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20 Reasons Why I Love the Recession

Filed in Financial Planning , Personal Finance , Retirement , Saving Money , Vulture Investing 29 comments

I’m one of those weird people that believe when things go horribly wrong, the opportunity to make your situation better for the long term quietly presents itself.

I realize it’s not a popular thesis to propose when we’re losing thousands of jobs everyday and 8% of the American public isn’t paying their mortgage on time, but sometimes the best way to educate someone is to let them try, fall flat on their face, and ask them afterwards just what the heck went wrong.

Only then do you get their attention after their arrogance or stupidity has been put in check.

Big Picture Reasons Why I Love the Recession

  1. We’ve all had one heck of a wakeup call.  Instead of a waking up to the normal alarm clock buzzer, someone has thrown a bucket of ice cold water on all us.  Quickly followed by a pissed off drill sergeant reminding us we’ve been slacking for the last 10 years and now is the time to get back to the basics.
  2. People are beginning to think with their brain, not their wallets.  The idea of disposable income is becoming less commonplace since we tend to value a dollar more when we’re not sure how many we’ll have in an uncertain future. Because of this, American’s are opening savings accounts in huge numbers.
  3. The strong get stronger and the weak will die off – maybe! Evolution supposedly still applies to the business world, so any company who offers mediocre products/services, will quickly go the way of the dodo bird.  Unless they’re “too big to fail” and receive a few billion in bailout money.
  4. Overpaid and moronic CEOs become household names.  Dragging the once arrogant, now incredulous CEOs before Congress brought the overcompensation issue into the public spotlight, as well as the numerous reports of management putting emphasis on profit over analytics.
  5. There is an incentive to buy almost everything.  Whether it’s a coupon in your Sunday newspaper, zero percent interest loans for a new car, or an $8000 tax deduction for buying a new home and a free IRS efile to boot, incentives are out in force hoping to lure in new customers.  Excellent news for bargain shoppers.
  6. The American public is actually saving money! Shocking!  We’re actually saving around 5% of our bring home salary according to the January 2009 consumer spending report.  It only takes the worst financial crisis since the Great Depression to scare us into submission.
  7. Necessity is the mother of all invention.  When people are unemployed, some have a tendency to start their own business.  Recessions can paradoxically be the best time to start a new business according to some.
  8. Going Green becomes a necessary evil in Corporate America.  When the bottom line is in the red, the ideas dismissed as cutesy or treehugger-like are adopted to save a few bucks.  Frugality and green living go hand in hand after all.
  9. Everyone is now aware their retirement accounts need regular maintenance.  I’ve never seen so many people so concerned about their retirement accounts until they were chopped in half.  You never know what you got until it’s gone.
  10. It’s only when the tide goes out that you learn who’s been swimming naked.  I’ll let you interpret Warren Buffett’s quote as you see fit.

Reasons for Everyday Folks to Love the Recession

  1. Gas prices are below $2.50 per gallon for most everyone in the U.S. That’s the best tax cut we can give the American public.
  2. Food prices have come off their highs.  That sneaky “grocery shrink ray” may still be in effect since companies are looking to boost profits any way they can, but it’s still better than paying the prices from mid 2008.
  3. Cost of basic materials has fallen.  The cost of lumber at my local Home Depot has dropped by nearly half what it was 2 years ago.
  4. Anyone seeking a loan must have a high to average credit score.  Trust me, if you are whining after being rejected for a loan, it’s probably in your best interests that you were turned down in the first place.  A person applying for a subprime loan during a recession is like making sketchy decisions after 2 a.m. and a nice buzz.  It’s best to just go home and sleep it off.
  5. The simple things in life quickly become the finer things in life.  Actually having dinner with your kids, your parents, or maybe even your in-laws can actually become a time to realize that you’ve got it made and didn’t know it.

