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?

I'd say save the money. @sunfloweryy. If you lose income, you can make it up from your savings. If you don't need to do that, you can pay a chunk off the mortgage when you get to the end of the fixed term and the economy is out of the woods.

Once you've used savings to pay down the mortgage, you no longer have the option to live on that money, should you need to.

In the late 90s I had employment agencies in a bidding war over my hourly rate because there weren't enough administrators who had a basic understanding of MS Office, I knew people earning decent money doing twilight shifts in warehouses, in my town there was a labour shortage for a while.

I wonder what things will be like in maybe 2 or 3 years

If things have a chance to bounce back by then I think many people could weather a downturn

Much longer than that and people could end up homeless

I personally think that inflation will go up after lockdown, huge pent up demand. That could well lead to interest rates rising

I agree. We're already seeing food inflation, with the constant "special" offers and multibuy deals disappearing. For the moment, that's offset by the big reduction in the price of petrol, but once people get back to work that will creep up again.

I also think that the effect of "pent up demand" will be exacerbated by contraction in the retail sector. Debenhams looks likely to go, Homebase is dead on its arse, WH Smith must surely hit the buffers soon. There will be other high street names that are struggling, I'm sure.

When there are fewer retailers, there's less inclination for them to compete on price, so I think a jump in inflation is inevitable. Maybe not across all sectors, but certainly food and clothing.

03LakieLady same in my area, everything cut to the bone with austerity including personal budgets for disability, carers, respite, social care and even children's services. The town hall even closed. The program of cuts started in 2009 and continued till now.

Devlesko some people of all age groups have never been affected by a recession. In the current young age group lots are on zero contracts and benefits have been cut to the bone so I'm sure a lot do know what a pitiful existence it is, to have little to no money. The younger people on this thread may be the prosperous ones but lots are in a low paid/low and zero hour contracts, high rents, can't save and barely existing way of life.

Also lots of the tips on the thread are good but I'm sure quite a few already live like that, surely people shop around for the things they need like utilities, insurance and even holidays, I thought that had become more mainstream or maybe I spend too much time on money saving expert.

The poor will remain poor ad people etching out an existence will continue to etch put an existence. The people who will truly suffer are the ones who either can't or won't adapt. I. E being on universal credit is awful but if on it and a recession hits then you have nothing more to lose and you just carry on the same. Albeit jobs won't happen and you will have a longer time on it due to the lack of jobs and high unemployment.

Losing your job with high outgoings would be devastating to those people with high outgoings, so they should either take the time to cut back on outgoings and save and sell their excess items.

When I read some outgoings on here I wince, so many people waste thousands on what they consider the norm, just read the threads on pcp and leasing cars, on grocery shopping and coffees. If people with this excess income have to tighten their belts then so be it.

The people already struggling, the low income working poor without slack in their budgets and without things to cut out and things to sell, these are the ones I feel sorry for.

TinklyLittleLaugh In the 90s there was family credit and before then there was government help for families with low income so there would have been some help available depending on your income.

I'm in the public sector so my job itself is safe, however the last recession led to pay freezes in the public sector and changes to salary bandings in my place of employment.

many people who started their careers after me / had less qualifications than me, quickly caught up salary wise because I reached the top of my grade.

Opportunities to progress dried up. In 2010, there was a large voluntary redundancy scheme so a lot of people left and weren't really replaced.

Its only been in the last 2 years that I've seen my employer start to go back to what it was like before. Now I see things going to shit again.

Yes I will still have a job but I am not where I wanted to be in terms of my career progression and salary.

It will be harder to move into other opportunities elsewhere as there will be more competition.

I think there will be tax increases to pay off the packages that are currently being offered.

flirty. I think DH was on about £17k, bringing home about £950 a month (remember we paid a lot of tax). Our £53k mortgage cost us about £600 a month. We were on the bones of our arse.

flirtygirl

I think every generation has it's challenges, and not belittling what younger people are experiencing, I've seen it with my dc 28 and 25, buying their first homes.
Thy were a bit luckier as we are in the NW and houses are cheaper, but I suppose wages and opportunities aren't the same.
But, they still haven't lived through a recession and the challenges that brings. I lived from the struggles of the 70's, (although a child) 80's and 90's and think that many young people today wouldn't be able to cope, the same as some couldn't in previous recessions.

Tinkly
That was us too I'm beginning to see why those years are a blur now, looking back, it was grim.
There was a farm near us, we lived in the country, they gave us eggs(far more than we needed) and wood for our burner. I exchanged half a dozen eggs a week for the local hairdresser to cut our hair. The bus fare to the nearest city was much more than we could afford.

I think the hardest thing was unemployment, you couldn't just say I'll get another job, or even both of you work, if you didn't have free childcare.
We had got on our bikes as suggested, so were miles from a support network, so dh was the only one who could work.
Occasionally, something temp would come up where I could work at night or weekend, but it was short lived and only provided pin money, nothing to make any difference.

Activities for the kids had to be free, but living in the country was a benefit for mh, and exercise.

My best advice OP would be not to move and upgrade your house.

I am in my 50's and therefor lived through several recessions. I honestly can't recall that any have had a devastating impact upon us. I work in a very average public service admin role and luckily for me, whilst I have seen several rounds of cuts I have been lucky in maintaining my job. I probably wouldn't count on this in future. I can certainly recall a few occasions when DH has been out of work but because our fixed outgoings have always been low we've got by until he was able to get another job.

