I'm worrying about the future for me and my young family.
Do you have any advice for someone with dependents during this time?
I avoid personal debt like the plague. If that means living in a small house, and driving an old car, then so be it.
I've also found that learning to deliver software, as opposed to just "writing" software, has made me much more valuable.
Shipping isn't "fun," and many younger developers don't have the patience for it; but, when the rubber meets the road, shipping is what it's all about.
In income terms, diversify away from a single source by learning new skills, training up in areas you're a bit rusty in, learning totally new ones.
In savings or investments: diversify where you put them, spread them around so you're not dependent on any one scenario.
In eating: eat more interesting and cheaper things. Become vegetarian, if you aren't already.
In exercise: drop any gym memberships, use things like body weight to train. Run one day, do yoga the next.
In your media consumption: diversify in sources but don't take this as a cue to read more. Read less, much less, but read better. Ignore social media, it's all b&&&&&t. Find one or two sources of media that are reasonably middle line, and read around a topic in a diverse way. Don't get sucked in to anything, least of all the disaster scenario stuff you'll find.
Last but most important: spend all the time you possibly can with your family. Make them your focus, not your income and "future". Be in the now as much as you possibly can. You'll only have this time with your (small) kids for a very, very short period. They'll be flying off soon. Be there for them.
Best of luck.
Ask HN: What tips do you have for weathering a recession? - https://news.ycombinator.com/item?id=15798401 - Nov 2017 (104 comments)
Ask HN: How are you preparing yourself for a recession? - https://news.ycombinator.com/item?id=22527383 - Mar 2020 (148 comments)
I wouldn't worry too much about it. A recession is not even close to the worst thing that can happen to you (both as an individual and as a family). It's not cancer, divorce or a horrific car accident. The only reason they're noteworthy is because they affect so many people at the same time.
Worst case scenario, you lose your job for a year or so and your portfolio gets fucked, but you'll survive and your children probably won't even look back at it that negatively (I know I didn't when my old man lost his job).
Keep it simple: do things that let you accumulate cash, so if you lose your job you won't also immediately get kicked out of your house and you'll have reserves to draw on. Consider that you might need to re-train etc.
Just build your savings. Don't do risky things that add to the complexity and your stress levels. Avoid crypto in particular.
I also have a family and I've been building cash.
Also: ignore people who tell you cash is bad because of inflation. Inflation is an effect that's known. Risks of various investments are combinations of "can be known" and "unknowable". Cash is king!
Make sure to have a small cash reserve so that you can manage for a while even if something devastating happens. Make sure to have a small stockpile of food at home so that you can make those money last longer. As a bonus, this will also count as basic prepping, and you'll be able to handle things like being snowed in for a week without too much problems (assuming you live where such a thing is possible).
Also cut down on non-mortage debt if possible, and make sure things like streaming subscriptions can be cancelled at a minute's notice; If you end up losing part or a lot of your income then you don't want to be stuck paying for things you don't really need (Spotify, Netflix etc).
What is your threat model?
Is it losing your savings to inflation? Having it taken away by a corrupt government?
Is it an invasion of the Russians?
Is it losing your job? Or the downfall of society to the point where nobody needs a programmer anymore?
Most people have a job in bad times. The real problem is your wages won't keep pace with inflation so you have to be careful.
Pay off debts now. Get an emergency cash fund going. Max out your retirement savings (so you can afford to save nothing if needed).
Last, but most important: you don't know what is coming. Enjoy life as best you can now.
How would you scale down your expenses (if at all?) if your real income decreased by 10 %? What about 50 %? How long could you survive if you end up with no income? What consumption can you reduce, and what can you cut out entirely? When will you start cutting some things out? How much longer will that make any savings last?
Similarly, how would you scale up the household income if your expenses increased? At what rate can you withdraw from any savings?
