In the news, we are constantly hearing about how the recession is affecting people in different ways. Some people have lost their jobs, others have had to file for bankruptcy. But what does this mean for your finances? How can you make the most of a recession and actually come out ahead?

 It may seem difficult, but it is definitely possible. In this blog post, we will discuss how to win in a recession by investing, hustling, and getting ahead instead of falling behind.

One of the proudest moments I’ve had in my financial life was right after the COVID-19 pandemic began. I remember my dad calling me and saying that the Carnival Cruise Line stock (CCL) had taken a hit. He told me that at its highs the stock had been around $60 and it was now down to around $17 per share.

I watched the CCL stock for the next few days. When it hit around $14 per share, I bought around $500 of the stock. A little bit later it declined even more and was at the $8 mark. Instead of being upset about my first investment in CCL being low, I saw it as an opportunity and purchased another $1,500. Around a year later, I more than doubled my investment and sold the stock at $23 per share.

Now, there was a time before I sold it that it reached over $30 per share. But I wasn’t mad at myself for not selling then. Trying to time the market perfectly is just impossible. I was happy with making more than 100% on my investment.

I’m not saying that in a 2022 recession, you should go and buy a bunch of different stocks and hope to make 100%. What I am saying is that the best time to buy stock is when the stock market is on a downturn. There is no better time to buy than in a recession when the stock market takes a hit.

What is a recession?

A recession is a period of economic decline. This can be caused by many different things, such as a decrease in consumer spending, an increase in unemployment, or a stock market crash.

What does this mean for your finances? Technically, a recession is official when there are two consecutive quarters of negative economic growth. So, if the gross domestic product (GDP) is decreasing for two quarters in a row, that means we are in a recession.

On July 28, 2022, the GDP report came out that solidified a recession in the US, as we had economic decline for the second quarter in a row. Hello opportunity!

Should I be concerned about a recession?

As many of us learned in 2008 and even the economic scares at the beginning of the pandemic in 2020, a recession or an economic decline can be serious. We’ve all been personally impacted or at the very least have seen friends and family struggle. This could be due to job loss, limited work opportunities, or maybe you have the same job but struggle to get by because of inflation. This is all understandable but let me paint a different picture.

I personally believe that a recession is an opportunity that only comes around once every decade or so. It is by far the best time to invest in various ways. It is by far the best time to hustle.

How long does a recession usually last?

A recession can last anywhere from six months to two years. On average a recession lasts 18 months. We can’t predict exactly how long the 2022 recession will last, but we can get to work and make the most out of this time.

Like I mentioned before, it is impossible to time the stock market. The answer to the question of when to invest in the stock market is, always.

The best investors have invested consistently, over time. However, to make the most of the recession, we should continue to invest consistently. So, what should change during a recession? I believe we should hustle and invest more.

Invest more by reducing expenses during the recession

If you don’t already have a budget and you’re not sure where your money is going every month, a recession is a good time to sit down and take inventory. Do you have three different streaming subscriptions, but you only really use one? Maybe you could save $30 per month by canceling a couple of unnecessary subscriptions. Maybe you can refinance your house and have a lower monthly payment. Maybe you can get car insurance quotes and save $50 per month.

In addition to finding ways to reduce your fixed expenses, maybe it’s time to take a look at how you spend on your lifestyle. Do you eat out every day? Is your grocery shopping at the fanciest, most expensive grocery store? Do you buy a new pair of shoes or new clothes every month? This is all unnecessary spending. I’m not saying that you have to cut everything out, but if you can find an extra couple hundred dollars every month, that would be hugely beneficial.

Invest more by skilling up during the recession

One of the most amazing things about living through this period of history is that we all have a lot of access to free education. Personally, without a college degree, I have taught myself how to do graphic design, video editing, website design, and more. And I get paid to do these things. I never took a course or paid a dime to learn how to do any of it. I taught myself using free resources like YouTube.

When you advance your skills, you will become more valuable to your current employer, valuable to potential employers, and maybe even find some freelance work.

Here is a list of different ways to advance your income by skilling up:

• Ask for a pay raise if you have invested in skills that make you more beneficial to your current employer.
• Find a new employer that will pay you more for your skills.
• Use your skills to teach others by offering coaching services or create a course on Teachable or Udemi.
• Use your skills to do freelance work in your free time.

Here are some ideas for the type of skills that you can add to your skillset:

• If you’re in the creative space, learn skills like I did in graphic design, website design, or video editing. Maybe you could take your skills to the next level by learning the basics of coding.
• Salesforce. No, I’m not talking about Sales. Salesforce is the world’s largest CRM company. The organizations that use Salesforce need people in Admin, Developer, Architect, and many other roles. The cool thing about Salesforce is that the training is FREE. You could spend a couple of hours everyday learning Salesforce and within two months you could become a Salesforce Admin. The starting salary for a Salesforce Admin in the US is over $80,000 per year. It might take a couple of months of investing your time, but if you are only making $40,000 per year and you could double your income, this could be an amazing opportunity for you.
• Handyman skills. I personally have learned how to do just about anything around my house, myself. I’ve changed the electric cord on the back of a washing machine, patched my roof, replaced pipes under my sink, and a whole lot more. This can save you a lot of money if you don’t have to pay someone else to do these things, and these skills may also help you on your career path, depending on your field.
• Car repair skills. Just like handman skills, car repair skills can save you money and may also make you more valuable, depending on your field. A few years ago, I was told that I needed new spark plugs in my 2012 Volkswagen CC. I watched a tutorial video on YouTube, ordered the parts, and replaced all of the spark plugs myself. This saved me hundreds of dollars, only took me 45 minutes, and built my confidence in knowing that I can do anything if I just take the time to educate myself.
• Other skills. No matter what your industry, there are likely skills that you could learn to make yourself more valuable. Look at the skills you have currently and make a roadmap of skills that would take you to the next level. Then begin to invest your time in developing these skills, a little every day. Watch YouTube videos, take free courses, or sit in on a college class. There are a lot of free learning opportunities if you just look and have the discipline to apply yourself.

