Prepping for a recession/depression

[FollowYourOwnNorthStar]

I’ve been reading another thread on here about a possible recession or depression as a result of everything that has been occurring.

I haven’t lived through one yet, but I would like to prepare and don’t rest know how. Does anyone have any advice?

I’m trying to work out if it means interest rates will rise, and therefore what to do with my mortgage (currently on a variable rate) and also wondering if it is sensible to make investment purchases now, Eg lots of jars for canning things etc (not really sure). Or is food available, just expensive, so it would be better to not buy that stuff and have as much in savings as possible?

Any assistance would be gratefully received. I found the coronavirus prepping threads invaluable, and (except for hand sanitiser!) was, on the whole, in a good position. This one scares me, as I don’t know what or how to prep.

Thank you

@FollowYourOwnNorthStar Someone recently started another thread on this a little way down the board, although not loads of posts yet. It is here
I share your worries about a depression, it's probably my biggest concern right now. x

Thank you, that’s very helpful.

I was just starting my first professional job last recession, which was fairly well insulated, and still is now.

However, having been less well off in the past and naturally cautious, I am trying to think about how to prepare now. Plus I don't know how a depression might differ from a recession, in practical terms.

My main focus has been a financial review - checking we're on best prices for utilities, phones, etc and cancelling unnecessary payments so that we can save more now as a buffer. MSE has some good tips.

We're sitting tight on a variable mortgage for now. Recent rate cuts have been helpful and I can't see them going up any time soon. In the last recession, one of the big financial levers to help boost the economy was slashing interest rates - unfortunately not really possible now.

In general we've been looking at moving to more sustainable / reusable things, which can also help in terms of cash flow / reducing reliance on purchases. So, cutting up old kids' vests for floor cloths, washable kitchen sponges, face cloths instead of wipes, moon cup, eBay for good quality second had clothes, etc.

Might not all be relevant to your situation, but hopefully some food for thought!

Bought extra coal, wood and gas got the chimney swept, winter clothing on sale so cheaper to buy now size up on boots cupboards stocked up looking to get chest freezer but hubby thinks that's going to far might get one in understairs and see how long it takes him to notice. Made my Xmas list and half way through it, think of all the bits you would need if stuck in house again in winter without spare money

Thank you everyone.

If it helps anyone else, after reading the messages here and on the other thread, I have decided to do the following (but am very open to doing more/changing, as needed):

Financial Steps

• Reduce liabilities, so pay off all non-mortgage debt ASAP
• Reduce outgoings, cut off any non-essential payments/subscriptions etc, try and reduce other payments eg electricity, phone etc.
• Save and up a reserve of 3-6 months of salary as a buffer
• Try and get ahead on mortgage, as a buffer against rate rises and increase in mortgage payment

Food & Shopping

• start to stock up on non-perishable and long shelf life essential items, each shop. Aim for 3-6 months worth on hand. Aim is to not have to shop for those things, and therefore reducing grocery bill.
• Make a list of cheaper, healthy meals that family likes, aiming to have 12 I can move too, if needed.

Household

• looking ahead over the next 12 months as to big items needed, and try to buy whilst on sale. Eg winter/summer items and Christmas items
• Get big things fixed now (need to get new windows, which will also reduce heating and cooling costs)
• Try and transition to useful hobbies, not just puzzles or crafts, but knitting, crochet, cross stitch, sewing (can make for us or as gifts), board games that can be played multiple times.
• Make sure I am using free options to their fullest, like libraries for reading and exercise outside rather than gyms or online subscriptions.

Job

• Update CV, just in case
• trying to do as many extra courses at work as I can to make myself as diversely employable as possible, should I lose my job

I’m mainly worried about interest rates going up astronomically and my mortgage payment going up.....but that’s because I don’t really know what else to worry about!

"I haven’t lived through one yet"

You weren't alive in 2008....?

@TheDinnerWitch

"I haven’t lived through one yet"

You weren't alive in 2008....?

My first thought!

The difference between a depression and a recession is the availability of credit to the common consumer. In a depression, the common consumer has no credit so when they have no income, they begin sooner to become homeless, living in tent cities and then starving to death.

In a recession, the common consumer has access to credit. Usually credit cards and when they lose their job/income, will funnel all benefits and savings to paying rent/mortgage and put all other bills on credit. This delays the inevitable because credit has a limit. But it does reduce the numbers of homeless and starving people if recovery can start within a few years.

In both, you don’t see high interest rates. You see very low to negative interest rates. This is because the government wants to keep the economy ticking over by encouraging spending even if it is with credit. If consumers are buying groceries/utilities/petrol on credit, at least the grocers/utility/petrol companies don’t go bankrupt. So the basic structures of daily life can limp along. And so on. You do see hyper inflation of goods and services though, so the cost of everything will go up because the country’s currency will be worth less and less on the currency exchange market. So importers will have to spend more £ to get the same amount of goods. The increase is passed in by increasing prices. The U.K. is especially vulnerable to this because it is an import reliant country.

If enough consumers run out of money/credit and key suppliers start going bankrupt, you then are looking at being a failed nation with electricity black outs, no piped water, no grocery shops, which then leads to looting and rioting/banditry, and the military being tasked to drive water and milk tankers and handing out international food aid for your populace while also trying to maintain law and order.

I was alive in 2008, but my family wasn’t in the UK at the time :) The country we were in at that time didn’t have a recession, and we didn’t return to the UK until it was over (all for non-recession related reasons!)

This is exactly my worry, particularly as I'm freelancing at the moment and am on very little money.

If the country goes to pot as dramatically as @PlanDeRaccordement described we're all fucked and I can't really get my head around that (though it's worth knowing so thank you, Plan!) but in the short term I'm paying off debt & making sure the house is ready for us to spend a lot of time here. Just bought a new fridge and about to get an extra freezer. Am halfway through buying Christmas gifts for DD.

We rent, which is a terribly precarious position to be in but our landlord is a good egg and has assured us he's not selling in the near future or putting the rent up. Anything a possible, of course.

It things get really bad i.e. depression and power goes out etc, then we are in a whole lot of trouble and one's prep supplies will only go so far before the inevitable. For something really bad you'd have to be able to become self-sufficient otherwise your stocks will run out and then you'll be as badly off as those who haven't prepped (if they haven't stolen your stash by then). Also you'd need to protect what you have or can grow/make, else others will try to get hold of it. It's a bleak picture.

I think you just have to decide what level of prepping you can realistically do, and stick to that. We simply don't know what the future might hold, so perhaps better not to dwell on the worst case scenario!