Ask HN: How are you preparing for the recession?

I quit my job during the last recession to do a startup (which ultimately failed). A lot of people thought I was crazy, but in hindsight it was the right move, as I learned a lot of things that I was able to parlay into a 2nd startup.

A recession is not the worst thing in the world. It's a business cycle, and happens on a regular basis. A recession might (hopefully) chase out some inflation; and it might clarify where some opportunities reside (like new infrastructure, or worker retraining/relocation).

A little bit of inflation isn't too bad, either. It helps people pay off debt with less valuable dollars. Bottom line: A little bit of inflation is OK, and periodic business retrenchments are OK. A whole lot of inflation, or a deflationary spiral, is horrible.

1. Keep 6-12 months of expenses in cash on hand. Cash. Not SPY, not I bonds, not HELOCs or lines of credit. Cash. When you are in financial peril, you don’t want to deal with a closed credit line, deeply depressed assets, or locked up instruments.

2. Don’t lose your job.

3. Network in case #2 doesn’t pan out.

(lessons learned from the 2001 and 2008 crises)

Start a new business. Recessions are great for that especially if you already have funding or if you can bootstrap. Did it in 2001 and 2008 as well; great stuff.

I would say though; be careful with with spending cash. Depending on your situation, it might be harder to come by. Many people I know who got fired in 2001/2008 and who had too high mortgages, debt and little cash fell on hard times for a few years.

Believe it's a great time to consolidate car ownership. Especially with transition from ICE. More car sharing amongst extended households. And of course a drastic reduction in total miles traveled ;)

Everybody is saying recession all the time, so I doubt it will be that severe. Isn't a recession more like it comes out of nowhere and people get hit hard quickly, thus the economic inefficiencies caused are a drag on the total economy?

I don't see what's unhealthy about our economy besides the fact that super cheap money may be gone for awhile. Alright so companies like PLTR go down, whatever.

It’s already here.

However recessions have been getting shorter and shorter every time they occur.

If you're asking how to prepare for a recession, the recession has already begun. Changing your behavior now is just going to lock in your losses. Stay the course and don't be distracted by changes around you.

1a. Don't Go out on a limb, now is not the time to scatch that itch. 1b. Do batten down the hatches in any and every way you can.

2. I was a self-employed freelance consultant. I survived by being good-ish at what I did. What got me through it? The alternatives.

3a. Boom-and-Bust are cyclic. 3b. The rich get richer each time the music stops. 3c. That which is old becomes new again. 3d. Always know how to fix something because when times are bad the rich will either want something fixed or want some new shiny thing installed. Times are seldom tight for the rich (or rather they tend to be the last to suffer before 'something is done about it')

- aggressively trim unnecessary expenses like media subscriptions, the "extra coffee", immaterial luxury goods. you don't have to live like a monk, but all of us could easily trim our fun spending by 20-50%.

- have 6-12 months of emergency cash that can sustain you if your main source of income fails. something will always happen, whether it's an appliance or car that breaks down, or an unexpected medical expense. slush funds are good.

- 'if it ain't broke, don't fix it'. make stuff last the extra mile, if you can. stretching electronics and clothes .... fixing electronics (when realistic) instead of buying the new shiny thing ...

- don't sell stocks. if anything; if you're fortunate enough to truly have extra cash, buy that stock at rock-bottom prices you've been eyeballing for a while. buy low, sell high.

- if you have dependents, be extra conservative with your cash. you will need each other.

- this too, shall pass.

I’d like some advice please.

I am currently freelancing with one major client. I only work 3 days a week which is great and I make a good amount of money. Client is a small company, seems financially secure, but eh could also go belly up I suppose. They offered me a fixed contract but it would be for less money than I now make freelancing, +4 days a week. Should I take less cash and less freedom for the security that a fixed contract would bring (and eventual governmental support of the company goes belly up)?

- Bought real estate.

- Got a remote-first job outside of crazily inflated tech money while still asking for tech money because the market for developer was crazy hot a few months ago.

The previous one wasn't too bad personally. I can't say I ever had problems finding a job, no matter the market. Network aggressively, sell yourself well.

Invest in people skills if you suck at it and you won't have problems landing a job, even during the recession.

Reduce overhead as much as possible. Reduce debt (least safe first) as much as possible. Invest in necessities that you and your family can consume/use.

People have all kinds of theories about what will be best currency, and stockpile stuff they can't consume/use. Cover your basis first.

Invest in any skill that will enable you to produce something.

As many have pointed out, I think recession it’s here already. I just switched jobs and got a 20% salary increase. Fortunately enough, we developers seem to be not that much affected. Touching wood, though.

Don't save cash, invest. Inflation will eat your money if you save the cash under your bed.

Open new business, people will stop spending on unnecessary things, but think what every people needs every day.

Labor will be cheaper, think about that.

38 years living in Argentina, you move fast or you die.

I think the thing to realize is that a lot of it is out of your control.

I was working at a startup during the 2007-09 recession. Before that things were going great and they were hiring, and hiring, and hiring.

Then all of the sudden things weren't great. The startup had two products they were working on, all of the sudden they only had money for one. One morning I came into work early and all the conference rooms already had people in them with the doors closed, they axed everyone working on product A and walked them out the door. I was on product B, I was fine.