Purely Selfish Reasons Why I Love this Recession

  1. Generation X has the investing opportunity of a lifetime.  If you’re a long term investor with a retirement account, you should be licking your chops when seeing the stock market down ~50% from it’s highs.  Dollar cost averaging into this market over the next few years could be the investment opportunity of a lifetime.
  2. That uniquely American idea of “hope” finally got taken down a few notches.  Don’t get me wrong, hope is a good thing but I’m glad to see a mix of both hope and pragmatism.  Pulling an ostrich and sticking your head in the dirt blindly hoping we’ll come out of this mess quickly is fallacy at best.
  3. Vulture investing opportunities are everywhere.  Whether it’s buying a one year old SUV at half price or a foreclosure at 25% off, everyday people who saved more than they spent see the current economy as one large garage sale.
  4. Environmentalists are witnessing a noticeable scale back in pollutants.  If we’re consuming less, we obviously don’t need to chop down as many trees or use as much coal to power the factories that produce the worthless junk we mindlessly consume.
  5. Giving a few wiseacre smirks to those that ignored the old ways.  I’m not much of one to say “I told you so”, but I don’t mind giving a smirk when I read moronic stories of people living beyond their means.

Got any reasons why you love the recession?  And don’t say you shorted the market… never celebrate in front of people who just died and got sent back to the minors.

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Posted by CJ   @   3 March 2009 29 comments
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29 Comments

Comments
Mar 4, 2009
11:16 am
#1 Curt :

Excellent list you have hear. The frugal live for recessions and this is our time to enjoy.

Mar 4, 2009
12:18 pm
#2 Matt :

@ Curt

Thanks. I’m probably not the best frugal-ite among personal finance bloggers but it certainly is a great time to gobble up assets right now. Just depends on your particular tastes.

Mar 4, 2009
12:28 pm
#3 Matt :

@ Christian 2.0

Thanks for commenting. I’m feeling ambivalent about the stimulus package as well. I feel it’s a social engineering package disguised as a infrastructure project, but there are definitely good projects in there as well. Anything that builds wind turbines and solar panels are great, but giving a few million for a minor league hall of fame is wasteful at best.

Theoretically, it’s bad if all Americans begin to save at once. At that point, you can’t adequately support the industries that support consumerism — retail, restaurants, shipping, travel, etc. There was a good article on this very topic on MSN Money this morning.

http://articles.moneycentral.msn.com/Investing/SuperModels/how-savers-could-doom-the-economy.aspx

Mar 10, 2009
9:12 am

Matt,
Great post. Regarding your comment #4, I always get a kick out of articles that suggest that increased household saving now will make things worse in the aggregate. Wasn’t excessive household spending (via cheap household credit) a principal cause of the mess? Yet by finally reigning it in, we’re somehow less patriotic?

Mar 10, 2009
9:55 am
#5 Matt :

@ Beyond Paycheck

You’re intuition is spot on. I find it humorous, but also reckless, when people say things “like savers will doom the American economy”.

I saw an interview with a Disney exec who headed up Chinese operations and he said one of the main goals was to convince the Chinese people to become spenders not savers. Some people just can’t understand there is an agenda pushed by Corporate America to make people loose with their cash.

I don’t buy the “less patriotic” argument one bit. Everyone should save 10% of their salary, and if businesses existed because they relied on that 10% of spendthrift behavior, then too bad for them.

Mar 14, 2009
8:07 am
#6 Bobby T :

I’m FAR from an “inventor” although I have had a few IDEAS in my past…With this recession, headfing for depression, I have truly put my mind to the grindstone, as they say. I know I’m not alone in the need to find shoirtcuts that save time, money and especially the environment. I have one of those ideas and am working on obtaining a PATENT, even as we speak. Bobby T

Mar 14, 2009
10:22 am
#7 Matt :

@ Bobby T

Thanks for commenting. If you’re going the patent route, I would suggest you hire an intellectual property attorney (aka – patent lawyer) to file your paperwork.

I have a college bud that works at the Patent & Trademark Office (PTO) and he’s said multiple times that today’s paperwork is so complex that an experienced patent attorney can find multiple loopholes to sidestep your patent if not written properly.

Best of luck with the new invention.

