Are You Ready for a Downturn?

Financial analysts and newspaper headlines are warning about another recession.

It’s been awhile–over 10 years in fact–since the economy suddenly contracted and left many Americans of all income levels in no small amount of pain.

It was 2007. The stock market tanked.

Unemployment spiked. Homes were lost. Portfolios ravaged.

Many people were forced to rethink their careers. Their retirement plans. Their priorities.

As the chickens came home to roost (it took a couple of years for the full force of the crisis to be felt among our circle of people), I consoled friends and family members, walked past the for sale signs in the neighborhood, and found myself offering the same pointers over and over again to those who asked for my advice.

Our lifestyle hadn’t been impacted. My wife and I were concerned, but not worried. ‘What’s the deal?’ was the shorthand for the question. “What’s up with you guys?” After explaining the same fundamentals numerous times to more than a few people, I went to Boston and talked with some OMGs there. They added some thoughts onto an outline I already had in my mind. I returned to Los Angeles, sat down, and wrote The Old Money Book.

I had no experience writing books. I had no experience writing nonfiction. All I knew is that if people in my neighborhood and circle of friends were asking about how we live and how our way of life could help them, other people in America might have that same need.

The book was published and, I’m happy and humbled to say, resonated. It’s been popular. It’s been well-received and well-reviewed by hundreds of readers on Amazon and Goodreads. For some people, it’s been a life changer.

It’s helped them reshape, redefine, and reorder their priorities and spending habits. It’s reaffirmed the Core Values that they’ve already embraced.

The blog has become a community of support for this Old Money way of life. I’m grateful for everyone who contributes and makes it the lively, informative, and generous place it is.

Many of you, Old Money Gals or Old Money Guys by birth or by choice, have ordered your lives around sound ethics and strong financial habits. You’ll be okay if the economy starts to wheeze…or flatlines.

Good for you. However, if you know someone who could benefit from reading The Old Money Book, mention the book to them. If you sense they’d welcome the insights and information, great. Send a $2.99 ebook to them and make them buy the coffee next time. Or just send a link to the blog and let them read and absorb the philosophy in their own time, on their own terms.

Of course I want to sell more books, but I’m more concerned about people who might benefit from the Old Money way of life and don’t know about it yet.

Winter is coming, as they say. Let’s make sure we’re all ready for it.

  • BGT

35 thoughts on “Are You Ready for a Downturn?

  1. Byron,

    I appreciate the chapter in your book on finances, but I would encourage you to think about writing a follow-on book just on the topic money/personal finance. Your book, just skimmed the surface of what there is to learn on the subject. Go deep!

    Liked by 2 people

    1. Personal Finance/Money and all that it encompasses is a very deep lake of information. From previous comments Byron generally doesn’t provide specific recommendation. As someone who works in the investments its a sticky subject to tiptoe around in terms of what is an ”acceptable recommendation”. Broadly it breaks down into:

      -Spend less than you earn, for the bulk of people this will increase your nest egg much more than adding 1-2% on your returns.

      -Consistency is key, don’t go chasing after the next big thing, the greater fools theory (buying something to sell it to someone dumber at a high price) burns a lot of people.

      -Keep fees low in order to juice returns as much as possible, a penny saved is a penny earned. I fully support fairly priced Investment Advisors who are blunt and straightforward. Half of their job is to handhold and make sure clients don’t do anything rash (much like children).

      There is a cornucopia of information out there that Byron can collect and maybe get some experienced opinions on while throwing in his usual well rounded outline. Maybe a personal finance pamphlet?

      Best,

      Jon

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      1. Excellent summary, Jon. I do go back and forth on the ‘investment’ outline, pamphlet, book, whatever it might be… I’m just not sure, and, as a wise person once said, When there is doubt, there is no doubt.

