Australian recession may be on the way - advice?

[aGracefulStomp]

Australia has avoided a recession for a world-breaking 27ish years, but this may be coming to an end.

As with all my friends, I'm yet to experience any kind of economic downturn and I reckon we might be in for a doozy.

For those that have lived through a recession anywhere in the world, what advice do you have to prepare for it?

Advice can be financial as well as anything that comes to mind!

Edit: I should have added that yes a recession may not happen but to avoid this post becoming one big economic and political debate, lets just pretend that it is. The advice will be handy for whenever a recession happens.

[Boganvillia]

I am Australian too, and I lived through the last recession (1992).

The only thing I regret about that time was not seeing Nirvana live when they played The Phoenician Club the year before. I was working a summer job and had my head up my butt.

I don't know, it was a weird time. My friends were all an odd mix of impoverished yet financially unreliant on our parents as we received Austudy (our parents were means tested for this.) The poorer your parents were, the less you relied on them.

Shopping strips were likely to be run down.

There were no jobs to be had so we all stayed at uni forever. I did 6 years.

[marty998]

Australia may be in a technical GDP Per Capita recession now but you only really feel it's a recession if you've lost your job or the value of your house is going down substantially. At this point unemployment hasn't spiked so it's a long bow to draw to say we're in a conventional recession.

That being said, living standards, for those who spend every dollar they earn, are falling, because incomes are not keeping pace with inflation. For everyone else who doesn't spend every dollar they earn, there may be less room for saving but they can still afford everything they need.

An interesting indicator came out today about new car sales. It could be a pointer to leaner times ahead, or it could be a structural shift in the demand for cars. Either way, we won't know until a year, possibly more down the track for sure.

[Bloop Bloop]

I'm Australian and it doesn't bother me at all. In fact I think recessions are good. They keep inflation and cost of living pressures low, so your money goes further. They take a bit of wind out of consumer sentiment, so you can buy things (like furniture, or tech stuff, or clothes) at a good price and there are lots of sales. They also keep house prices from rising too high, which is great for home purchasers and investment property purchasers. I don't see a downside to recessions other than, I suppose, an increased risk of losing your job if you are in a profession that depends on consumer sentiment.

[Linea_Norway]

If you really believe recession is coming soon and you own a big clown house, you should consider selling your house for the current high price. You should buy another house back during the bottom of the recession. Although it is probably hard to predict when the bottom will be reached.

If you are a couple and both work in different industries, you should prepare to live off one income only. Start saving up money already. If you are in the same job for a long time, consider staying there. If people are let go because of the recession, it is probably the latest hired people that must go first. If your company offers a goodbye package to those who want to go voluntarily, is that something you could except, and live on your FU for a while?

Selling out of the Australian stock market while the prices are still high. Buy back when they are at their lowest (have to guess when that it).

Prepare to buy other properties as rentals when the prices are at their lowest. But from what I have seen in other countries that had a housing crash, was that the most expensive houses go down most in value. They can easily lose half their value for many years. Smaller and cheaper houses did not go down that much, because there is more demand for such houses.

[ExitViaTheCashRamp]

I'm not Australian, but have lived through a couple of recessions.

 First step is to read the cover of you Hitchhikers Guide to the Galaxy... Don't Panic !

 Things will seem glum for a while, the news will delight in stories of personal hardship and woe. Folks will fear for their job and everything bad will appear to be magnified by the recessions. Endless talk from opposition politicians and political news programs about who's fault it is and how to fix it.

 But keep perspective, they are rarely *really* bad with vast unemployment and widespread additional hardship and are usually over in just a few quarters.

 The only way to really prepare is  the usual mustachian advise.. pay down your debt, build savings, have a globally diverse portfolio.

[Dropbear]

The main question for a mustachian, I suppose, is how to make the most of investment bargains while not overextending oneself and ending up a financial casualty...?

[ExitViaTheCashRamp]

The main question for a mustachian, I suppose, is how to make the most of investment bargains while not overextending oneself and ending up a financial casualty...?

Don't :) They call that market timing surely ?

[Dances With Fire]

I'm not Australian, but have lived through a couple of recessions.

 First step is to read the cover of you Hitchhikers Guide to the Galaxy... Don't Panic !

 Things will seem glum for a while, the news will delight in stories of personal hardship and woe. Folks will fear for their job and everything bad will appear to be magnified by the recessions. Endless talk from opposition politicians and political news programs about who's fault it is and how to fix it.

 But keep perspective, they are rarely *really* bad with vast unemployment and widespread additional hardship and are usually over in just a few quarters.

 The only way to really prepare is  the usual mustachian advise.. pay down your debt, build savings, have a globally diverse portfolio.

+1 Been though a couple of these as well and watched as many lost their jobs.

Some fields are more "resistant" to recessions than others. Think health care or teaching just as examples.

Save. Obvious I know, but save some more if you can. NOW is the time to do it, not later.

Pay down debt as much as possible. Those who are debt free have far more options than those who are loaded with debt.

Network with others in case you have to find a new *job*

Just a few thoughts. Best of Luck to you...

[partgypsy]

If you really believe recession is coming soon and you own a big clown house, you should consider selling your house for the current high price. You should buy another house back during the bottom of the recession. Although it is probably hard to predict when the bottom will be reached.

If you are a couple and both work in different industries, you should prepare to live off one income only. Start saving up money already. If you are in the same job for a long time, consider staying there. If people are let go because of the recession, it is probably the latest hired people that must go first. If your company offers a goodbye package to those who want to go voluntarily, is that something you could except, and live on your FU for a while?

Selling out of the Australian stock market while the prices are still high. Buy back when they are at their lowest (have to guess when that it).

Prepare to buy other properties as rentals when the prices are at their lowest. But from what I have seen in other countries that had a housing crash, was that the most expensive houses go down most in value. They can easily lose half their value for many years. Smaller and cheaper houses did not go down that much, because there is more demand for such houses.

I agree with all this advice. If you have overextended yourself buying an expensive house, sell it now while you can still get a decent price, and either rent or buy a house when the market has fallen.

One thing I don't agree with is trying to time the market. You may want to re-examine your comfort level in investing in stock and re-adjust based on your risk tolerance, but for me the stock market is a 20-30 year investment, not a year-to-year thing. The only qualifier is if you know that you need the cash in the next couple years such as being a renter and wanting to buy in the next couple years when prices may be lower.