00:00When a recession is pending or if we have a little bit of warning right now, there's some things that you can do.
00:07So let's go over some of the things you can do. Got your pen ready? Pull it out.
00:10One, I want you to create a noodle budget. So what does that mean?
00:15I need you to drop down and get your noodle on, girl. Hey, drop down and get your noodle on.
00:19So a noodle budget is this. It is your baseline budget.
00:22Remember back in the day that you had to eat ramen noodles because you didn't have much money for anything else?
00:27Meaning that you really only took care of your necessities.
00:31You should have your noodle budget on deck.
00:33So in case you have a loss or a decline in income, you could drop down and get your noodle on and live at your noodle budget.
00:40Two, call your service providers now.
00:43They're a little bit overwhelmed, I'll admit, but almost everyone that you pay money to, your utilities, your mortgage, your insurance places, everything.
00:52Almost everyone you pay money to has some sort of program in place because they understand we're in unprecedented times with COVID-19 and how that's affected your income.
01:03So share something like my income has been negatively affected as a result of COVID-19.
01:07What program do you have in place and how do I apply for it?
01:10So do that.
01:11Three, reduce your debt payment.
01:14So I am a girl who loves to be debt free.
01:16I am currently debt free.
01:17I'm sitting in my debt free house.
01:19I have an investment property that's debt free.
01:22I paid off my student loans.
01:24I don't have a car note.
01:25I don't like debt.
01:27But when a recession is potentially looming, it's more important that you have a strong cash position, meaning that it's more important that you have more cash and I would worry less about debt.
01:38So it doesn't mean that you shouldn't pay your debt, but I would honestly be paying the minimums to my debt and putting the rest in an online-only savings account because an online-only savings account is going to give you more interest and I would not open a checking account at that online-only savings account.
01:56So that way, the only way for you to get your money is to transfer it back to your normal bank at your normal checking account.
02:04And that's about a 24-hour wait.
02:06So it makes your money inconvenient when you use an online-only savings account.
02:10An inconvenient money gets saved.
02:12That's a tweetable.
02:14If you won't twote me, you better tweet me at the Budgetnista.
02:17Four, I want you to prepare to invest.
02:19So if you're someone whose bills are great, if you're someone who has a good amount of money in savings, then prepare to invest.
02:26So preparing to invest just means do you have your brokerage account?
02:30Is it open?
02:32Preparing to invest means is the money transferred there?
02:35Have you taken a class or a course?
02:37Have you reached out to your financial planner, financial advisor?
02:40Preparation is key.
02:41Then five, assess your current job.
02:44So what does that mean?
02:46Do you think that your current job is pretty stable?
02:49Are you an essential worker?
02:51If not, then that means it's potentially on the chopping block.
02:54And I want you to move accordingly now.
02:56If you think that you might not have a job in a little while, then I want you to make a move now.
03:01Should you be looking into applying for unemployment, especially dropping down to your noodle budget?
03:06So just assess your current income and your current job because at this point, nothing's really guaranteed.
03:11Now let's talk about what not to do.
03:13Do not go running to the bank and pulling out all of your money.
03:17Sis, there's something called FDIC insurance.
03:19It's not 1930 when they didn't have this insurance and if the bank closed, your money was gone too.
03:26No, FDIC insurance will protect your money up to $250,000 per account per bank.
03:34So if you have more than $250,000 in that account, holler at me.
03:39No, sincerely, if you have more, then certainly transfer it to another account so that all of your money is protected.
03:46Don't go pulling it out.
03:47Also, don't go pulling money out of your 401k if you have more than 10 years to retirement.
03:53What we forget sometimes is that recessions are a natural part of our economy.
03:59They happen every 10 years or so.
04:01The last recession happened 2008, 2009.
04:05It is now 2020.
04:06We've been late.
04:07Recession was coming.
04:09COVID-19 did not cause a recession.
04:11It was merely like the switch that flipped it on.
04:14Okay.
04:14And so what that means is, is that with recessions, declines come inclines, right?
04:20So we will go up and we will go down.
04:22Think about a rollercoaster.
04:23You can't continuously go up on a rollercoaster forever.
04:26Eventually it comes down and that's what we're experiencing.
04:29And you can't go down forever.
04:31Eventually it will go up.
04:32And so within the next 10 years, we will go up.
04:35So if you pull your money out of your retirement account now, you're going to lock in your loss.
04:39Right now it's a loss on paper, not in real, real, real life.
04:43You're going to lock in your loss.
04:44If you have more than 10 years to retire, we're going to go back and so will your retirement account likely.
04:48So don't pull money out of your retirement account.
04:52I also too, during these times, I don't want you to co-sign.
04:55Now I'm not a big fan of co-signing anyway, but especially now, and here's why, because someone who is normally very responsible might lose their job through no fault of their own.
05:05So you might co-sign for your sister who's never late on a bill.
05:10And then during the, during this time that we're living in now, she loses her job.
05:14And then that means you are equally responsible for that bill.
05:17I also don't want you to get any new debt.
05:19People have been asking, should they buy a house right now?
05:21And I'm like, eh, I would wait to see how this pending recession is going to, um, to, it's going to really shake out because I really rather you have cash on hand for one of two reasons.
05:33One, having more cash on hand means that if you do lose your income, you will be able to continue to, to survive.
05:40And two, having cash on hand means you'll be able to take advantage of what happens during recessions, which is that you'll be able to invest in things that you'll be able to pay pennies on the dollar for things that cost more money.
05:53Home prices tend to drop during recessions.
05:56So does the stock market, we've seen it drop already and it rebounded, um, somewhat, um, but I don't want you to lock up your money in debt.
06:05If you are able not to, and five and what not to do, don't take your income for granted.
06:10I know, you know, when I was a school teacher before I was the budget needs to during the last recession, I just knew I couldn't lose my job.
06:17There's just no way.
06:18And, um, I did my whole school closed and I took my income for granted.
06:23And so I wasn't quite prepared.
06:25So don't take any income for granted.
06:27I don't care if you're a police officer.
06:28I don't care if you're a doctor or nurse, nothing is for certain.
06:32So be mindful of that.
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