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?

OMG, yes, I forgot, up to 15% mortgage rate, we went off grid to keep our home.
It's amazing what you'll do in times of hardship.
It does have a profound effect on you though and when you've seen a few like me, the frugal lifestyle quite often becomes your norm forever.
I don't mean you never have treats again, but you learn the value of money and the difference between need and want.
One of my criticisms of this generation, but they haven't experienced this before, so I don't mean it in a nasty way, they just aren't prepared because they never have had the need.

Oh don't start that business Dev.

sunflowery

If one of you lost your job, and couldn't find another for as long as recession lasted, would you lose your home/ have to sell, and maybe lose equity?
If yes, don't plough money into your mortgage, as unfortunately if this should happen, you'll just lose that money.

If you could manage on one wage easily it might be good to pay a lump off, but only when any other credit is gone.
Honestly, the only way to do the best you can is to reduce outgoings.

Savings are better than overpaying in a recession OP.

don't start that business Dev but that post was almost an explanation why the OP started the thread. Many young adults now have never known a full recession.

Those if us who, merely by dint of having lived through one or more, do know and so have a different mind set about it.

Having savings is only 1/3 of the battle. Reducing outgoings to the minimum and learning how to make a little of anything go a long way are the other 2/3

A positive mental attitude makes it a little easier to bear!

It is great that you can save that much, l assume other than mortgage you have no other debts?

You need savings for the unexpected ie, job loss but once you can realistically manage for 6 months in the unlikely incidence you both lost your jobs, then pay off the mortgage as fast as possible.

Unless you have a very long term fix always assume mortgages could go up hugely, people here have said how devastating some of those hikes were. Either pay it down or fix long term.

When l was in my 20s with my first flat in the South West in 1991, l was so worried about having a mortgage alone, and a tiny new business, that l worked 70 plus hours a week to pay it down, whilst most of my friends were buying their first cars on finance.
I was so frugal. Everything l owned was second hand from charity shops, my car was worth a couple of hundred pounds....
At that age you have youthful energy on your side!

By 30 l had enough equity to put a small deposit on a (admittedly grotty ) Zone 2 London flat which enabled me to take a job l wanted.

I shared it by turning the living room into a bedroom and renting it out, and carried on paying down the mortgage....still lived frugally,

These were the best decisions l have made in my life, as despite job losses, sever accident injury, and a business almost failing l have always managed to have a secure and affordable home.

Keep up your discipline now, earn any extra you can and don't spend it!
The last thing is ...remember it is 10 x harder to achieve these things as you get older.

@Devlesko I don’t take it personally when I hear people criticise my generation for the way we spend because tbh I agree! I have lots of things I don’t need and I’m a sucker for ‘nice’ things - clothes, home decor etc. It’s in your face all the time on social media etc and it’s hard but I do try to save more than what I spend on crap I don’t need.

If one of us lost of job we could probably survive. It wouldn’t be pretty but the mortgage could be paid and we wouldn’t die. Goes without saying that we would go without holidays, treats and Sky etc. If we both lost our jobs I don’t know how long we could ‘survive’ for. I guess a year or two if we drained our entire savings pot. I’d feel so sad about that tho .

Thanks @FaFoutis we’ve been wondering about that a while. We will keep saving then!

@Dragongirl10 no other debts, we are quite lucky in that DHs new job is on route to my workplace so we can share a car. It’s old but tbh we aren’t car people so don’t mind too much!

Most young adults are accustomed to having insecure employment. Most don't own a home.
It's not the same as our experience was. Rents will be their problem.

The only time to overpay if you are concerned about the future is if you are just above the LTV for a lower rate at your next fix.
e.g. if the interest rate for 75-80% LTV was 0.75% lower than 80-85% LTV and you were at 80.3% LTV it would probably make sense to pay off 0.35% of your mortgage.

Try to save and avoid going into debt.

Most young adults are accustomed to having insecure employment. Most don't own a home.
It's not the same as our experience was. Rents will be their problem

Do what? Younger posters like OP shouldn't bask such questions and older posters shouldn't offer their experiences?

It hardly matters what the specific difficulty will be, each generation has its own hurdles to overcome. The mind set needed is the same. Reduce outgoings, learn to live being frugal, don't let it destroy your mental health.

Yes the mindset is similar but the practicalities are not.
I think they are more well equipped mentally but god only knows how a recession will work in the rental sector. It's already very difficult for unemployed people to rent privately.
As far as I recall we only had foodbanks during strikes. Now it's normal.

(at the moment, wealth is concentrated in the hands of the over 60s)
Based on what?

The 2008 recession was grim for us, we were trying to sell our flat, I was on mat leave without a job to return to and dh was made redundant 4 or 5 times in quick succession, I forget the exact number. We put our flat on the market a few days before the collapse, it took 18 months to sell and we sold for the same amount we bought for 4 years previously, so we were lucky, but we couldn't afford to buy anything, we rented for years and weren't sure we'd ever be able to own property.
Dh was on jobseekers allowance, the biggest shock of that was how long it took to get any money, we were using credit cards to buy food for a while.
We were very lucky in that I got a job quite quickly, a relative paid dds nursery fees for a few months. Dh took part time work in a warehouse for a few months as this was the only job he could find.
Tax credits helped us out a lot, however as we were getting back on our feet they were miscalculated and we ended up owning hundreds of pounds which took ages to repay.

I think of all of it the biggest shock was dh being out of work, we live in a prosperous town where in the 90s there was always plenty of decently paid low skilled jobs. We never imagined we'd be out of work ever.

Sounds like you're in a strong position op. I personally think that inflation will go up after lockdown, huge pent up demand. That could well lead to interest rates rising. We're planning to overpay our mortgage while we can.

I think of all of it the biggest shock was dh being out of work, we live in a prosperous town where in the 90s there was always plenty of decently paid low skilled jobs. We never imagined we'd be out of work ever

I think that's the difference with now. Young people now, in most of the country, don't have that experience or expectation.

wealth is concentrated in the hands of over 60s because they have lived long enough to pay off their mortgage. That is all. Anyone who is buying an house will on paper be much wealthier once you pay the mortgage off. Most do that before 60 or at least 65.

@FaFoutis I did not have the experience or expectation of decently paid low skilled jobs and I am 50. There did not used to be any minimum wage. The level of pay of some jobs was shocking. Where I worked when minimum wage was introduced some staff had a significant overnight pay rise.

There are always jobs that no one wants to do just as there are now. There are always jobs in care homes, picking vegetables in fields, etc.

Me neither, but it wasn't uncommon.

Fix your interest rate if you haven’t already. Pay off as much as you can on any other debts, and save as much as possible. Forget moving for the foreseeable. Then strap in and ride it out. It will pass.

It’s shit, short of having loads of cash to tide you over, mentally prepare yourself to go through tough times, it won’t go on forever.

I think it depended very much where you lived in the country.

Yes all.
I'm not sorry that I didn't have it. It meant that I missed out on the hideous materialism of the 80s and instead lived in a van (and sometimes picked vegetables). I had a lot of good times.
Community, creativity and resilience all good things that can come out of a recession.

Jew bought our first house in 2007 just before I’m the last crash and within months it had lost 20k value putting us massively in negative equity. It took us 10 years to be able to afford to move.