A secondary benefit of this exercise is that it lets you find the pain points and see if you can do something now to limit their consequences later. (Is there e.g. preventative maintenance you can do on a car or your teeth that would avoid a more expensive breakdown later?)
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In contrast to many others, I don't place such a high value on having an exact day-to-day budget. Generally, both expenses and income follow a fairly statistically stable pattern, i.e. it averages out.
You do want to know what the averages are, of course, but you don't need to meticulously track daily expenses and income to learn that -- it's enough to go back in history and sample, say, every sixth day. Much less work for basically all the same benefits.
https://ukpersonal.finance/flowchart/
The essence is to have a budget. Understand exactly how much you spend and where you spend it. Once that's done, you can work out where (if anywhere) you can save money. It might be as simple as cutting out Netflix, or as complicated as refinancing all your debt.
You wouldn't ask 4Chan about white collar workplace social norms.
When it comes to making ends meet most of HN lives on easy mode. If your situation is anything other than easy mode then the usefulness of anything anyone here has to say will approach zero. You don't know what you don't know. This means that even when someone is an outlier and has great advice on a topic in which you wouldn't expect is you won't be able to identify it.
So hedge your bets by asking your questions in communities that have relevant experience in the topic.
I don't even lock my door. If I left money on the side walk someone walking by would put it in my mail box, or even drop it off.
When you have a strong community everything will be okay.
I also have all the traditional planning. Food, gear ect. Don't be the guy who does his hunting at the supermarket, grow your own vege section.
But you can not do everything yourself a strong community is the most important thing.
We are tech workers most of us can work remotely, which really opens up the options of were we can live.
Long term find a wife with the same ideals and get some land to call yours, where the swings of government and media opinions can not affect you.
The consequence of this is to prioritise a long mortgage over total repayments and to not necessarily pay off as much as possible, even keeping money back for day to day spending, assuming that's budgeted properly. Obviously there is a trade off; the smaller you can get your mortgage the more flexibility you have around adjusting repayments to help with living costs.
The long term view of inflation also suggests it might be better to hold more debt to ease things now. Though obviously that depends on how your wages might change in the longer run.
1. Move into government work just prior to periods of economic downturn - making the standards and requirements that will be needed in the future.
2. Move into private sector work during parts of economic upturn where you could take advantage of all the stuff you had a hand in during step 1.
However not sure if world situation will translate to problems for tech industry.
0. Empower and partner with your spouse to make all the financial decisions. They should know absolutely everything. You can’t do it alone.
1. Zero debt. For a while I had house mortgage that I repaid at the first possible availability of bulk cash.
2. Max out tax saving investments. Try not to pay one penny more tax than absolute minimum.
3. Max out life insurance you can afford. Don’t combine life insurance with investment.
4. Buy good health insurance over and above employer provided.
5. Monthly investment in equity index fund.
6. Only when you are done with all the above spend whatever remains on your monthly expenses.
7. Don’t postpone making of a will.
Assuming you’re in the U.S. or similar you don’t need a farm, a shotgun, and a Honda full of silver ingots.
Diversify your savings, avoid consumer debt, and be wary of new monthly payments.
Consider changing to more stable job if appropriate.
That should do it.
Prepare for failure of government/war? Go be a "prepper" - Ie. have a few months worth of food and water stored. (not that hard in tins/pasta/rice). Get small solar panels for phone charging and a gas/wood camping stove. Download wikipedia.
In both cases, prepare to move countries. Often it's better to just leave than try to survive in subpar conditions. Beware that millions of others may be trying to do the same, and lots of governments don't like millions of refugees. Get yourself a passport for another country and you'll be far more likely to be let in.
Can't do that? Then don't bother, nobody can predict the future. Any advice you might receive here could backfire as much as it can pay off.
- one house or a piece of land can lose value depending on local conditions or be hard to sell when you could need cash.
- debt can go either way, maybe inflation makes going into debt right now a good idea, or maybe you won't be able to afford in the future and the investment does not pay off.
