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7 Things You Need to Do to Prepare for a Potential Recession

Expertise: Personal Development, Real Estate Investing Basics
22 Articles Written
dictionary entry defining the word recession which is highlighted in pink

Recessions can be really scary. There are so many unknowns—it’s easy to become overwhelmed.

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Add to that COVID-19‘s threat to your physical health and the impact of sheltering in place on your mental health—this is a lot to deal with. But deal with it we must.

Failing to manage our stress and refind our focus could result in missing out on a huge opportunity or making shortsighted, uninformed decisions.

For me, sticking to a to-do list during times like this helps me to feel productive and keeps me moving forward.

Follow these seven steps to be proactive and productive no matter what the future holds.

Related: Recession Prep 101: Investing in Real Estate During a Financial Crisis

How to Prepare for a Potential Recession

Step 1: Gather all the relevant data.

The first thing you need to do is learn as much as you possibly can about what we’re dealing with. The best way to do this is to learn from those who have experience dealing with something similar. Find the experts, read their books and articles, and listen to their podcasts.

Remember, though, that adjusting your plan to accommodate an impending recession is speculation, so you should always consider multiple points of view. Nobody can predict the future with certainty. But we can figure out the likely scenarios.

The most important thing here is to stick to the facts and seek advice from credible sources.

Coronavirus, covid-19 news headlines on United States of America

Step 2: Come up with a plan.

Once you have a better idea of what we are dealing with and possible scenarios that could play out, determine what you are going to do about it.

Will your strategy change? Will you put things on hold? Will you pursue something new or different?

Related: Should You Change Your Goals Due to Coronavirus?

All of these are likely scenarios and are at least worth considering. It is also reasonable, and probably wise, to have a plan B and even plan C.

Step 3: Strengthen your foundation, and get your reserves in order.

Whatever reserves you had may need to be doubled or tripled when preparing for a recession. You may need to consider additional vacancies or rental rate reductions. You may also be faced with the possibility that tenants cannot pay rent at all.

Building up your reserves will require discipline but it will be worth it.

Furthermore, ensure that you are taking full advantage of the stimulus package. Do your research and find out what assistance is available to you.

Step 4: Cut all unnecessary expenses.

Go through your expenses with a fine-tooth comb, and cut out all the excess. Any subscription that you’re no longer using or that isn’t bringing you joy—get rid of it.

There are many ways to go about this, but the first step is figuring out where your money is going. So schedule some time to print out your credit card statements, then get to cutting!

Related: How to Slash Your Food Bill in Half (AND Support Good Health)

A few steak dinners replaced with home-cooked spaghetti is an easy sacrifice, and your bank account will thank you for it.

Scissors cutting through a coaxial RG6 cable - cut the cable tv concept isolated on white background

Step 5: Revise your strategic plan.

All the above will likely require that you reassess and possibly realign your strategic plan. If you haven’t already developed a strategic plan, check out this post for a quick and easy way to do so.

Please note that I am not advising you to let go of your goals! I am simply recommending that you reprioritize and potentially move things around. You may have to push some things off, but you can replace them with other things.

Step 6: Stay positive.

We’ve all heard the saying, “Hope for the best, but prepare for the worst.”

This is truly the best thing you can do during uncertain times. Realizing that there are things within your control and things outside of your control can be really helpful. Do what you can, and don’t stress about what you have no control over.

The economy is cyclical; downturns are normal and to be expected. You can’t change that, but you can decide how you will handle it and what you learn from it.

Step 7: Take care of yourself.

Uncertain times can be very stressful and make you doubt the path you’re on. None of this is healthy or productive!

Come up with a plan, and stick to it. Create some routine and normalcy in your life, and cut yourself some slack.

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How are you preparing for this economic shift?

Join the discussion with a comment below.

Erin Helle is an Army veteran turned entrepreneur specializing in flipping houses, turnkey renovation products, and real estate investor coaching...
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    Luis Rivera New to Real Estate from Puerto Rico
    Replied 8 months ago
    I've done all of the above except making a plan, I'm more of an opportunist, and I'm also trying to figure out creative ways of making money during these times. Thank you for the amazing blog post!
    Erin Helle Investor from Monterey, CA
    Replied 8 months ago
    Thanks, Luis! Sounds like your plan centers around being prepared to jump on opportunities as they are can you best posture yourself for these opportunities?
    Ashley Mitchell from North Carolina
    Replied 8 months ago
    I wish you well. Do you own any properties?
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 8 months ago
    Getting your head right and shoring up your cash reserves/cutting expenses is definitely the way to approach the coming (actually already here) recession. Good article!
    Erin Helle Investor from Monterey, CA
    Replied 8 months ago
    Sandy Gabin Rental Property Investor from Lawrence, Ma
    Replied 8 months ago
    Thank you for this article Erin! I have already started to slash down on things that I really don't need to continue with my RE goals. I am preparing for my financial freedom and have a plan B. I will work on getting plan C. I promise. 😉
    Erin Helle Investor from Monterey, CA
    Replied 8 months ago
    Good for you! And don't forget about these things...cutting expenses is something you should do ALL the time, recession or not!
    John Murray from Portland, Oregon
    Replied 8 months ago
    The same old story sell when the rest are buying, buy when the rest are selling. Good times make weak people, bad times make strong people, strong people make good times. This will come to pass. Wear your PPE, isolate when possible and most of all study history. Keep in mind that billions of people still don't have running water and enough to eat.