Invest with your hustle in the recession

I am not a huge fan of trading time for money, but for short periods of time this can be really beneficial. You could commit to a year of extra work for the purpose of investing. Just imagine these numbers:

• Make deliveries with Uber, Shipt, InstaCart, or Walmart. Imagine that three nights per week you made deliveries for three hours per night. Let’s say that you average $50 per night. That’s $600 dollars per month that you could invest in the stock market. That’s $7,200 in one year just because three nights a week you delivered items instead of watching Netflix. If you did that for just one year and let it sit in the stock market for the next 30 years making 10% interest, you would have over $125,000.
• Rent out a room in your house on Airbnb (get $25 when you use this link). I know it’s not the most convenient thing in the world, but having a roommate is a great way to make passive income. You can rent a room on Airbnb and make around $1,000 per month. If you invested $1,000 per month for a year, you would have $12,000 invested. After 30 years of just sitting in the S&P 500, earning around 10% interest, you would have over $200,000. If it sat in your investment account for 40 years, it would be worth over $500,000. All because you hustled for one year. Let’s say that you rented a room on Airbnb or to a roommate for $1,000 per month for 5 years. After five years you would have over $90,000. If you let that $90,000 sit for another 25 years, you would have almost 1 million dollars. All because you hustled for 5 years and then let your money work for you.
• Donate Plasma. You can earn around $1,000 on your first month and between $350 to $500 per month after that. There are lots of cool benefits to donating plasma. First, your donation really does make an impact. Secondly, your body reproduces plasma within 24 to 48 hours of donating, so it is considered to be very safe. Third, you can read a book or watch a Netflix film on your phone while you make your donation. When you donate plasma, it usually takes between one and two hours and you can donate up to two times per week. If you breakdown the hours, this is one of the best exchanges of your time for money.
• Now, imagine that you did all three of these side hustles for a while. You rent out a room on Airbnb, you donate plasma every Tuesday and Thursday, and you drive for Uber every Monday, Wednesday, and Friday night. You still have your weekends free, and you would earn around $2,000 per month that could be invested. If you did that during the 18 months of a recession, you would have invested $36,000. Without ever adding another cent, after 30 years of sitting in your investment account at 10% interest, you would have a total of over $625,000. After 40 years you would have a total of $1,629,333.

Invest in Real Estate before the recession ends

I really enjoy real estate investing, but the market over the last couple of years has been out of control. I have still seen a lot of investors making moves, but I’ve been in a holding pattern, waiting for a downturn. The downturn seems to be happening now, so now is the time to prepare. If the low of the downturn happens in about 18 months, now is the time to start saving and preparing to make a down payment.

How can you use real estate to make money during a recession?

The best advice has always been to buy the worst house in the best neighborhood. Generally, the best deals to be found are the worst looking places. With a little elbow grease and money invested to turn a house around, you can flip it for a profit, rent it on Airbnb to make big monthly profits, or offer long-term rentals that require less maintenance but put a little money in your pocket every month for a very long time.

What is the BRRRR method?

The BRRRR method is a real estate investing strategy that has been made popular by BiggerPockets. The idea behind the BRRRR method is to buy a property, fix it up, and then refinance the property at a lower interest rate. After you refinance, you take out all of your original investment plus any additional cash you have put into the property. This allows you to buy the next property with little to no money out of your own pocket.

Great mortgage opportunities for military members

If you are a military member, there are some great opportunities for you to buy property with very little money down. The Veterans Affairs loan program allows veterans to buy a property with no money down and no PMI (private mortgage insurance). This is an incredible opportunity for any veteran looking to get into real estate investing.

Great mortgage opportunities for first time home buyers

There are also a number of programs available for first time home buyers that allow you to buy a property with very little money down. These programs are typically through state and local governments, as well as a number of different lenders.

Now is the time to start preparing for your future real estate purchases. Look for properties that need work and start saving your money so that you can take advantage of the opportunity when the market does turn.

Should you invest in the stock market or real estate during a recession?

It would be beneficial to you if you had investments in both the stock market and in real estate. If you want to invest in real estate during the recession, maybe you should save for that down payment first before putting your hustle chunks of money into the stock market. If you’re able to do both, obviously that is going to be the best option. Be sure to create a plan and give yourself milestones that you can celebrate along the way.

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I hope this blog has inspired you to hustle over the next 18 months, working to give yourself a brighter future. You’ve got this. I believe in you! If you have any questions, be sure to let me know.

Click here to see the difference your money makes over time in a savings account vs. a brokerage account.