A recession may still be a way off, but it feels more inevitable. A lot of recent growth has been driven by growing levels of indebtedness. Low rates of interest have led to widespread accumulation of debt and also quite possibly the worsening of quality of debt. Small increases in interest rates, driven by inflation and restructures to the economy, could now have a much more
marked effect on the level of defaults and consumer spending patterns.
If and when the time comes, I want to be clear on where I want to be.
A decent personal cash reserves
Full time employed in addition to running the business
A decent reserve in the motel bank account
All debts that have the potential to be interest bearing in the next 12 months, paid off
Until this position has been reached, it’s not worth thinking about investing. When the recession comes, the opportunity will come to think about investing anyway.
Will it be enough to get us through? Possibly not. It depends on how long the recession lasts.
The realisation for me is that planning for the recession starts with how I conduct myself on a day to day basis. It starts with how I change my behaviour today.