- savings means basically losing money right now. Will this trend hold? Who knows.
Look - I have small kids too, so I'm not advocating that you ignore it. Everyone with dependents should be proactive in considering how they are supported (in "good" economic times too). There are just so many interconnected pieces of a global economy that a wide brush of doom is far from inevitable.
The first question I would consider: What is the funding source of the company that I work for? Are we public and thus directly dependent on market swings? Or are we VC or private-backed, which is indirectly affected but could also weather the storm if forward-thinking? Or are we private + bootstrapped, which is generally a good thing until your customers start fearing the doom-and-gloom economy too.
In mine (UK) one the biggest outgoing costs is energy, mainly heating. There are various government schemes to help people with recent bills and ways of reducing energy consumption.
Now might not be the best time to work in a startup that sells discretionary goods/services.
If you've got a solid job in an industry not too vulnerable to supply chain shocks or high interest rates you should weather the next downturn, as long as your expenditure is under control.
Likewise, durables can be hoarded before price hikes hit. Try to figure out all the incidental <$100 things you'll need for a few years. Invest in containers and shelving for them so that they aren't lost in a pile, but have a proper space where they can be put. Just having some cardboard or cafeteria trays around can be enough.
Regarding the financial investments, the model I would use for crises is migration. When people move their money around and put it in different assets, train for careers, etc they are migrating from one "place" to another to avoid impending disaster, just as people migrate seasonally to go where the food and good weather is. If you get this simple call of "stay or go" right, you avoid the majority of the impact from economic crises, and can even come out ahead.
For me, I've set crypto as the place, and privacy coins as a large part of the allocation. It's probably not the place for everyone, and I respect the people going with cash, but it's a call made specifically on the premise of migrating to something that governments have little influence over, since, as you've probably noticed, they're doing all sorts of things that upend investments lately. And if I got the call wrong, they'll ban it and render my assets illiquid, but I'm relying on a game theoretic analysis that says that some countries will embrace it in order to get ahead of those that ban it, and therefore I'll have a way out to fiat when I need it.
Now is probably not the time to quit your job to work on that startup that you've always dreamed about. But that's more about your family situation. I have young children and I wouldn't quit my job even in good times.
"see a good opportunity:" Perhaps a career move shows up that's "defense" related?
"clear risk for your family:" Maybe if you live near the Russian boarder consider moving.
"Mostly keep doing what you've always been doing:" Maybe avoid traveling to certain areas. Assuming you've always been responsibly saving, keep doing that. Investing is a good way to beat inflation.
The worst thing you can do is panic. That's when bad decisions are made.
Also be ready to evacuate from the city when time will come. Move early, roads will be stuck very quickly. Keep your car tanks full, keep few cans of gasoline as well.
Budgets are great, if you have steady income. If not, you have to think heuristically rather than algorithmically - how much of my current bank balance has to go to fixed costs like mortgage or rent, food, etc? If the answer is less than 100%, you're already doing better than a lot of people.
Learn to do as much as possible yourself - cook as many meals at home as you can, do your own repairs, make things you need instead of buying them. Invest in tools, because unlike stocks or (God help us) crypto, tools are actually useful in and of themselves. Go find a copy of the old Reader's Digest big yellow DIY home repair manual at a thrift store and keep it.
My rule is, never buy anything new you can get used, never buy anything used you can get for free, never buy anything period you can make, never make anything you can recycle from stuff you already have.
Learn what utilities actually cost in practical terms - how much does it cost to run my AC/heater for an hour? Cook a casserole in the oven? Leave a light on overnight? You'll find yourself actually considering how you use them a lot more. That might sound like Sad grumbling about the heat being turned up above 75°, and maybe it is, but maybe Dad had a point.
