Ask HN: How can I prepare for hard economic times?

Spend less. Save more. Invest wisely. sharpen your skills.

If you think its coming, move your money to hedges. But people have been predicting the next big crash for the last 5 years to no avail, so don’t be surprised if you miss out on major gains.

in theory isn't going into debt before the big crunch the best move with inflation?

I have no investment advice for you, but it's always a good idea to streamline your economy, so that you can manage with less if something happens.

Make sure to have a small cash reserve so that you can manage for a while even if something devastating happens. Make sure to have a small stockpile of food at home so that you can make those money last longer. As a bonus, this will also count as basic prepping, and you'll be able to handle things like being snowed in for a week without too much problems (assuming you live where such a thing is possible).

Also cut down on non-mortage debt if possible, and make sure things like streaming subscriptions can be cancelled at a minute's notice; If you end up losing part or a lot of your income then you don't want to be stuck paying for things you don't really need (Spotify, Netflix etc).

Leave the city.

Related:

Ask HN: What tips do you have for weathering a recession? - https://news.ycombinator.com/item?id=15798401 - Nov 2017 (104 comments)

Ask HN: How are you preparing yourself for a recession? - https://news.ycombinator.com/item?id=22527383 - Mar 2020 (148 comments)

Diversify you risks. As much as you can: ETFs, property, rents, commodities, crypto, private funds, currencies.

If you have a stable job and a fixed mortgage you’ll be okay regardless of inflation. Inflation really only affects those who hold debt or hold cash. As public inflation numbers increase, make sure you are getting a commensurate increase in salary.

Having a rough idea of how portfolio management works would be a good start. Logically, having all of your money in one bank(or asset, or whatever you are used to) is not a good idea since you're exposing yourself to a single point of failure(if that one asset/bank fails, you're screwed). You could have for example, 50% of your capital in one bank, 25% in another, 25% in cryptocurrency stables(currencies that keep an almost fixed value) and in this way you're reducing your risk on one side and raising it in other assets. There are entire books about how to manage money and risk that explain in detail some common patterns and things to avoid when managing money. Of course this is not financial advice, we all know that finance is a dangerous world and copying what someone else is doing may not bring you the same results.

Depends on where you are in the world. In the UK, there's this handy flowchart

https://ukpersonal.finance/flowchart/

The essence is to have a budget. Understand exactly how much you spend and where you spend it. Once that's done, you can work out where (if anywhere) you can save money. It might be as simple as cutting out Netflix, or as complicated as refinancing all your debt.

I still hope we can avoid the full blown recession, but everyone should be prepared, Europe will be hit the hardest, US should be in better position.

Simulate various scenarios. The point is to have made some tough decisions ahead of time, while you still have some peace of mind. Because the decisions you make now will be of higher quality than the ones you make when you are under more stress.

How would you scale down your expenses (if at all?) if your real income decreased by 10 %? What about 50 %? How long could you survive if you end up with no income? What consumption can you reduce, and what can you cut out entirely? When will you start cutting some things out? How much longer will that make any savings last?

Similarly, how would you scale up the household income if your expenses increased? At what rate can you withdraw from any savings?

A secondary benefit of this exercise is that it lets you find the pain points and see if you can do something now to limit their consequences later. (Is there e.g. preventative maintenance you can do on a car or your teeth that would avoid a more expensive breakdown later?)

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In contrast to many others, I don't place such a high value on having an exact day-to-day budget. Generally, both expenses and income follow a fairly statistically stable pattern, i.e. it averages out.

You do want to know what the averages are, of course, but you don't need to meticulously track daily expenses and income to learn that -- it's enough to go back in history and sample, say, every sixth day. Much less work for basically all the same benefits.

How employable (or otherwise earning capable) are you? If 10% of people lost their jobs, that would be a big recession. Would you be one of them, and if you were, would you have trouble funding another job that pays as well? It depends on your industry, current job, experience, network, personality, etc. If you're a philosophy professor, it may be tough to get the same job. If you're in a non-faddish in-demand area of software, with lots of industry connections, you can probably keep a good job regardless of recession. You need to be honest about this with yourself.

