Thursday, November 5, 2009

Is This What a Recession Looks Like?

Are we or are we not in a recession?

It seems all the media can talk about is this recession, or lack of recession.  I was reading the news this morning and on the same news site they had two articles, one was about how the recession was over and the other was about how we had a long way to go before it was over.

Excuse me, but how can both be true?

After thinking about it I had a few thoughts.  The first is that this recent economic downturn has taught us a lot of really good lessons about financial stewardship.  I think we forget these lessons.  How many people remember the "Roaring 20's" were just before the "Great Depression?"

We need to remember to take ownership of how we spend money.  Just because we want it doesn't mean we need it or can afford it.  I grew up in a home where we waited and saved.  It was hard to see my friends get what they wanted when they wanted it, but I have to tell you I appreciated it a lot more when I got it.

It seems the recession is only as bad as your advance planning.  Those with money saved and realistic financial habits are feeling pressure but don't seem to be panicking.  Those who were in lots of debt are having a much harder time.  Before I get angry letters telling me about people you know who are in trouble by no fault of their own, I understand there are exceptions.

If you are used to spending all you make or more a recession can hurt.  Less income means cutting back.  Sometimes you can't cut back enough and that is hard.  The cruddy part about a recession is life goes on whether or not you have extra money.  People get sick, you need to move, the kids need shoes, you get the idea.  Life goes on.

So what to do?  Many people are without jobs or are making less at the jobs they have.  Morale may be down, there is less cash to spend and debts may be coming due.  This is a tough situation to be in.  I wish I had all the answers, but I don't.  I would suggest looking at what you do have.  People who have lost it all have told me they learned what was really important, and it wasn't the stuff.

If you need financial help, get it.  Find an adviser, a banker, a wise family member or a counselor.  Don't hide from the problem.  If you are stressed, get help for that too.  Spend your money wisely and don't panic.  If we want to get out of this recession (with all media outlets in agreement over the subject) then we need to make wise purchases and create new jobs.  We need to buy what we can afford and reduce our debt.  We need emergency funds and a "Plan B."  Most of all we need a firm grasp of what is important to us.

So are we in a recession?  Probably.  Do we need to stay there?  No.  Can we come out the other side as better, wiser people?  You bet.

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