The hardest thing to grasp, if you're currently doing well, is how you get locked into survival mode when you're broke. You have to learn how to deal with that, and a lot of people can't. If hard times come, all you will think about is today, and the coming week, and the coming month. There are people who are able to, say, work a low-paying gig 40 hours a week and come home and work on side hustles and entrepreneurial projects - Stephen King working as a teacher and in a laundry and coming home and writing at a tiny desk in his own laundry room. If you're one of those people, you are very fortunate. But the likelihood is that, if you do find yourself in tight financial straits, you will spend your spare time just decompressing from whatever you're doing to try to survive.
Hard times are easier to bear if you've learned to be more self-sufficient and make do without luxuries and do more with less. You've seen that meme from It's Always Sunny In Philadelphia about "old poor" vs "new poor"? That's the difference. New poor is constantly shocked by how hard everything suddenly is, even the things that used to be simple. (A Costco card is not very useful if you live in the middle of the city and can't afford a car, for example. You ain't hauling a year's supply of toilet paper home on a bus.)
Old poor knows all this and is not surprised by how much shit the world can throw at you. Old poor knows that the AA folks have the right idea: you need to accept the things you can't do anything about right now, do what you can about the things you can, and know the goddamn difference.
So really, all of this comes down to reframing your strategies for making it from one paycheck to the next, and adjusting your expectations accordingly.
Also, ditch the streaming services and learn to love The Pirate Bay, and I say that as someone who's made much of his living for most of his life off of creating media. :-D Especially if you've got kids - being able to summon Frozen or Encanto on command even if you can't pay the broadband bill until next week is parental magic. Or so I'm told - I never had kids because I grew up like this and I didn't want to make someone else suffer if they don't have to.
Good luck, man, and if you're doing well now, don't ever forget to be thankful for it. It really comes down to luck most of the time, despite what the nerds will tell you. Being smart and working hard isn't enough, or half the undocumented dudes I've ever known working in the orchards and fields would be living like Kardashians, and all the trustafarians whose parents bootstrapped their crappy useless startup and let them live in the guesthouse rent-free would be standing by the freeway on-ramp with signs that read WILL CREATE INNOVATION IN THE LUXURY TRAVEL SECTOR FOR BEER AND A WARM BED.
If you’re really truly convinced of an impending recession the best thing you could do would be to take out massive short positions. However, I suspect that you’re not so convinced.
Beyond that I’d suggest just living a life within your means. Calculate your bare cost of living expenses and save up a six month emergency fund. If you’re seriously concerned then go for a 12 month emergency fund.
Saving and having an emergency fund are crucial, in any time period, but especially during uncertain periods such as we're starting to see now. Make an honest list of your actual expenses of the last few months and question wether each one is worth it. House, car, Starbucks, gym, takeout, ... where can you save meaningfully?
If you've already saved some money, consider spreading it. Different accounts at different banks. ETF's with broad exposure and large capitalisation. Perhaps a little bit in alternative sources of value like gold or crypto, in case financial markets become unstable.
If it really goes to shit: oats are a cheap food with good caloric value. Easy to store for a long period of time. Actually look at the prices of the things you buy and compare it to the value of oats. That ~5$ latte at Starbucks could keep my family fed for a week on cheap oats from Costco [1]
[0] https://www.bogleheads.org/wiki/Bogleheads®_investment_philo...
[1] https://everydaythrifty.com/grocery-store-price-comparison/ 5$ * 0.06$/oz = 83 oz = 5.1 lb.
For this you have to ditch the idea of signalling your wealth to your friends and colleagues and, instead, be content to be seen as poorer than you are. Perhaps you don't buy a new car (ever). I'm still driving the car I bought in ~2010. Perhaps you live in an ugly/old building.
You also have to be willing to continually trim spending to exactly what you value. For example, I personally value eating food made with high quality ingredients, so I'm willing to spend more on these ingredients, but this also means I need to spend less elsewhere so I stopped going to bars and cut down on my eating out.
The upside of this approach is being able to do the things I really value while still having a large buffer of funds in case something happens to me or the economy as a whole.