We spent quite a bit of time thinking about mortgage repayments recently, and the overwhelmingly conclusion was to optimise for minimising short term repayments. The rationale was that with a young family our expenses are fairly high whilst our income is likely to increase in future.

The consequence of this is to prioritise a long mortgage over total repayments and to not necessarily pay off as much as possible, even keeping money back for day to day spending, assuming that's budgeted properly. Obviously there is a trade off; the smaller you can get your mortgage the more flexibility you have around adjusting repayments to help with living costs.

The long term view of inflation also suggests it might be better to hold more debt to ease things now. Though obviously that depends on how your wages might change in the longer run.

Been wondering this too without much of a conclusive answer.

Gold is already jumped so that is too late. Crypto seems correlated with stocks.

I’m counting on a large gap between salary and expenses to save my ass

How secure is your job/industry? Not every sector will be hit equally.

Now might not be the best time to work in a startup that sells discretionary goods/services.

If you've got a solid job in an industry not too vulnerable to supply chain shocks or high interest rates you should weather the next downturn, as long as your expenditure is under control.

Work for a company that is protected and you will be okay. Food, soap, and other basic boring stuff will be in demand. Luxuries not as much, so games might be bad, or as cheap entertainment they might do good as people buy the games that will keep them all year to avoid the expensive entertainment they did instead. Really it is a guess as to what will do well.

Most people have a job in bad times. The real problem is your wages won't keep pace with inflation so you have to be careful.

Pay off debts now. Get an emergency cash fund going. Max out your retirement savings (so you can afford to save nothing if needed).

Last, but most important: you don't know what is coming. Enjoy life as best you can now.

You should probably buy some farmland, have a farm somewhere. Could combine it with working remotely as well.

That way, you will be more easily able to provide your family with food. Especially if both you and wife can do the farm work.

And perhaps, with the farm at some point you might be able to live without needing to work much.

Some inspiration can be found here: https://www.youtube.com/watch?v=T15gXm6ha_I

What country are you based in?

In mine (UK) one the biggest outgoing costs is energy, mainly heating. There are various government schemes to help people with recent bills and ways of reducing energy consumption.

If you own your own property, get a wood burning stove. The ability to heat your dwelling and cook food if the electricity goes out or you can't afford fuel is priceless.

Learn a useful skill. Fixing mechanical equipment, farming, building bunkers, preserving food without refrigeration. Teach your kids those things, and how to hide in the forest.

Buy house with few dozens of acres of land. Buy tools to cultivate the land. Buy few sacks of potatoes, learn how to grow them. Buy few sacks of salt, ensure it's stored safely. Learn how to weld with gas, buy enough gas to be stocked. Buy medicines. Buy guns. Buy bullets and vodkas. There are many thing to do to survive in harsh times. But first thing you need to ensure: your own home where you can live; defenses against strangers; preferably good community, you can't survive alone; ability to grow enough food; something that could be used as a currency: salt, bullets, vodka.

Also be ready to evacuate from the city when time will come. Move early, roads will be stuck very quickly. Keep your car tanks full, keep few cans of gasoline as well.

Where do you live? Some of the replies seems to be thinking you are living next to a oncoming zombie apocalypse.

What is your threat model?

Is it losing your savings to inflation? Having it taken away by a corrupt government?

Is it an invasion of the Russians?

Is it losing your job? Or the downfall of society to the point where nobody needs a programmer anymore?

Prepare for a recession/market crash? Diversify assets - property, bonds, shares, foreign and local, cash under bed.

Prepare for failure of government/war? Go be a "prepper" - Ie. have a few months worth of food and water stored. (not that hard in tins/pasta/rice). Get small solar panels for phone charging and a gas/wood camping stove. Download wikipedia.

In both cases, prepare to move countries. Often it's better to just leave than try to survive in subpar conditions. Beware that millions of others may be trying to do the same, and lots of governments don't like millions of refugees. Get yourself a passport for another country and you'll be far more likely to be let in.