It has been 18 years since our last great recession. The next great recession must be right around the corner. Here are some things you can do to prepare.
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If you were already thinking about selling your large, family home and moving into a smaller, less expensive home, make that move now. It may not be too late.*
- Avoid new debt right now like the plague. You do not want to be carrying a huge debt load into a great recession that might be worse than the crash in 2008 and in 2000.
- To the extent you can, try to build cash reserves equal to six-months living expenses. During great recessions, tens of millions of people get laid off, as companies downsize or fail, To make matters worse, AI is threatening to totally disrupt the economy, as it replaces workers and consumers with computers. This great recession could be a really bad one. Perhaps you should take a much more modest vacation this year, maybe renting an Airbnb close to home, rather than flying to Disneyland.
- Perhaps my most important advice is to set up in advance lines of credit. I have a huge line of credit on a rental home of mine, but I never use it. It is just there to get my company and me through the next great recession. Remember, bankers will never lend to you if you need money. The secret to working with bankers is to keep lots of cash in the bank.
* Now back to selling your big, unnecessary house. In truth, it probably is too late. The home sales figures coming out recently have been just horrible. No one is buying homes. It may be a sign that the next great recession is already here; but you should at least try. It doesn't cost you anything to list your home.
There are areas of the country where housing prices are just 50% of those in California, the New Your City area, or the Chicago area. My wife and I moved from California to Indianapolis twenty years ago. For the first time in our married lives, we were not house poor. We were no longer devoting more than 50% of our income to the mortgage payments on our residence. It was heavenly.
If you are looking for a nice destination, you might consider Indianapolis. The housing is very affordable here, and the real estate is very attractive. A great many buildings are constructed of brick, and it's just a very handsome look. Compare a nice brick building to a concrete building in California, covered with graffiti.
Cats just can't resist.
Perhaps the single nicest feature of Indianapolis is the abundance of lush, water-rich vegetation. There is something extremely soothing about deep, green vegetation. If you are from California or Arizona, you will be stunned by our lush, Emerald trees here.
We had snow on the ground just eight days all winter. There are plenty of days in the West when it is too hot to go out. "I'm melting, Dorothy, I'm melting! Who would have thought a little girl like you could destroy my beautiful wickedness?"
But there is some good news. It is looking less and less likely that China will invade Taiwan and start World War III. The debacle in Iran showed China and the world that their weapons don't work.
This week Xi Jinping fired the four heads of scientific development for their Rocket Force (hypersonic missiles, etc.), their Navy, their Air Force (China's stealth fighters aren't actually stealthy), and their Army. All of their military contractors are incredibly corrupt, so World War III has been called off. Never mind.
