How to Save Yourself in this Recession

[andviv]

Tom, great suggestion about working on ways to reduce your tax bill. Rep++

any strategy in particular you are looking at?

 

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[tchandy]

I read a few books and started to see that I focus on real estate and stocks where some tax breaks can be made. In something I read it said why are all of the tax codes favored toward the rich. I started to thing about that and it's true. Most people in the lower and middle class have some tax breaks but the rich have more tax breaks. For stocks, you will possibly have some losers. If you sell the stocks where you lost some of the money, you can get the loses written off. I know there's a certain limit but can't seem to remember at the moment. I bought a home as a rental a few years ago in Arizona. One the outside and inside it didn't look that great. There was an overgrown cactus, some chipped paint, stains on the carpet, etc. We got a good deal on the house since other homes in the neighborhood sold for $50-80,000 more. Since it was going to be a rental we figured we could hire someone to cut the cactus, repaint the exterior and interior, and replace the carpet with tile. It took longer than expected but we finally got it complete. I kept all of the receipts. All of the costs for the upgrades and workers were write-offs as well. For rental homes, the cost of the property manager are deducted as well as the taxes paid on the home itself. Last one, is if you ever have a home in another location where you have to fly to it, you can have that written off. I have a home in Hawaii and took a trip there two years ago. I have a condo that's a rental. We stayed in Waikiki enjoyed the beach and sun. I scheduled a meeting with my property manager and took a trip to see the house. Everything was fine and the condo looked great. I kept all of the hotel receipts and plane ticket receipts and all of that was deductable when I did my taxes the following year. It was tempting to sell the condo since it appreciated so much but I think it will pay off. How often can you get a free trip to Hawaii?

Tom

 

[outsourcery]

One thing that trading has taught me well, is that it's better to protect what you have, then risk it all on the future. You can't know the future, but it is extremely tempting to avoid taking a small loss now on the unfounded belief that things will be better later.

But what if you take that loss and things turn around? It could happen, but you still have resources to recoup and rebuild quickly. Probability is does not favour a fast turn around however. Trends in all things gather momentumn, and the stronger and faster the trend the more momentumn it has. Right now we are in a very strong negative business cycle, that has a long way to go before it's out of steam.

Isolate each investment and assess it's viability independently of anything else you might have going on. Now is not the time to prop up one failing invesment with another, or you could lose both.

If you've got a business or investments that are struggling, ask yourself if these are placing your broader financial position at risk, if they are it may be time to consider unwinding them in a controlled manner.

Edge's advice is excellent too. Hedging if done well (and early) is a great way to preserve wealth during volatility... but it is not without expenses and risk also.

I have friends that are on the verge of losing 20 years of hard work, because they've left it all too late. They denied the reality of their situation, and now losses have mounted and they'll be forced into a firesale. It is a very sad thing to see, becuase they're kind and generous people and worked very hard to get there.

My partner's father is out of retirement and back in a menial job because he didn't manage risk either.

These are life changing times, with life changing decisions. If you're unsure how to make these kinds of decisions, or if you feel too emotionally involved, seek professional advice... and do it today...

Cheers
Hugh

 

[dnuge3]

Granted, I am young and no very little about how to help people out of bad financial circumstances, I can only suggest that people take this recession as a lesson to live a little more frugally and not to look at things as a short term, quick gains, but to look at the long view and save a little more. Other than starting a small e-business to supplement some income, I cannot really think of anything else that might help. The confidence in the financial systems and markets must be restored before anything begins to look up.

 

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[GLC65]

This recession, which I think is more like the beginning of a depression, has hit a lot of us from left field. I did live frugally and did not take exotic trips or vacations. I did treat myself out to a few Lamborghinis and Ferraris but never in my mind did I think the banking and credit markets were going to be totally shut down. Smallest loan I have is $15 Million and it is extremely difficult to get a second behind a loan of that size. I have adjusted to the climate and now I know that anything is possible. I always though it was stupid having excess cash because I always took it for granted I can always borrow a few million short term. Everyone in the business world need to adapt to change and I think more people and businesses will be cautious as of what they spend and will probably stick to necessities. I have no intentions of purchasing any high ticket item toys until things really truly change. Just grateful on what I have and I thank God that I am profitable, not by much, but at least out of the RED.

 

[dnuge3]

This is true, but the masses control the market. It's not a few individuals. Yes, there are plenty of opportunities out there currently to make some money during this recession, as with any recession. The basic principle of creating massive wealth is to be slightly ahead of the curve. Which would mean investing in some things that have a great ability to grow over the next few years. If I had the money I would put some in green tech, nanotech, and funeral homes. Why funeral homes you ask, well, baby boomers are aging most are at or soon will be retiring. So, yes, there are plenty of things out there its just a matter of dedication and doing your research.

