Is there a recession coming??

I’ve heard so many pundits talking about the inverted yield curve and how it’s a sign of a looming recession. Basically investors can earn more from US treasury bonds over the short term vs the long term. Historically that has been a key indicator that a recession is looming. This happened in 2005 but the US economy didn’t really start to suffer until 2007.

Is this time around different? I honestly don’t think so. Closures in retail left and right, a student loan crisis, unattainably high real estate prices, continual lowering of the Federal Funds rate, economic uncertainty with China and our stubborn president… Reductions in shipping and manufacturing, a glut of oversupply in the automotive market.

For the record I’m in the camp of people who thinks we are due for a market correction and some type of economic recession. Will it be as bad as the late 2000s? Who knows for sure. What I do know is that I’ve been down that path before. https://apple.news/Am2QtY5VxTC2qllXbXWOumw

I was a student during the last two major economic blows in this country. A student with no real money in the marketplace and still operating with a certain naivety from my Gen X and Baby Boomer educators who were indeed able to live the dream on a working person’s salary. My situation today is quite different.

I’m not quite debt free, but between my contribution and my employer, $1600+ goes into my 401k each month. That’s not including a neglected Roth IRA with Betterment that I am presently lacking ample cash flow to fully fund alongside my other short-term obligations. If anything it’s in my favor for the market to go down, that way I can buy more shares of the total stock market index. (FSKAX) at extremely low expense ratios and a higher probability of asset appreciation.

Within a year god willing I will free up some cash flow. $545/mo on a car gone, $129/mo on a car warranty gone, $55/mo for a cell phone gone. That’s $729/mo. for me to live on, use to travel, build up my emergency fund, potentially save towards the down payment on real estate should the right opportunity come along. As I get older and see where each of my dollars is really going, it’s a wake up call how much things depreciate.

I still am staying the course with investing. I get the tax benefit now, it’s great to use compounding to build up a nest egg, a declining market allows me to buy equities at a “discount”, there is an annual limit on how much I can put in a 401k annually, and I have no plans to retire in the next couple years. If anything it’s more like 14 to be retirement optional in 2035.

2008 me invested in penny stocks such as DPDW, which I bought right as it peaked and lost about 50% of my hard earned cash on. I also owned shares of companies like Apple but got too skittish with each and every company announcement, press release, etc. I doubt I will ever buy single stocks again unless I have a huge surplus of cash laying around.

Month 53: Why 1984 won’t be like 1984

It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM-dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom.

Oh wait… Not that 1984, but $1,984. As in my student loan balance. That’s about what my computer, a MacBook Pro cost when I purchased it in early 2014. This is a moment to celebrate. Why? For the first time ever my student loan is below $2,000. Progress my friends, it’s all about progress.

What about Retirement? $18,223 in my 401k and $362 in my Betterment Roth IRA. So $18,585 total. Credit cards? Credit card balance is around $1400. Each paycheck I make a $700-800 payment toward that with plans to increase once student loans are gone.

Now what about the car???  Current payoff is $29,169.81 at 1.9%. That’s down from $1997.39 from $31,167.20. I have another payment coming up in a week which will drop it below $29k.

Not being content with where I am today, I started to do a little bit of job searching. Interviewed with a local employment agency for a contract gig. The position sounded interesting and I think would be a step forward in my career. However I don’t think they would be able to match my benefits aside from medical and dental. 160 hours of vacation, essentially unlimited sick time, paid holidays, 5% retirement matching… As a contractor, you need to plan for all of those things.

It’s important to look at the big picture when making big moves like working for another company. Can’t afford to leave money on the table. I’ve been following a little bit of Alex Becker‘s work, read his book 10 Pillars of Wealth where he talks a lot about working for yourself and the benefits of a cash flow business. I also am in the middle of Scott Alan Turner‘s 99 Minute Millionaire ebook along with The Procrastinator’s Handbook – Mastering the Art of Doing It Now by Rita Emmett.

My last point and this is a big one. Don’t stop. Live is a marathon, not a sprint. Just because you had a setback or 5 doesn’t mean you let that break you and give up. From 2009-2011 I went a year without a regular FT job, not qualifying for unemployment and over $42k in student loan debt. I was down, depressed and unsure my future. Today I am on more solid footing. Not balling by any means but I’m way better off than those dark days.

Applying my own advice to different areas of my life, learning from experts to save time, minimize frustration and see results.Hope to share more with you on that soon.

Month 52 – Navient $2,479, Retirement – $17,912

Sorry if these updates are getting boring. I’m making progress still. Down to $2,479 from $15,402 just one year ago and $2,970 one month ago.

month52updateMy retirement is steadily growing. 401k is finally vested after 3 years and up to $17,654. My Betterment account is up to $258.

Other than that I did get a raise even though it was less than I was hoping for. Still need to keep looking for more jobs but not trying to get crazy stressed about that. Kind of question whether to put so much effort into a search when it’s not mandatory.

Speaking to the big elephant in the room. This blog… is called Debt Free 32 – One Man’s Mission to get rid of $45159.35 of debt. The 32 part is because I planned do to this by age of 32. Today is my birthday… I’m 33 now, not 32. A couple months short of my goal, but still making great progress since the start of this blog. Over $45k in payments. Under $2,500 left on the student loan. Worst case this sucker will be gone by December. Best case – October. Then I can celebrate and reflect.

Retirement Plan – Re – Activated

Set up an automatic transfer to my Roth IRA. A whopping 57.29 a week. I plan to contribute half the max each year at least until my income increases significantly or the loans are paid off. Hopefully not spreading myself too thin.

For now, the money is going to sit in my discount brokerage account until I figure out exactly what to do with it.  I have some stocks in mind, but want to avoid paying excess fees. Also want to be diversified. A Roth is one of those things that everyone says to start doing while you’re young. At just a couple months shy of 30, there’s no time like the present.

I’m still not sure if I should be contributing more to make up for lost time… On a 35k gross, 5500 / ~20% of my net income is a touch pill to swallow. Even if I can take it out at anytime and avoid paying a penalty.