Many of us are wondering when we’re going to punch our way out of this economic recession we’ve been wallowing in for the past five years or so. It’s anyone’s guess, but I’d say we’re going to be in it for quite a while, and perhaps it will get even worse, simply because so many of us only learn the hard way. It seems we insist on repeating failed behavior patterns largely because they’re what we know and are comfortable with. Failure to obtain different results by doing the same thing again and again apparently has no bearing on the matter, we do it anyway.
Collectively, all the foregoing is true, but individually, it doesn’t have to be. As a rational being, we can do much better than mindlessly repeating what has proven to be unsuccessful. We can make deliberate and lasting changes in our behavior, no matter what the crowd or our “leaders” might be doing or suggesting.
Being a big fan of watching the crowd, instead of following it, let me present you with a simple way to weather just about any kind of recession or downturn in the economy. It’s an approach that I follow and it has served me well. It’s something we can all make use of because we’re all likely to go through three to four economic downturns in our lives. The technique is simple; it has only two steps to follow:
Step 1, develop a frugal and financially conservative lifestyle that, within reason, maximizes income, minimizes expenses, and focuses on wise investment of resources to create lasting and meaningful wealth. During good economic times, implement the lifestyle with deliberate focus as if you’re in a downturned economy.
Step 2, when the economy turns sour, make only minor changes in your lifestyle as warranted based on special circumstances. In other words, you largely continue as if nothing unusual has happened.
The bottom line is that most people go through feast and famine cycles that are often self-generated because of choice. They spend freely when times are good and hunker down in an austerity mode when times are tough. Why not choose differently? My experience shows that living more conservatively as a norm provides great results over the long haul. If you follow the two simple steps above, you can maintain a reasonably even keel no matter what financial waters you’re navigating. The choice is yours, smooth sailing or a financial roller coaster ride.
A Peek at Techniques
Assuming you’re enamored with the idea of smooth sailing, let’s look at some ideas with respect to how one might maintain an even keel, regardless of the economic times. We’re really talking about a mindset that reflects a financially conservative strategy, and we can see hints of the mindset by looking at specific tactics that one can employ to achieve important financial goals. Here are just a few examples.
- Buy used vehicles and maintain them. New vehicles lose tremendous value right after you purchase them. Used vehicles provide high transportation value and can be maintained for perhaps the equivalent of one new car payment each year. If you buy a new car, then make it fit with your long-term interests and then “run the wheels off of it.”
- Seek employment in a recession-resistant marketplace. The electric utility industry and the medical field are good examples. No matter what the economy is doing, people need electricity and medical care as they are vital for daily living.
- Maintain a relatively steady lifestyle; when income goes up, spending doesn’t necessarily have to expand to match, instead, savings and investment can and should be enhanced. Maximizing income and savings is a key to rapid wealth accumulation.
- Practice taking the “long view” in whatever you do. Whether it’s a second home, a second car, or another child, each has initial costs and long-term recurring costs. As an example, consider the additional cost of monthly payments, upkeep, insurance, annual registration and depreciation associated with another vehicle before making a purchase. If you visualize making all of the recurring payments, it can help you make a better decision because there is a good chance that you’ll be doing so with your eyes wide open.
- No long-term consumer debt. If there is anything that makes for a financial monkey on our backs, it has to be consumer debt. The wise know that credit cards are a means of paying for something, not a way to give ourselves a personal loan.
The roller coaster ride of economic ups and downs isn’t limited to personal finance. I’ve worked as an employee in several large companies that have gone through “austerity modes” on several occasions, and none of the restrictions on spending have ever affected me or my staff simply because I’m not naturally inclined to be a careless spender, no matter whose money we’re talking about. If you do much the same in your personal life, you’ll find that changes in economic conditions won’t necessarily force you into changing your lifestyle, pulling in your horns or hunkering down to weather the recession. Instead, you’ll operate largely as usual, and without nearly as much concern and discomfort as those who match their lifestyle to income that fluctuates.
The two simple steps outlined above can offer peace of mind, and that means a lot to me. I’m not comfortable living on the edge as so many do. In addition, with such smooth and steady sailing, instead of roller coaster riding, it’s much easier to maintain a good “sight picture” and that promotes attaining long term goals – the only ones worth shooting for according to my play book.
You’re the Captain
To be sure, this approach to weathering tough economic times won’t work for everyone, but it has worked well for me. I live a life of abundance, but it’s largely because I’ve defined what abundance is on my terms according to my own “long view.” I don’t let others create the definitions and rules in my life; instead, I do that for myself. I’m perfectly happy knowing that my lifestyle doesn’t have to change much at all, no matter what the economy is or isn’t doing.
An acquaintance of mine on Facebook sent me a note recently. I don’t know that he has great insight into my life, but it was clear by his comment that he imagined somehow my life was special or “charmed” instead of well charted and lived in a deliberate manner. He said, “If my life was as smooth sailing as yours, I’d have it made.” My response was simple and filled with what I see as truth, “It can be, just talk to the captain.”