        In the future, I might distill some insights from experienced, successful advisors, but the landscape changes so rapidly, by the time I got it into print, everything may have changed. So for now, I’ll leave it to the experts. – BGT

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  2. Any fiscal or monetary policies enacted to stave off or lessen the impact of a coming recession will be aimed at getting Americans to spend more money. We need Americans to save not spend. The average American household has less than $8,900 in liquid savings. The real differences between old money and everyone else is the ability to delay gratification and the discipline to live at or below your means. You cannot accumulate wealth if you spend it as fast as you get it.

    Liked by 1 person

    1. I am quite surprised at the figure of $8,900 in liquid savings, albeit quite low in itself. I recently attended a short presentation at work under the banner of ‘ Managing Debt Safely ‘. The auditorium was reasonably full.

      No withstanding my own surprise at what I thought was a very private question ‘ Is there anyone here with no debt at all ? ‘ very few people raised a hand. Referring to the quoted figure, perhaps many have debt but keep some ‘liquid’ for eventualities such as a car breakdown, out-of-insurance house damage etc.

      It’s hard to see the same discipline entertaining both angles because with one blip on the radar the liquid will evaporate and the debt will increase its climb rate.

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      1. Remember the audience. If not a mandatory event, “Managing Debt Safely” will draw from people that expect to get mileage out of it, that is, people who are indebted.

        And paradoxically enough, it may be beneficial to *not* claim you’re debt-free.

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  3. Sadly a very timely post, yesterday I received the infamous “Hey Bob you have a minute” and my position eliminated after years of dedicated services. While there is money, I hate touching it. Praying for a new position. It’s weird how I just slept for 15 hours straight. Time to move forward.

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    1. Hi Bob, I know everyone’s very sorry to hear about this. With some money set aside, you’re in a great position to move forward and find new challenges. I’m sure something lucrative and fulfilling is on its way. – BGT

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      1. Thank you, yes there is always money set aside. It was telling my 10 year old that Daddy won’t be going out to work for while and seeing him cry, got to me. Onwards to new things!

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  4. As a 23 year old (just became that today…) and quitting my job as a history teacher to pursue my own career path. It was a difficult decision, but I live with my parents, have no responsibility (moneywise). So it’s a logical decision.

    At the same time it makes me nervous, no money (currently) coming in… And therefore not really living up to the OM way of doing things! I’m not really from that background, but when I read your book it became clear to me that I have had an upbringing with all those core values. A lot of your tips (especially about relationship was literally what my dad said to me.

    I really think that it’s not the saving that defines a OMG lifestyle. It’s where they they spent the money on or at and where they do not. It’s not money that counts it’s relationship and health. In other words love for your self instead of seeking love in materialism. Saving is overrated, because if you only look at it that way you will end up like someone you don’t want to spent time with…

    I do think that having more money coming in is a blessing only if you know what you are doing. It’s easier to save a lot and invest. Let’s face it with 50dollars it’s hard to get any return on an investment.

    People forget that earning money is a quest for good habits and a good lifestyle. Only then you will attract the people and the business to make money. And that’s what I’m learning first before I can start to embark on my financial journey!

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    1. Happy Birthday, Lennart! You’ve nailed down the Old Money philosophy perfectly. Best of luck on the new venture, and I hope you’ll keep us posted on the progress. Any windfalls should be shared with the group on a prorated basis. (Wink, nod.) – BGT

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      1. Thank you Byron!

        I will, for now everything is quiet on my front. But that will not stay for long!

        So any windfalls will be shared, I think that that is the least thing I can do in return for the wisdom you and the commenters bring to the table.

        Ciao

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  5. Just a few days ago a financial advisor, himself young at 38, told me that whenever young people come to him for planning advice he tells them to work on three priorities: 1. Emergency money. 2. Retirement. and 3. Property.

    Starting at no. 1, if you have not disciplined yourself to save and for example you have a costly car repair ( and the car is a real necessity ) you will immediately go into debt to fix it and nos 2 and 3 will start slipping away.