 

[BeingChewsie]

Some of the big pork in the new stimulus bill is going to go to colleges and universities for finanicial aid for students. I was reading that community colleges are being slammed with student enrollments. The online school Robert teaches for is running a huge campaign to bring in students and hiring a load of staff for what they believe will be an onslaught of students over the next several years. I would imagine there are some serious opportunities there, especially as more and more students go to school online.

There will still be a large number of students who go to ground schools too, so I'm sure there will business opportunities there as well.

Sue

 

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[randallg99]

there is a large incentive for the government to support enrollment at this juncture as many people who've lost much asset value will most likely continue working past their original planned retirement age.

in years past, college & high school grads would simply take the place of the retirees but now we're going to see competition among the grads and retirees for the same positions....

gov't is keeping an eye on unemployment levels and trying to control it indirectly by keeping as many students enrolled as possible.

 

[BeingChewsie]

Which certainly makes us happy since that is where a majority of our income comes from. I think there is going to be opportunity for someone to profit huge in some way off of the flood of people going back to school, especially the flood of people going online for the first time. I'm sure we will read about it down the road that someone saw some problem or need and filled it in relation to people going back to school.

Sue

there is a large incentive for the government to support enrollment at this juncture as many people who've lost much asset value will most likely continue working past their original planned retirement age.

in years past, college & high school grads would simply take the place of the retirees but now we're going to see competition among the grads and retirees for the same positions....

gov't is keeping an eye on unemployment levels and trying to control it indirectly by keeping as many students enrolled as possible.

 

[MJ DeMarco]

Just to echo some of the comments, many new millionaires are born at market extremes ...both positive and negative ... 2 years ago we had housing, 9 years ago tech .... at the extremes is where the opportunities are .... those opps need to be managed w/the risk that comes with it so when the extremes become normalized, you stay rich. I know mortgage brokers who made millions. Today, they are broke. They took advantage of the extreme, but failed to manage it and the risk with it.

 

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[MKHB]

Just to echo some of the comments, many new millionaires are born at market extremes ...both positive and negative ... 2 years ago we had housing, 9 years ago tech .... at the extremes is where the opportunities are .... those opps need to be managed w/the risk that comes with it so when the extremes become normalized, you stay rich. I know mortgage brokers who made millions. Today, they are broke. They took advantage of the extreme, but failed to manage it and the risk with it.

If we could just go back in time and get a perspective on tomorrow's calamities ...oh wait maybe we can??

 

[Runum]

Interesting to read this thread now. How we all have changed because of this event. I didn't get hit as bad as some.

I guess my overall hit was the quality of my renters has declined since that time. People seem more willing to back out of leases and walk.

Summer 2012 was when it really hit us. We had 50% vacancy and 3 major rehabs going on. We were bleeding cash. We hired labor to help to right the ship sooner. My wife and I worked 14-16 hour days sweating. The labor complained about working 8 hour days.

We got the cashflow back up and saved the biz. Liquidated most of the units since then.

 

[Chitown]

If we could just go back in time and get a perspective on tomorrow's calamities ...oh wait maybe we can??

@MKHB,
I've been reading a lot of old recession-related threads. Damn good stuff.

Interesting to read this thread now. How we all have changed because of this event. I didn't get hit as bad as some.

@Runum,
It's amazing how you comprehend some things once you've experienced life a bit. I guess they call that wisdom.

 

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[Runum]

@MKHB,
I've been reading a lot of old recession-related threads. Damn good stuff.



@Runum,
It's amazing how you comprehend some things once you've experienced life a bit. I guess they call that wisdom.

Battle scars, war wounds.

 

[Chitown]

Battle scars, war wounds.

@Runum,

Glad you and your wife came out the other side okay.

 

[MKHB]

@Runum,

Glad you and your wife came out the other side okay.

@MKHB,
I've been reading a lot of old recession-related threads. Damn good stuff.



@Runum,
It's amazing how you comprehend some things once you've experienced life a bit. I guess they call that wisdom.

Well said. Also, up markets are sometimes the domain of the well connected and capitalized, as opposed to choppier times, which plays a little more towards the hungry, motivated players.

 

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[MJ DeMarco]

Interesting to read this thread now. How we all have changed because of this event. I didn't get hit as bad as some.

I guess my overall hit was the quality of my renters has declined since that time. People seem more willing to back out of leases and walk.

Summer 2012 was when it really hit us. We had 50% vacancy and 3 major rehabs going on. We were bleeding cash. We hired labor to help to right the ship sooner. My wife and I worked 14-16 hour days sweating. The labor complained about working 8 hour days.

We got the cashflow back up and saved the biz. Liquidated most of the units since then.

Just wanted to say it's nice to see you back in the building.

 

[Runum]

Just wanted to say it's nice to see you back in the building.

Thanks MJ. Good to be back. Missed the convo's.

 

[Andy Black]

It's amazing how you comprehend some things once you've experienced life a bit. I guess they call that wisdom.

Battle scars, war wounds.

Yep.

"Wisdom is earned."

I'm proud of my grey hairs.

 

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