming from doing consulting on the side
with only other chewy candy companies.
Because if the chewy candy industry as a whole goes under,
then you just lost both sources of income.
You can diversify your second income by consulting
for other factories that produce different types
of products that aren't directly tied to the candy industry.
You could also diversify yourself by teaching
different leadership type skills that you've learned
through running a candy factory,
specifically chewy candy factory.
If you are married with two incomes,
then you should stress-test your incomes as well.
Most people would probably consider one person's income
the main source, and the second person's income
the second source.
If you both work at the same company
or within the same field,
then this is even more important for you.
Diversify, diversify, diversify your income,
just like you should always diversify your investments.
As always, I have investing recommendations
down in the description along with resources
and playlists to help you out with all
of your personal finance and investing needs.
Once again, make sure to Hulk smash that thumbs up button
to help support myself, my dog, Molly,
and tell mother YouTube that you like what I'm doing.
Don't forget to check out these videos to your left
that I hand-picked for your beautiful face.
I'll see you in the next one friends, adios.