    It starts with discipline. Remember this too – once you have saved and have something to fallback on, keep your mouth closed tight. When other people know or think you have money, THEY have plans for that money. You are not part of those plans.

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    1. Exactly! The reason that I can do this is because I have… (Well I will hold my lips down)

      Furthermore at the same time I invest. I buy good food, excersise and read a lot of books.

      And let’s face it discipline is also something you learn from your parents and from your environment. That may be one of the big reasons for this unbridled spending.

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      1. Very true, Lennart. FDR said that a government, like a household, can spend more than it brings in for a period of time, but not forever. And he created more government programs than anyone in history, I think. Let’s hope some rationale appears on the horizon. Thanks. – BGT

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    2. Thanks, David. A wise strategy, succinctly put. And your wisdom resonates, on that last part, perhaps from experience…? We will have to discuss over our next coffee. It’s like the shopkeeper who closes the curtains on his store window each night: what people can’t see, can’t tempt them. – BGT

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  6. Winter is always coming, Byron. Fortunately. Among other things, it purges nature of pests and diseases.

    Greed, malpractice and unbridled consumption are so entrenched in our society, that we also need a purge once in a while. The real problem is that we don’t learn from it, and don’t regulate properly.

    Ironically, many people profit from recessions. Lower real estate prices, lower interest rates. Buy/build, wait, then sell/rent. Monopoly.

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    1. Very true, JL. Shrewd, even ruthless, investors are ‘loitering with intent’ as they say. Let’s hope we can get the word out so that people do learn, recession or not, and turn a corner on the spending. – BGT

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  7. Hi Byron. I’m one of those people for whom your book has been a life-changer. I wasn’t born into this lifestyle by any means, but your book led me to more books on the same subject. I became very interested in personal finance and how to live better while spending less, as you state. Knowledge is power, so they say. It didn’t happen overnight, and there were still many mistakes along the way. But the gradual change in mindset and behavior has been truly beneficial.

    I am grateful for the work you do here, and try to pass it on if/when I can get others to listen, which is a whole other story.

    Bev

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  8. We have moved some money into cash to lock-in the enormous gains over the last 8 years. Many of our friends have been doing the same quietly over the last two years. This economy is on a sugar high, and someone very foreign in terms of values and temperament is at the helm of our Republic. We are readying for change.

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  9. Byron, if someone brings up the topic in a Parisian café, sip your tea, pause, look straight ahead, then say: “Après moi, le déluge”.

    Here, we use this expression, attributed to Louis XV, to add a lighthearted touch to an otherwise serious discussion.

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  10. I agree with Janet’s comments. During the last recession the Australian Government decided to stimulate the economy by giving families $950 (this was families earning up to $100,000k – so not poor families). At the time I was a graduate student and single mother of two and mine went straight to savings. According to the news media, a lot of huge flatscreen TVs were bought that year! People like to display affluence it seems rather than be rich despite the stress it causes. I have had people look down on me or be incredulous that I rent my house and own an older car…but I smile 🙂 When I was growing up in rural England, the richest man in the village who owned the manor house (my school was named for his titled ancestor) drove a battered old volvo and dressed like a tramp. I don’t make assumptions about people from their house, car, etc. Many people are renting a lifestyle they can’t afford. If and when the downturn comes, there will be pain for many families unfortunately.

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  11. Byron—I am another reader for whom your books have been life changing. My parents, father in particular, very much lived Old Money values, but I lost my way and got sucked into a lifestyle of more conspicuous consumption. It’s what I now realize was “Carrie Bradshaw Syndrome”: spending a ton on a city apartment, clothes and shoes with not much to show in savings or security after years of working . I read 3 of your books recently and am already feeling far better about myself, my future and the return to the wisdom and values my parents always sought to instill in me. Now I see others in flashy new construction homes, visible labels / logos and overpriced leased cars and feel and feel somewhat sorry for them as they try desperately to keep up. Thanks for your work !

    Like

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