Credit Debt Cures

I keep hearing that we are headed for a recession. People like Dave Ramsey say things are fine. Which is it?

We haven't noticed any difference at our house. What can we do to prepare if we are headed for a recession? What exactly will that mean for the middle class? Thanks.

Public Comments

1. This kind of thing always happens during the eve of a recession. The indicators are there to tell us otherwise. I would say we are headed for a recession. For the middle class, you will not feel it until well into the recession...which is how recessions work. No one knows when we are in a recession until several months into it because the market indicators that advise us of this information take time to generate. So for us middle-class folk, we will notice that we won't be spending as much as usual and that life at work my become more stressful, as unemployment generally increases due to corporate cuts. Recessions affect the economy and the market more than it does the individual person.
2. Well, to me it is obvious. The dollar is so low, it's half of it's former glory and value. The economy is very slow, no jobs, sales are low. All there factors play a role in the economy. Soon you will see prices go up.... I think you should make sure you have a good, stable income, save as much as you can, I think you make more money you should take a 2/3 year job abroad where you would be payed double for the exact job you are doing at home.
3. Depends on what numbers you look at, really. The housing market is not so hot, but other sectors of the economy are doing rather well. Unemployment is low, but the dollar is weak (not that that is necessarily a bad thing, either.) If you ask me we are neither headed for a recession nor headed for a boom. The next few years we will probably level off. Now if taxes are increased, that's a whole new can of worms. Higher taxes mean less money in people's pockets and therefore less spending. Lower spending means less money for businesses and the economy suffers. As long as we don't do anything stupid, we should not get into a recession.
4. Yes we are under recession. Today we have only 11% prodution units compared to post WW I I. More imports and less exports developed foreign debt. As on today we have 9 trillion dollars ( 9,000,000,000,000=00) of foreign debt. So our dollar is going down. This is beyond control. Now there is no choice. . Its easy to understand in the year 2000 we were getting 1.21 euros for dollar. But right now we are getting only 0.68 euros. Means If we have 100 dollars in year 2000 right now that become worth only 56.19 dollars. Means we lost so much wealth already compared to other nations. . No one exactly know what will going to happen. Because this is depression of all world driven by US. Countries like China, Japan, Canada, Mexico and German may suffer more next to our country. now china currency is almost fixed ( pegged) with US $ . If in case china take out the pegging means if their currency keep floating, we start to feel more sever depression. we may not afford to buy made in china goods. We have to start our closed prodution units back. As per me this date may fall in 2008. Because of weak dollar china is loosing a lot. It buy raw material and oil for more money and sell goods to us for less money . Its loosing money to keep their own and US economy running. It may not last for long time. Now everything is beyond control. Nobody can control or prevent us from going depression. We dont have any chance to escape from this. As we are super power the exact impact of depression is getting postponed. The only way left is to save yourself. Diversify you money in other currencies and buy some gold.
5. Dave Ramsey states if you are prepared (have cash on hand, 3-6 emergency fund and not using credit) then you won't really notice a recession. You are "recession proof." Meaning- rising interest rates on credit cards don't affect you, you don't have an ARM for your home, you aren't living pay check to pay check so that the increase in the cost of goods (gas & food) won't be as noticable. Now people that are already boardline of going under will notice it quicker. Some states are already in a recession, but again, some people in those states aren't affected as much as others because of their financial status and prepardness. It doesn't matter if you are middle class and a recession hits- it matters how close to the financial edge you are when the recession hits.
6. Recessions are temporary. They are a great time to invest in stocks and real estate. If you do not have money saved up, I suggest working on that but not just because we may have a recession.
7. I've always known Dave Ramsey to be a personal finance advisor, not an economist. Personally, I think he's an idiot, but that's beside the fact since he seems to be helpful to otherwise helpless people. I am not sure the context in which he said it, but to the average person the economy being in the outhouse has no affect upon them. It's owner's of businesses in sensitive industries that are going to feel the effect. If anything the average American (assuming he doesn't lose his job) can sometimes benefit from a recession. Inflation usually stays down during a recession, with some things like gas actually getting cheaper. Interest rates will fall as well. I'm assuming this is the context in which he said it, in that, recession or no recession, your personal financial life is rarely affected unless your job or income comes from an industry that fluctuates with the economy.
8. Just be sure you have adequate savings and if you're an investor, stay the course. In fact, now is the best time to buy because you'll be picking up bargains that will skyrocket once the market returns to respectability again. In the short-term it doesn't look good, but long-term investors will be best off because the market has a reputable track record.