Common Sen$e: The Rainy Day Fund

ART WOOD

With all of the talk about inflation and recession, I wanted to talk about defensive strategies to make it through any economic downturn. You can’t turn on the TV or look at your phone or computer without hearing something about the impending recession. So, what should you be doing to prepare for it? SAVE!

Typical monetary advice says you should have three to six months of monthly expenses stashed away in a safe place that you never touch except in an emergency. With inflation the way it is, I would recommend six to nine months. I think most people believe a slowdown is coming, or is already here, but what people don’t know is how long it will last. The Federal Reserve says it won’t stop hiking interest rates until the unemployment rate starts to rise. That means people are going to have to start losing their jobs, and then be out of work for a while. What is your safety net if you lose your job for six months?

The good news is that you have time to prepare. If you are not already doing so, increase your direct deposit program so 4% of your income goes to 401K, 20% gets split out to a separate savings account, and the rest goes into your regular checking account. Doing this requires discipline to not touch the savings. Pretend it’s not even there, and any money left over after paying your bills, move over to savings as well. Even if you never get affected by a layoff or recession,

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you will sleep easier at night knowing there is a safety net there.

Another great idea to help you accomplish this is a review of your monthly bills to decide what you truly need and what you don’t. Do you really need all those streaming subscriptions? Really…do you? Or maybe you can look at cutting the cord and quit paying for expensive cable? Do you need to buy a brand-new car right now? Do you need the latest and greatest cell phone? These things should not be considered essential, and should be paid with excess money after the main bills are paid, and you have put aside funds for savings and retirement. I know, it’s not easy, but you can either fail to plan or plan to fail.

My family is going through a lot of this right now. The mortgage business was booming in 2020 and 2021. In my seventeen years in the business, I had never seen anything like it. On the flip side, now rates are in the sevens and the highest they have been since I got into the business - and business has really slowed. My early mentors always told me to save for a rainy day. I am glad that we did. We have the nest egg put away, but we also constantly are looking at ways to reduce our monthly outlay of cash until we get through this. There is no finite period for when this recession will start or when it will end, so we just need to do our best to be prepared the best we can.

ART WOOD (NMLS #118234) is the branch manager of The Art Wood Mortgage Team of Goldwater Bank, located at 2341 Main Street in downtown Tucker. “Tucker’s Mortgage Guy” for sixteen years, he is a former Tucker Tiger (Class of ’92), and co-founder and organizer of Taste of Tucker. Family guy, community guy, and definitely not your typical mortgage guy - it’s all that he does that makes Art Wood who he is. Contact him at 678.534.5834 or art.wood@goldwaterbank.com.