We live in a 2 bed ex council house and took the decision to only have one child, partly because we wanted to retain our low outgoings and not have to move somewhere more costly. We also have second hand cars. Yes we do generally enjoy life with holidays and meals out etc , because our fixed outgoings are low we know that we would always be able to manage with one wage.

I realise that for younger people you wouldn't her the chance to buy the cheap property's did but given OP is on the position of being on the property ladder already and thinking of upgrading, that's why I'd advise them to stick with what they've got at present.

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.

I'm in my mid thirties and this has never been my experience. It has always been about getting into a field that actually pays enough money to live a modestly comfortable life. Low skilled jobs have never been in that category.

Low skilled jobs in my lifetime have always paid minimum wage or just over - poverty wages, not enough to live on without governmental top ups which can stop at any moment. And rents have just kept rising.

All jobs should pay enough for someone to have secure housing, buy food, pay their bills and have a few treats. But they don't.

I graduated in the boom. Lots of well paid jobs house prices going up. I had a great job.

I didn't realise it wasn't the norm and how lucky I was.

Recession then hit. Lost it all.

Last recession I was 28.

I couldn't get a job for love nor money eventually had to travel about and do short contracts.

Staying in b&bs in random towns. I was single. Felt very lonely, isolated, uncertain, couldn't move on with my life or plan. Felt no point making friends or relationships as had to move on.

Took years to settle the debts i built up during that time and get credit rating back.

I was like that for a few years. Felt like I swimming in treacle.

I never forgot how that felt and got myself in the public sector as soon as I could for the security. Ensured that if myself or husband lost job we could survive and pay mortgage on one wage.

Not a great way to live but indication of impact last recession had on me

Sorry tips to prepare

Cut back on everything you can.

Speak to citizens advice as soon as you need to and get help to talk to creditors and see what you're entitled to.

AbsentmindedWoman I get that wasn't most people's experience, but it was mine. My holiday jobs during university were decently paid. More than that there were loads to pick from, there was a labour shortage. That was my experience in my late teens and 20s, dh changed jobs regularly and it was shocking in the last recession that there were no jobs to be had.

There's much you can compare these current circumstances to as it will be a global recession. Plus, it's very likely that covid 19 will be something that has to be managed for many more months/years which makes recovery difficult to forecast. Practically speaking, pay off as much mortgage as you can afford to and start growing vegetables if you can. You don't need a big house to have children but security goes a long way.

You need cash.
Most people have their money in their homes or pension plans or locked away in investments of some sort. The bills will still need paying and you can't pay them in house equity or pension projections. That's one of the reasons the stock markets tank as well, people rushing to liquidate whatever assets they can.
Also banks stop lending, credit card companies won't keep upping your limit even if you're in a secure job as they minimise their exposure overall.
Cash is king.

Can I get some views?

The banks are still offering mortgages at 95%. If you have debt the sensible advice is always to pay off that debt first but I am starting to rethink this.

To pay off that debt could take two years.
In that time the banks may no longer offer 95% mortgages
In that time a person is still paying rent

Looking on a mortgage calculator when I put in my income with monthly loan payments it is not a much different deal to when I put in my income and no monthly debt payments to pay.

If you are in a permanent secure job is it not just as good to

Take out a mortgage before paying back debt as at least some of your income is now going to a mortgage and not rent.

Perhaps I am missing something here, but much of th eold advice was based on teh presumption that you couldn't get a mortgage with existing debt (loans, credit cards) - or so I thought.

What am I missing?

Are you asking whether you should buy a house while you still have debt Iwanna?

Yes, Disquieted, I agree.

@Fafoutis

Yes.

In that position now I would buy a modest house, cheaper than I could actually afford, and work out how to make some money from it.
I had huge debts in the early 90s, bought an ex-council house in a dodgy area and filled it with lodgers. It worked ok.
I would be more scared of renting at the moment.

@Fafoutis

Thank you. I think if you do as you suggest (buy under limit so you have a cushion) something that perhaps needed cosmetic work to it but was livable it actually makes sense. It would be less than rent (including insurances and overheads) and it gets you out of the instabilty of renting.

I cannot see the negative when compating it to renting another two years and the risk of

banks tightening restrictions
banks increasing mortgages to only those with high LTV
rents increasing

As long as job is secure (as any job could be) it seems to me a possible and preferable and realistic thing to do.

Anyone who wants to add a comment, please do. I know that there may be something I have overlooked.

That sounds sensible Iwanna. Be willing to put up with things that are not ideal to gain a bit of security.
Other debts can be dealt with later. I was in debt (not counting mortgage) for at least 10 years after buying a house. Long term, owning a house makes so much difference to your finances.

My husband (then boyfriend) and I were 27 and 26, we were both made redundant from our dream jobs (we work in the same industry), only renting at the time though as we were still on low wages and paying off debt from our masters degrees. We had to sign on straight away as we had no savings, I remember the job centre treated us like shit we were lucky to find jobs within 6 weeks though although we had to move across the country for work in our field. We were also really fortunate to get jobs at the same company (again) too. Been here 11 years now, have a small mortgage and I'm heavily pregnant with our first, at least we have savings this time too if we both get made redundant again.

Working from home at the moment, jobs seem secure enough in the short term but don't know how this will effect the company in the medium term say even a year down the road. Worrying less about the recession than the actual pandemic itself though, our country has dealt with it terribly especially considering we had a head start, I really worry about the vulnerable in our society especially my Mum and inlaws. Xxx

@FaFoutis

In many ways, I wish I had been less sensible when younger as I wanted to pay student loan off first, then build up savings before buying and it meant I missed the boat.

I think it is doable now as I have a bit more experience and am mentally more prepared.