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?

There are a lot of new build flats in parts of London that are going to have to drop in price or stay empty. If those drop then there may well be a ripple effect outwards.

It will partly depend if people are forecasting a sharp v shaped recession or something longer term. If it’s 18 months of serious pain followed by 24 months of gradual improvement then people may sit it out. On the other hand if it’s 18 months of severe pain and 60 months painfully slow crawl out of the morass then prices will have to drop.

There’s no sure prediction but wondering which industries will hold out for longer? Non-essentials are the first to drop, (red lipstick makers excepted) and social media stars of the future will be the make-do-and-mend ones rather than botoxed gazers. But public sector, education, energy, food, these indistries will also change, the question is how much policy support they will get, and as PPs have mentioned, how long the recession curve is.

@stella Generally any discretionary spend, except for the super rich. They will still be fine.
So leisure industry, clothing, cars, builders, estate agents, home decor and furniture, holidays, etc. People focus on what they need to spend. So some clothes, food, basic travel. There will still be people with money to spend on the leisure industry, but far less.

My budget is so limited that I am not looking at any grand plans - simply to get on as cheap as possible - add what little value I can )no kitchen, carpets, do up the garden) - the kind of changes a practical person like me can do on a modest budget and then when I have say, two years payment in move to something a bit better (quality, 2 bed), etc and I think that will be it. My budget and plans are modest I am just thinking of ways that get you off the ground and then onto something that you would actually want to stay in (a one bed or two bed in a nicer area as opposed to a bedsit/studio above a shop kind of thing).

Sounds grim but actually think it is more normal than people realise in London where the prices have always been slightly skewered - just not as much as now.

Stuff people can use, consume and get value from at home has been doing well recently because of lockdown and I think will continue to even after it's relaxed. That could be true of both skills and physical items. I think we will see more entertaining at home, people visiting friends and family as leisure and recreation for at least some of the times they might otherwise have gone out, especially if we get a semi-relaxation of lockdown for a long time.

As a result of this thread we've decided to stop our mortgage overpayment and save it instead. If we don't need it it will get swept into our mortgage on a six-monthly basis rather than a monthly basis but if we do need it, at least it's there.

We have little other debt left as have been working hard for ages to clear this in a bid to be Brexit ready

We now save for big purchases and make savvy use of 0% finance. Not sure how much longer those will exist for.

I can afford the mortgage and council tax on my salary. We'd have to cut every other expenditure right back and have identified the order in which we'll do that.

We have identified the steps and maybe stages that we can respond to this. We are fortunate that we have a little bit of wiggle room.

We have a big lump sum of savings because we were planning to make a significant home improvement. (We're in a house were likely to live in until our dotage. It's small but ideal) and now I don't know if we should do this.

It would make our home much more suited for us but I'm getting a bit nervous about spending the money.
It will cost about £16,000-£20,000 (we have £16,000 saved for it)

Plan to change our open plan living room-dining room to a separate living room with a kitchen diner instead. Our kitchen is tiny! It would mean two separate living spaces instead of one.

Would you do it now or wait 2, 3, 4, 5 years?

Our mortgage is fixed for another 4.5 years and we fixed it when we had a good LTV though that will easily change if house prices fall. Fixed for now which is good though and on a repayment basis.

Starting to feel the same myself about mortgage overpayments, especially when the interest rate is low anyway. And the government are going to want to keep them that way.

I wouldn't spend the savings on the house in the immediate future SciFi. You will probably know what your circumstances will be in two years time and can make better informed decisions then

I remember people handing back their keys to banks and when I was buying my first house I viewed houses that had been repossessed, still full of the owners' belongings. I'm very careful with putting money into houses because of this.

I lost £50K on the sale of my flat in the last recession. I was moving overseas, the management fees were ridiculous and the ground rent had doubled. I needed to sell fast. I'm looking to downsize but will wait 12-18 months before I consider moving.

What other savings would you have if you do the refurb scifi?

Some Vegetable - maybe about £8,000? Much, much more than many people will have I realise that.

I grew up in a very poor home, then lived through the 90s at home as a teenager terrified we were going to lose our home every week while my step mother poured thousands down her throat.

So I've always been very cautious as a result tried to keep debt low, prioritised housing (but was interest only while paying for childcare) so it's been a slog but we're getting there.

I don't want my children to feel scared about the security of their home the way I was scared in the 90s.

Oh plus we're going to stop over paying the mortgage so that we have that as savings rather than locked away. That's about £4,000 per year. But month one for that saving is May so it's zero at the moment!

Ok so 8k probably 4 months expenses ish? And you can add £400 a month to that from not overpaying. I think I'd want to have a bit more behind me before a large spend like a refurb. The thing about having 6 months worth saved is a running joke in some quarters I know but it's a cliche for good reason.

That said, interest rates are crap and your money will decline in value in real terms... I would get to perhaps 12k and then make the decision, and just park it before that.