Some of those people didn't work for almost two years. It was just random. I had quit a software developer job in the real estate industry to work at the startup because I thought it was obviously going to be a bad time to be in the real estate industry. Which it was, but I had no idea that it was going to affect everything else.

Get a part-time second W-2 job, now. Show up on time every day for 90 days in a row. Get a non-customer facing job if you can. Warehouse is good, security guard is good. Places that run 24 hours are good places to look.

Get over having to enter your info twice and and fill out a form with the same thing too. This is intentional, it's to weed out the quitters.

Have a folder with everything you need in to fill out an application form in it.

Call the HR at your old jobs to verify the phone number is still correct and what your dates of employment were. Get over your embarrassment, they truly don't GAF and if you left on good terms (two weeks notice) they may ask you back.

Amazon warehouse isn't as bad as they make it out to be, avoid driving amazon and anything else amazon.

TL:DR; Non customer-facing part time job, be perfect for first 90 days.

Recession? Let's see who is right within 1 year.

I will bet you something that should hold its value. Looking around my house, I have a few bags of rice and pasta that I could put on the line. If you're right, that will probably be worth something!

I have a year of living expenses in cash, several more in low-risk investments. I've been practicing interview skills (but I was doing that anyway). Making sure I have local copies of any personal creds from my work machine – 401(k) login, Carta, health plan, etc. Holding off on some home improvements – I'd probably like to have the money if I lose my job in a downturn, and I might get a better deal on labor in a downturn if I don't (or be able to snap up cheap assets or whatever). I chose to keep living in a HCOL tech hub even after everything went remote because I wanted exposure to both local and remote jobs – that's helpful in a good economy, and could be the difference between a job and no job in a bad one.

A lot of prep is done years ahead of time. Live within your means, save for retirement and for emergencies. Don't buy the most expensive house or car you possibly can – something that's technically affordable on a bubbly senior SWE salary is likely very not affordable on unemployment. With luck and discipline you can end up with enough of a nest egg that you don't have to stress too much about this stuff.

I graduated into the great financial crisis, and lucked into a couple of dead end jobs. A mistake I made was internalizing that the economy is bad, clinging to those jobs out of fear even after the worst of the crisis had passed, and losing out on some years of high earning after things started to get better.

So, here's the thing: unlike the pandemic, your life will basically go on normally.

But you might get laid off.

The goal is, should that happen, to be annoyed but entirely unconcerned about how you're going to pay bills while you look for the next thing.

Keep an emergency fund, update your resume and reference list.

And know your budget. There are expenses like eating out that are easy to pause if you need to—disregard every idiot yammering about avocados and coffee, as long as you're saving money at the end these don't come with any risk. There are expenses that can't be cut quickly easy (rent, car payments, utilities, gym memberships with year long commitments)—these are the enemy.

That's it. You'll be fine.

As the dot-com bubble collapsed, I enrolled in university and had a steady decade of a meager but survivable income: first living off student loans, then as a TA in grad school. Came out of it with a degree that helped me get an adult job.

1. DON'T save. DON'T sell equity (ie. Don't raise capital). DO take on as much debt as feasible. DO use said debt to employ the inevitable cheap labor and capital goods to run profitable ventures.

2. Yes, I was laid off from a start-up then joined as one of the first at an already profitable pre-seed start-up that would raise $20M with <5% dilution during the worst of the recession. Eventually exited very successfully. Labor was cheap and pre-PMF competitors dropped like flies.

3. Mistake #1: I saved instead of doing the smart thing and taking on massive debt. My savings and small debts inflated away over the next decade. My colleagues who opted for large debts had their large debts inflated away and faired much better than I did in the end.

Mistake #2: After the highly successful exit I joined a start-up with the hot "growth before revenue" strategy. The only thing that grew faster than our user base was the dilution of our equity. Investors won while we gave up years of work for a slice of the pie that got disgustingly small for the risk we took as founders.

To sum it all up: Profit before growth. Leverage the things the recession makes cheap due to other people/businesses no longer being able to afford them (e.g. talent). Fund profitable new business with debt. If you sell equity, only do it after proving that you can do it with debt and exhausting the option for debt. Despite VC funds drying up, you'll be the belle of the ball if you've proven you have created a reliable money printer.

Caveat: If you can't make a reliable money printer, find someone who has and join them.

If history is any indicator, starting a company during or shortly after a recession has yielded some massively successful results. Not only does it crowd out parties that would enter easily during good times, you also have access to incredible talent on the market due to a high supply. Yes, access to capital is definitely more strained, however PG has said that technology progresses more or less independent of the stock market and economic cycles.

All this to say, I’ll probably look to start something. Anyone else down?

Nothing. I can’t predict shit and neither can you.

I’ve been paranoid since before you were born ;) Here is what I did long before the current downturn.

* Cleared up credit card debt (actually all debt) 25 years ago

* Paid off mortgages

* Sold office and bought farm with year-round creek

* Stored lots of freeze-dried food

* Bought precious metals

* Kept my coding and writing skills up to date

* Moved some investments to cash positions so we have 1 year of expenses (arguably not smart due to inflation)

* Made friends with my neighbors

* Guns, duh

* Did massive infrastructure work like new plumbing, electrical, generators, roofs, decks, etc. before prices went up too high