Mar 14, 2009
9:08 pm
#8 Patience :

I loved this. One other thing–if you live in an area that had skyrocketing housing tax assessments during the real estate boom, suddenly your assessment levels off and you know your mortgage payment will remain the same for another year. At least, that’s what happened to us.

Mar 14, 2009
9:27 pm
#9 Matt :

@ Patience

Glad you liked it! I would imagine most people would welcome stagnant or lower real estate taxes — except state governments, so that’s an excellent addition to the list.

Did your county/city do this automatically or did you have to file some paperwork?

Thanks for dropping in, and consider signing up for the RSS feed.

Mar 17, 2009
8:10 pm
#10 don :

This recession is awesome… I just paid some worthless piece of crap $25.00 to cut my grass instead of the usual $150.00. I told the maid & she offerd to cut the grass for
$20.00 to make up a portion of her decrease in salery due to these tuff times. My neighbor lost his home after defaulting on his mortgauge payments,so I bought that place for 40,000 less than what he paid, and now I’m renting it to him for $30.00 less per month then what his mortgauge payment was. This is GREAT !!! I feel like I died and gone to heaven. Is anybody else having as much fun with this recession as I am?

May 18, 2009
10:28 am
#11 J. Money :

This was one of my favorite reads!!! I love it…good stuff.

Oct 25, 2009
12:24 am

Great post Matt! And now, just like that, we are back to the raging good times of old.

Have you seen Wall St. bonus figures? They’re back to 2007 highs in terms of revenues, with 15% less people to pay. In other words, big bucks are back!

Should be a job market frenzy in 2010.

Oct 25, 2009
12:56 am
#13 Matt SF :

I’ve seen some of the numbers, but I’m curious if the Pay Czar will step in and do some damage.

I’m probably in the minority by saying I think Wall Street needs a serious downsizing in the compensation area, but it would be really nice to see a consistent uptick in finance sector employment (or any other sector for that matter). Let’s just hope next time it’s not a boom and bust scenario like it’s been for the last few years.

Jan 27, 2010
6:39 pm
#14 Matt SF :

Good to know others are flourishing in these tough times. I’m not an expert, but it seems they might be continuing for a longer amount of time than anyone suspected.

Jan 26, 2011
1:48 am
#15 Chris Alta :

Great post man. I just came across your site super randomly and the recession post on your popular post list caught my attention. I just started blogging and I completely agree with you 100%. The reason I decided to get into blogging and to stop going to school where I’d ultimately probably end up working a 9-5 was because I saw the mistakes my parents made. Then they want to go around and tell me the same advice of what to do with my life even through our family is in a rut now because of their decisions. Just didn’t make sense to me. Anyways great post and I’ll definitely be checking back later. OH and if you have time check out my blog and let me know what you think. I just started so any positive feedback would be dope.

Cheers

-Chris

Jan 26, 2011
11:43 am
#16 Matt SF :

Thanks Chris. Funny how some people give advice, yet they fail to realize just how similar their advice related to their own situation, and even more funny, how poorly that advice worked out.

As they say, the worst vice is often advice.

I’ll check in with ya from time to time at your blog.

Aug 24, 2011
9:38 pm
#17 Kuehnau :

Haha, I am laughing at how some of these perdictions came off as wrong. Gas was easily over $2.50 a few months ago and food prices have done nothing but go higher.

Aug 24, 2011
9:43 pm
#18 Matt SF :

Ha ha… I’m laughing b/c you can’t read the date on the post. You know, when there actually was a recession.

Nov 20, 2011
4:09 pm
#19 Lucas :

@Don,

If you can take advantage of the economic situation without exploiting others, then more power to you. But your examples suggest otherwise. Shame on you for using these “tuff times” as a pretext for cutting your maid’s salary as you scorn her all the way to the bank. Your mortgage payments are probably at least $200 less than what your neighbor had been paying and you passed on only $30 of the savings. Pretty stingy.

See, the difference between the 1% and 99% is not greed, but that the 1% have the resources to make a spectacular splash. If you are pointing at the 1%, then remember, three fingers are pointing back at you. I truly hope you will take a more socially responsible approach to your finances.

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