Why the Fed’s Attempts To Curb Inflation Might Lead to Recession — and How To Prepare
Written by
Heather Altamirano
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Chris Cluff
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There have been grumblings of a recession for quite some time, and economist Stephanie Pomboy is warning it will hit Americans “hard” and there will be a “double-dip” profit recession for U.S. companies — which could cause big problems for the economy if earnings plunge, Business Insider reported.
“We are not going to avert a hard landing,” Pomboy said in a recent interview with Rosenberg Research, per Business Insider. “I think that this notion that the Fed could raise rates in record speed and magnitude on an economy, toting record leverage without economic or financial incident, is laughable.”
The U.S. economy will always be at least somewhat tumultuous, but having your finances in order will help weather the rough waves. Here are four ways to prepare for a recession and take control of your budget during an economic roller coaster.
Save Up
If you don’t have an emergency fund, now is the time to start one. Save at least three to six months of expenses, which will give you peace of mind and put you in a comfortable spot should a job loss — or other unexpected issues — arise.
Don’t Cash Out Investments
Stocks will rise and fall, and during a downturn, you might be tempted to jump ship. According to Ramsey Solutions… wait!
“Ride it out. Stocks rise and fall all the time. And even if you’ve seen a loss in your investments, you’ll only feel that loss if you take the money out. Investing is a long game. So leave your money alone! Keep your investments where they are and wait for the upswing to happen. Because it will happen,” Ramsey Solutions suggested.
Pay Off Debt
Having a high amount of debt is never a good idea, especially during an uncertain time like a recession. After saving an emergency fund, tackle debt one lender at a time. Start with the lowest amount you owe and keep going — this is known as the “debt snowball method.”
Pick Up a Side Hustle
Layoffs can happen during a recession and losing your source of income is scary. Evaluate your job security and pick up a side hustle to feel confident you can ride out the hard times.
“If you’re out of work or have good reason to think you might get laid off soon, pause extra payments on your debt snowball, focus on covering the basics, and stockpile cash,” Ramsey Solutions stated.
“Then, get to job hunting! Maybe you need to revamp your resumé, improve your interview skills, or completely switch careers to a recession-proof job.”
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