To ask what recession is like and is there any way to prepare?

[sunfloweryy]

Just that really.

I was in my teens for the last one and both my parents were in secure jobs and houses so nothing really changed for me. I barely even registered anything was going on.

Now I’m 27 and bought a house a few years ago with my DH. We were hoping to TTC and upsize next year and have been saving.

I have been reading lots on here that we are likely to go into a recession as a result of all this and I’m starting to feel anxious.

Just interested in people’s experiences of what things might be like on a personal level and if there is anything we can do to prepare ourselves or make it easier?

We talked ourselves into the last one. The press can be a nightmare.

Best to make sure you’ve got your emergency fund to give you 3-6 months money.

The issue currently will be what’s left after the current shitshow and how many companies survive this.

And don’t forget we’ve got the road crash that is a hard Brexit looming very real at Christmas.

I’ve been through a few now, and to be honest, it depends on your individual circumstances at the time as to how much you’ll be affected. Some we’ve been quite badly affected and others barely left a scratch in terms of direct consequences.

That means it isn’t worth getting anxious about, but you’re quite right to think about being the best prepared you can be. Try and get your debt down, but make sure you also have a cushion of cash available if you need it. Liquidity is very important, if the worst happens and eg you lose your job or get sick, you want something to tide you over while you get sorted out. That’s true of life generally though, .its best to gradually tuck a bit away every month.

Well done for forward thinking.

My parents were made redundant from their professional jobs in the city in the 90s recession. It took a long time to get back on track and I grew up in those years poor, when we had formerly been normal-comfortable. I remember not having a fridge or cooker when the old ones broke down and having to sell the car for a pittance. Those were the New Labour years though, and I got free school meals and free uniform and school trips, without stigma, and my teachers were kind. In later years with a nice job and clothes and house, I still can’t shake off the sadness of those years, we couldn’t afford a new washing machine. But we always had enough to eat, not much meat or many treats but enough. I hope the welfare state steps up now in the 2020s because there is no other way.

The only thing I'm worried about is negative equity in the house-but as our house is worth currently about 100 grand more than the remaining mortgage even that wouldn't be killer right now for us... but it would be in the future as I'm banking on downsizing once the kids are older and boosting my currently very small pension that way.

You don't say whether your jobs are secure and that's the biggie. If one or both of you lose your jobs you're likely to be competing with many others in the same position, so even highly sought after people can struggle to find another job or might have to take lower paid work. Plus the situation is made even worse by companies having recruitment bans, so fewer jobs on offer.

Try to set your outgoings so you can live on far less than two full time incomes - mitigates against job loss or having to take a lower paid job, will help you build up some savings if you don't spend all your money each month and this will help if you have a child as you then face either spending one of your salaries on childcare, or one of you being a SAHP or working part time.

YY to making sure you can cook well with cheap ingredients and think carefully about the amount of money you spend on food and drink out of the home. It is massively more expensive to eat out, buy lunches out etc, many people easily spend hundreds of pounds a month on this without realising how much a few quid a day adds up to if you do it every day.

Definitely don't rush to move house or take on a bigger mortgage, but it's worth remembering that if prices do drop, it can be a good time to trade up, because if prices drop 20% across the board, the amount of £££s a bigger house drops might be more than the amount that a smaller house drops, so it can be cheaper to move if you can afford it that is.

But the flip side of this is that there might be fewer FTBs so it might take longer to sell your house, if fewer people have the deposit and income to be in a position to buy.

I don't see interest rates increasing in the short to medium term as there is so much personal, business and government debt out there that it would just prolong the agony. Even though certain sectors appear to have recovered since the 2008 crash, a lot of it has been propped up by prolonged historically low interest rates, making it less expensive to borrow money and be in debt. Plus people thinking there's no point saving, as they don't get any interest. But there is a point to saving, it means you have access to money when you might need it.

DH was made redundant before the global crash working in a sector which could already see where the economy was heading. Had just returned from a job interview abroad when Lehman Brothers folded and gave us the courage to leave the UK. It's not always been plain sailing but we have definitely benefited from being outside the UK in his line of work.

