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If you think winter might be coming and want to prepare financially, the #1 most important piece of advice is this: Lower your expenses. Nothing gets you into
by erdevs 10y ago
If you think winter might be coming and want to prepare financially, the #1 most important piece of advice is this:
Lower your expenses.
Nothing gets you into trouble more than having a high expense load. Get as close as you can to spending nothing.
The next most important piece of advice is to build up cash. 6 months of your monthly burn is cutting it way too close. You should save until you have at least two years. What's more, you should save until you can actually invest some money.
These two bits of advice go hand in hand. The lower your expenses, the easier is to save 24+ months of runway up. And the reverse is true too.
Beyond that, you can do a couple other things to prepare yourself. You could join a larger, profitable company with no history of major layoffs. (Eg Google, Facebook, many others.) Or, you could take the opportunity now to start your own company, and maybe think about what sorts of businesses could benefit from an economic downturn when you do so. Focus on getting it profitable, rather than focusing on rapacious growth. Obviously, these moves (getting a job at a stable company or stating a company and getting it profitable) are more out of your control and harder to pull off. Which is why cutting expenses and saving as much as possible are the most critical endeavors.
- elchief 10y agoI dropped mine pretty dramatically in the last year. Quit smoking. $12/pack * pack/day = $4380/year Eating at home every meal (save one/week). Went from $10/meal out to $3/meal in (I don't eat breakfast usually). $5000/year No drinking on school nights ~ $4000/year That's a lot of after tax cash.
- crgt 10y ago$12/pack ?!? It's less than half that? Or where are you that the taxes are that high?
- brianpgordon 10y agoLooks like it's even more than that in New York. http://fairreporters.net/health/prices-of-cigarettes-by-state/ http://fairreporters.net/health/prices-of-cigarettes-by-stat...
- elchief 10y agoVancouver. If you think that's expensive, you should see our real estate!
- crgt 10y agoPricey real estate I can wrap my head around, Bay Area here. But $12/pack? Madness.
- Gustomaximus 10y agoIt's $20USD per pack here in Australia. It's reduce lousy tax but with the plain packaging and this price has really gotten people to quit.
- 31reasons 10y ago>>Get as close as you can to spending nothing. Are you suggesting farming ?
- emodendroket 10y agoFarming on any sort of serious scale requires tons of capital.
- dejv 10y agoYes, and farming on small scale is actually more expensive then buying produce at shop. (When you include all the investment required for hobby scale gardening initiative). Speaking as a farmer and hobby gardener.
- evv555 10y agoAlot of that stuff isn't required in my experience. If a piece of land can grow grass you have a good chance of succeeding with just tilling it and planting. Farmers have different requirements where they need to manage risks of crop loss and maximize yield.
- madelinecameron 10y ago>You should save until you have at least two years It is a little late to be doing this. I have pretty bare-bones expenses (Fine, my apartment is 40% of my income) but I would struggle to save 24-months of expenses any time soon. Unless you are making like $250k and living on $50k, I would say it is a little late to be stocking up to survive a downturn. I could do it if given probably 5 years, but I couldn't pull that off in 1 year.
- k-mcgrady 10y agoIf you're renting, in a downturn, wouldn't it be very easy to move to a cheaper apartment and reduce that expense significantly?
- madelinecameron 10y agoDefinitely. The "worst case" is just walk away from my lease and move in with in-laws.
- caseysoftware 10y agoIt is never too late to start stocking up. Yes, the sooner you make the changes, the better off you will be. Just like getting healthier. A huge part of it is mindset. If you are striving to build 24 months of savings, you'll have to think about income and expenses and figure out which ones matter, which ones can go away, and how to improve them in general. There may not be a single silver bullet but there can be a lot of little things that will help in the long run.
- jazzyk 10y agoA lot of people pay way too much for cable, like $150/ month... Cut the wire, go OTA, if you must (free), and Netflix ($10/month)
- seanp2k2 10y agoI really wonder how many people on HN seriously pay for cable. For me and many of my friends, we just have Internet and watch whatever we want whenever we want. I wouldn't watch cable if it was free. I wouldn't watch it for an hour a night if they paid me $100 a month to do so. The idea of paying $50+++ per month for what I consider to be an absolute waste of my time is crazy to me.
- roymurdock 10y ago> 6 months of your monthly burn is cutting it way too close. You should save until you have at least two years. Tell that to the nearly 50% of Americans who live month to month and would not be able to produce an extra $400 in savings to cover an emergency. The average American consumer is a powerful spending workhorse that keeps our economy running, but it is dangerously close to running out of gas. http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ http://www.theatlantic.com/magazine/archive/2016/05/my-secre...
- viraptor 10y agoThe context here is tech jobs though. I don't expect many SV employed engineers to live month to month (unless they're making really bad decisions)
- anexprogrammer 10y agoGreat advice. Thing is, unless you plan ahead, almost everyone cuts expenses far too little and too late. I'd add figure out your lines of retreat. If shit happens, what goes first - cable, phone contract, nice car etc.? If shit keeps happening what's next? When? Figure it out beforehand with family whilst calm over a nice bottle of wine. You won't be making rational decisions after the shit hits the fanm and your partner is stressing over how you're going to keep feeding the kids.... Common scenario seems to run something like this. Lose job, burn normal money for six months or a year whilst "I'm bound to get a new job this week", and only then think about significant restructuring. Fast forward another six months and only now is cable tv or mobile contract being looked at. Hmm, maybe we need a cheaper car. "Sorry guys can't afford to go out this month". And so it goes until you lose the house. I lost touch with a great friend and his family in the dot com fun who went through something like this. He looked increasngly ill and stressed until one day their phone no longer rang. Never did find out what happened to them. Couple of other friends went through similar, though rather less dramatically. I went from a higher rate than I dreamed possible to unemployable for six months+ literally overnight. As a contractor at the time I was poison to the permanent market. (Brilliant interview, but we think you'll get bored... etc)