Tell YC: What are your financial strategies amidst this growing credit crunch / dragging economy?

IMHO you should get very good at trying to build a business. Indeed that's maybe why you're even reading in this aggregator anyway. Even when they fail, you learn quite a good lesson, and using people around you to help you leverage your talent will probably put you in a better position to withstand these economic downturns.

On the meantime, get acquainted with sound economic theory books, maybe even some accounting 101's and perhaps a refreshing metaphor wielding book (Millionaire Next Door by Thomas J. Stanley and William D. Danko maybe?) to help you get pumped up.

On a side note, it seems that economic downturns are favored by big investors to get undervalued assets into their portfolio (be it either paper, real estate or even businesses) for cheap. Indeed this seems to have been Buffet's strategy all along. Maybe we could learn from him, that a bearish environment, does not have to be the most caustic of ones.

You can succeed. Try not to speculate too much, go for fundamentals.

phase 1) pay down all your high interest debt. if you're paying more than 7-8% on something (i.e. a credit card), pay that shit down. you'll be hard pressed for the market to pay that much consistently, so you're best #1 investment is to pay that down first.

phase 2) build yourself an emergency fund. if you get fired, have a medical emergency, or whatever, you're going to need money. build up at least 3 months worth of living expenses. keep it in a high hield savings account (i use HSBC direct) so you're earning a solid 3+% on it. not too bad.

phase 3) take the bulk of your money and invest it in a diverse set of index funds that have low costs. i also suggest setting up a 401k or roth ira if you don't already have one and put most, if not all, of your investment money into one of these (for now, at least -- compound interest and long term investments work best when you start early). keep your money in here for the long term (10 years minimum) -- don't get scared over downs or excited over ups. over the long term, the market will produce an average of a 10% return (see http://www.icmarc.org/xp/rc/marketview/chart/2006/20060714ti... for more info), and thats what you want. rebalance your portfolio twice a year. this is, essentially, autopilot investing.

phase 3.5) lather, rinse, repeat, in this order. if you get more debt that falls into phase 1, do phase 1. if your emergency fund doesn't fit into phase 2 anymore, feed it until it fits phase 2. and then always, like clockwork, be pumping more money into phase 3. feed it it like its one of your other bills.

phase 4) if you want some more risk, skim off some of your index fund money and invest it into a small smattering of individual stocks. i recommend dividend-paying stocks and REITs since, even if the price goes down, you're still earning a dividend. even though my portfolio stocks are negative, my individual stock portfolio as a whole is positive due to the dividends i get. but be wary -- investing in individual stocks can be a gamble if you don't know enough about what you're doing (and if you pick some of the "big" stocks to invest in, you're already investing in them via your index funds, most likely).

hope this helps. investing and doing well is easy. investing and doing better than "well" requires research time (which you could use on your startups), effort, and doesn't always work out.

May I sugest a link that popped up just a moment ago? http://news.ycombinator.com/item?id=307838

Or if you want it direct, use: http://marshallbrain.com/million.htm

Very nice, down to earth advice, from the founder of HowStuffWorks.

Edit: Just found the edit link. Fixed the comment.