Interestingly despite so many people feeling the pinch from 2008/9 the whole coffee culture has boomed since then and even in the early years coming back home it always felt like restaurants were really busy.

Who knows what will happen this time around. I don't think anyone needs to worry about the possibility of interest rates of 15% like in the late 80's. Property value is only really an issue if you have to sell for whatever reason - going up the ladder usually works in your favour if you can afford it in a recession.

I think you need to be resourceful

House prices will probably be worth 25% less this time next year as it will take a while for people to get realistic on asking prices,the press will continue to ramp market as much as possible

The lockdown has already demonstrated what is really essential so some hobbies and pastimes will remain others will go

Some will be more affected than others and values of pensions and Isa s will already have fallen

Sell any crap you dont need on ebay etc cash will be king

I think decision proofing is a lot to do with having a recession proof job, or one with a good redundancy package attached.

Then you need to be able to keep your housing. At least if you have a secure income you will be able to pay your mortgage, even if changes to house prices push you into negative equity. What goes down will go up eventually - you might have to stay put for longer than you intended but at least you’ll be securely housed. Then you cut your cloth accordingly for your living expenses etc.

For individuals, The biggest recession consequences come from losing your job and then not being able to secure another one. Prior to the 2008 recession it was easy peasy to leave a job and get another the next day. That changed overnight, and hasn’t really reverted to the pre 2008 position in the intervening period.

Many, many businesses will fold as a result of this. Jobs will disappear and unemployment will soar. The government intervention will only cushion the furloughed employees temporarily - paying the wages doesn’t guarantee a business can survive an economic shock like this, far from it. Once the furlough payments stop and the business tries to resume, insolvencies will soar very quickly. Many companies will have been struggling along anyway because of Brexit, and this will be the final straw.

One other thing is if you do lose your job, try not to get too proud to want to take on a similar job with less pay. I know it is hard emotionally to do this. But the people I saw who did this sometimes never got back into their line of work and ended up in much lower paid work. Once you are out of a field for too long, it becomes almost impossible to get back in.

In the 90s recession I was you and still living at home with parents, made it hard to change jobs, I was stuck in a job I hated. In the end I sold my car and went travelling...... ah the time with of no responsibility

2008 my dh and I were on the cusp of moving house, we delayed by a few years, was really miserable as hated the area we we’re in.

This time we have a big mortgage but dh has a safe job, mine I’m not so sure, we both earn equally...

I think many families were unaffected by the last one other than a decrease in salary. It definitely knocked my socks off as I was on maternity, the company I worked at for 11 years crumbled.
This one will be worse as it is going to affect everybody. The best advice is to hold onto your home no matter what else you need to cut back on.
Many of my friends never recovered after losing their home to the bank.

Also there is almost no such thing as a recession proof job unless you are an undertaker. You don't know what sector will be affected. Most industries are linked. So another industry getting into problems can have consequences on yours. I had thought my job was recession proof before the last recession, but it now does not really exist.
But largely it is industries involved with discretionary spend that suffer first.

The one thing that should make this one easier is that all parts of the country will be suffering and so the government is more likely to take measures to try and make any recession as short as possible. Some recessions have only really impacted some parts of the country and there has been very little done by the government to tackle it as a result.

If you do lose your job and don't have another one, seek financial advice asap, even if that is online on money saving expert forum. There is a lot that can be done to sort things even when things look dire financially such as mortgage holidays, but the longer you leave it, the harder it gets to sort. Also much better financially to sell than have to have a house repossessed, you always lose out financially then. And don't turn your nose up at considering options such as lodgers. I know this is not ideal in a family home, but sometimes you just need to get through tough times.

And recessions do happen reasonably regularly. Unless you are very lucky you will be affected by them a few times in your life. So it helps if you can keep that in mind financially. I know people with good incomes who thought it would always be like that and then cursed how they had no savings when a recession came.

@EmeraldShamrock You are always much better to sell than be repossessed by a bank. People usually leave it too long before getting advice when they are struggling.

After a bad childhood I’ve always worked hard to ensure mine don’t endure the same. We don’t take on debts apart from a small mortgage, save every month and limited the size of our house and family so that it could be afforded on one salary should either of us lose our jobs. I’m not fussy re work though and would take pretty much anything to feed my family.