The end result is total financial peace of mind.
That's a pretty bleak outlook, I know. However right now the depressive realism I had when I chose to switch is looking prescient, up here in the North East of Europe. No worries. :)
Insurance: it depends which country you stay but you should have medical insurance.
Gold/Silver: Gold/Silver use as a hedge. If you have these metal in your wallet good.
Paper money : if you can, invest money in currency basket.
Digital : keep some coins secure.
Expenses: Reduce non essential expenses.
Health: Keep yourself and your family healthy by doing daily workout or yoga.
Silks: learn new skills. Make yourself valuable.
Survival mode : Always on it. Learn to analysis situation and act.
Gold is already jumped so that is too late. Crypto seems correlated with stocks.
I’m counting on a large gap between salary and expenses to save my ass
That way, you will be more easily able to provide your family with food. Especially if both you and wife can do the farm work.
And perhaps, with the farm at some point you might be able to live without needing to work much.
Some inspiration can be found here: https://www.youtube.com/watch?v=T15gXm6ha_I
Side story: One time at a co-op I bought a 9-pound bag of cashews (unsalted!). Just for a lark I ate nothing else until it was gone. No downside (but several years before I wanted more.)
Trim excess expense that doesn’t bring you something
Invest the excess into something durable (house, stock, gold, etc)
Don’t hold dollard in your account, it’s value is going down
Look into increasing your value/salary
I was thinking of buying some shelf stuff that keeps value during a recession for selling, but I don't really know what to ge yet. Any ideas?
US petrol prices are very cheap.
So here goes.
It's reasonable to pull your fiat and putting it into something hard, like physical silver. Not bars, but the smallest units of coins you can get.
Insurances and other stuff that relies on the stock market are going to go bust, so you might want to consider cancelling.
I advise against gold, because governments everywhere could decide post-crash that your Gold belongs to them. It's not unprecedented. There's no guarantee they will pay you for it with whatever money we'll get to use post-crash. When trading Gold is outlawed, your Gold becomes basically worthless.
There's far lower risk for that to happen with Silver. Gold seems to be a great short term investment right now, with the chance of Gold shooting up relatively soon relatively quickly being ... uh ... relatively high. So for short term greed definitely an option, but in current times I wouldn't bet anything on it for the long term.
This is for preserving your wealth and moving it post-crash.
Then, of course, comes food and water. Everything that keeps long-time is good. Given that your fiat is going to go poof, spending a lot of money on food that lasts isn't a bad idea. Worst case you'll have long lasting food you don't need, best case you have food.
Then there's cooking. Ignoring that power is getting more and more expensive, there's no guarantee you won't be suffering from BlackOuts, where ever you live. Personally I've bought a few tanks of propane gas, which doesn't go bad and lasts for a long time. It's like camping. Gas + Cooker.
If you can find anything useful regarding solar, then go for it as well. Always have more than one options available. It's important to never bank on a single thing working out as hoped.
I advise for keeping a few months worth of money on your bank account. You know, regular payments, etc, but the majority should be converted into something you actually can own. That includes cryptos. There's little reasoning to believe that people won't jump into cryptos just as much as hard assets.
In case prices drop: don't sell. In case prices shoot up after the drop (or without the drop), consider not selling silver/cryptos for a currency that's going to go poof anyway unless you have really good use for that fiat.
It's not about getting rich, it's about having something you can sell for the new money, post-crash.
I strongly advise AGAINST hoarding things with the idea of selling them to others who need them. When shit really hits the fan, these people will be overrun and killed by the angry, hungry, desperate mob.
Yes, the world and the people really are in that bad of a shape right now.
Think about everything and do not do panic actions.
Talk to others about what they think.
Do not let yourself be hindered in thinking about this.
Don't believe anyone who tells you it'll be fine anyway, because the risk isn't worth the short bliss of ignorance until reality smacks you in the skull with a metal baseball bat.