"I’m not fussy re work though and would take pretty much anything to feed my family."

Me and my husband are both the same. I know so many people who will only consider professional jobs. I'll do whatever when it comes down to it, I've cleaned up shit and served hamburgers before and I'll do it again if it puts food on the table.

Just a reminder.
Saying that you are ready to do any job, including cleaning shit, doesn’t mean there will such a job available to everyone .
It’s nit as simple than ‘if you really want a job, then you will find one’ or ‘if you dint find a job, it’s because you are too difficult’.

When recession hits, it’s not just professionals who struggling to find jobs and you could also argue that applying for jobs when you are massively over educated/trained for it is stealing those jobs from the people who can’t do anything else.....

Professionals are also at a disadvantage for cleaning, retail etc jobs if they don't have any experience.

If there are people who've proved that they're able to do work that requires certain skills and is often physically demanding, employers will choose them first over someone who is used to sitting around in an office and will be off when they do get a job in their own field.

Just because a job is low paid, needs no qualifications and there are lots of people needed to do them, doesn't mean everyone can do it well.

@QuestionMarkNow what makes you assume I'm a professional?

No one said that they would definitely be able to get a job but I know plenty who would refuse to do something that they consider beneath them.

When it comes to a recession, just because I have other skills doesn't mean I'm going to not take a job so others can have it instead. Does anyone really think like that? I don't have enough money to be thinking that way, sorry. It's every man for himself when the chips are down.

Thanks for the comments. I feel a mixture of terrified and reassured that we can’t do anything more. Currently we have about 80-85% equity in our home based on the price we bought it at. We have savings but probably not enough for another house deposit if we lose all our equity. But I guess enough to tide us over if we lost our jobs so that’s something.

The being in the same industry as your partner thing has made me anxious too. DH used to be in a secure industry (banking) until a few months ago he made a big career change into the public sector. I’m public sector too so I guess we have to hope the government don’t make cuts or we are both at risk

I've been through a few I'm 60. Don't even think about upsizing yet, instead save every penny you can as you will need it.
I remember Black Monday in 1987. I was a single mum and had just bought my first home, I was working part time and just about ticking along.
Interest rates shot up to 15% so my mortgage was astronomical. I only just made it by working agency nights on all my days off but we very nearly lost the house.
I made sure since then never to get into debt and to always keep a good amount of savings for emergencies.
Also think of an alternative way to make money if you lose your job.

you could also argue that applying for jobs when you are massively over educated/trained for it is stealing those jobs from the people who can’t do anything else

You could say that.

But if it comes down to it, what are you going to do? If low skill jobs are all there are, you have as much right to anyone else to apply for them.

OP, some good advice on this thread.

If your job is secure and you have no debts, then you won’t be in a very bad position at all. If you lose your job, then I second the advice to be resourceful in getting another one.

For now, pay down debts and save as much as you can. Rethink extravagant spending habits and DD. People who can live on very little are in a much stronger position.

In the slightly longer term, if you avoid (or quickly get out of) negative equity, lower house prices are actually better for trading up as the jump to the next level is much smaller.

I was a qualified nurse then but suddenly hospitals weren't taking anyone on. I did cleaning, childminding, pub work anything to earn a buck on the side.

Employers want their employees to do a good job. They are more likely to employ someone for a cleaning job who has worked as a cleaner and has good references, than someone who has had an office job. Why would you employ someone that you have no idea how well they would do the job?
What I have seen more is people doing fairly decently paid jobs refusing to take more lower paid jobs in their field, and never being able to get back into that field again.

If there is any training you can do that will make you more employable, see if you can do it online now.

I think this will effect public sector workers eventually, but it’s more likely to involve reduced hours/pay cuts/lack of pay rises than lots of job losses.

Ok I think we might have to sell
Dh has already been asked to take a hefty pay cut and we were already not doing great with our big bills. Very real possibility he’ll lose his job and not be able to get another one (finance)
So with moving down the ladder/down sizing - better just to do it ASAP? Or try anyway - I guess things might take a long time to sell.
Do rents tend to go down too? We could divide off a small annexe to rent though even before this we wouldn’t have got much for it based on our location.