Before I even get started if you are someone who gets anxious easily or worried over the evening news then please stop reading now.

The last two years have been a “what in the world is going on?” type of time period, but the second half of 2021 looked like we were making a turn for the better. It looked like we were headed in the right direction.

Then…..

Around the end of October I started feeling uneasy about the economy. Uneasy about what 2022 and 2023 may look like. Yes the stock market is soaring, but the stock market is not the economy. At the time I could not put my finger on why I was feeling like this, but the feeling was there. I admit that once the holiday season started in November that feeling slipped away. It may have been because I had traveled to Barcelona as well as Dubai. Both places had low infections numbers and life was back to normal.

Unlike the United States there were an abundant number of workers everywhere. Construction, education, restaurants, tourism, etc. People were going about their lives and money was being made in their economies.

Then I got back here to the states and within a few weeks the feeling returned. It returned with one announcement.

The student loan pause was being extended to May 1st 2022.

With that one announcement the uneasy feeling was on me and I started thinking about how was I going to financially navigate 2022 and 2023.

I know that for many the student loan pause was a wonderful surprise, but for me it was a signal that the foundation of the economy is not as strong as we thought. That there is something underlying that we are not seeing.

Before this announcement was made the federal reserve had made the announcement that they were going to start pulling back on their help that has been in place for the last two years and start raising rates again. They wanted to do three interest rate hikes in 2022. These hikes were going to help with the inflation.

This was going to help bring down the prices in the grocery store (inflation).

Unfortunately this announcement was made before omicron took off. Before infection numbers started to increase dramatically. Now those interest rate hikes may be delayed which means inflation will last much longer. Which means your paycheck will not stretch as far as it used to.

Later in this post I will give recommendations on how you can possibly beat inflation.

What Happened In The Economy The Last Two Years

There was a health crisis for the last two years, but there was also an economic crisis brought on by the pandemic.

So much of a crisis that the government infused over $5 TRILLION dollars into the economy. We had stimulus checks, super charged unemployment benefits, PPP, EIDL, free breakfast and lunch as schools, increased EBT, emergency grant aid for college students, money for the airlines, money for state governments, child tax credit and MUCH MORE!

There was money flowing everywhere to keep our economy from going into an economic crash. To keep it from going into a depression.

This is where you should start to feel my worry.

They did all of this because we had a deadly virus on our hands that was taking our economy down and we had no medical answer to it.

Today we do have an answer to it in the vaccines with the addition to wearing masks. So you may be thinking well Ja’Net although we have a million cases a day worldwide and the healthcare systems are starting to be overwhelmed again that is okay because we financially got through it before so we can do it again.

Nah. Wrong.

The government is not going to do what it did last time. They are not going to authorize trillions of dollars again. They are not even talking about shutting down. So now we are in a position where the cases are back, but the financial support is not.

Restaurants are starting to cut back hours because employees are sick and not able to work. Every professional sport you can think of has had to postpone or cancel games. In college sports multiple bowl games were cancelled including the UCLA vs NC State game four hours before kickoff!

Hospitals are starting to be flooded with covid patients to the point that they are starting to postpone elective surgeries again. In the education world colleges trying not to have campus wide breakouts have decided to push back move-in day for students and most starting the spring semester online. Many K-12 schools across the country have decided to start the first two weeks virtual.

I could go on and on with the similarities of 2020, but I think you now see a more complete picture.

You now are starting to see why I have the feeling that I have.

I would like to look at a few parts of the economy and go a little deeper.

Inflation

I have some good news and I have some bad news.

Let’s start with the bad news first. Inflation more than likely will be here for at least the first half of the year. Although supply chains are improving, they have not improved fast enough to bring the price of your groceries down in the next month. General Mills and other food companies have said they will be raising their prices 7%. Ikea for those of you who love their furniture will be raising their prices 9%. Not only are big companies raising their prices, but so are small businesses. If you have not noticed it yet local businesses around you as well as those online are making their customers aware that because of the rise in the cost of doing business they must raise their prices.

Now on to the good news.

You could weather the inflation storm by being strategic in what you buy and when you buy it. Groceries will be where you will save the most money if you use this tactic. It is all about planning and not shopping on emotion. The key is to plan your meals around what is on sale that week. If hamburger is on sale this week then this week’s meals could be spaghetti, hamburgers, and meatloaf. You have three meals made from a meat on sale and you could add a “no meat” day to add on to the savings. Majority of items in the grocery store go on sale every month. You need to learn the cycle so you can beat inflation and save money.

Housing:

Before I get into this I want to say if in 2021 you bought a house above its value you could be in for a rude awakening in the future. Possibly the near future. The housing market over the last year has felt very 2006 ish, but in a different way. In 2006 they were giving anyone a mortgage. A lot of people didn’t even have to show their income and still got a house. The market crashed when people could no longer pay the bad loans they took out and the investment products that included those loans went bad too.

This time around we are experiencing the same thinking of people saying “the housing market can only go up!” They were saying the same thing in 2007 until it didn’t. The housing prices of 2021 were highly inflated with some people paying tens of thousands of dollars over the asking price. It was real FOMO, but the difference is that it was not with the hottest jeans that everyone is wearing, but with the biggest investment of your life!

So what is the threat?

If the housing market goes back down to normal value then the houses around you will sell for the real price. What that means for you is that if your house value comes down then you will owe more on your house than it is worth. You become just like those in 2008 who homes were underwater.

Good news:

Unfortunately, I don’t have any good news for those of you who overpaid for your home, but for those who have been wanting to buy a home you could run into some good fortune. The bad thing about your good fortune is that it has to come at the bad fortune of another person.

Hello again 2008.

If the economy lives up to my feeling then there will be a downturn in the housing market bringing prices down to normal. Those normal prices will come as a result of supply outpacing demand and/or a recession that hits those overpriced homes hard. People will want to cut their loses and sell those homes.

If you are looking to buying a home in the next two years you should be aggressively saving your downpayment as well as getting as much debt out of your life.

Education:

Those who know me know that I speak to thousands of students around the country each year. Students in middle school all the way through college so when the economy starts to take a downward turn I immediately start to think how can I help them not be negatively affected by it. In 2020 proms and graduations were cancelled. Student athletes who were seniors were not able to make their final push in their sport that could have helped them get college scholarships.

Colleges sent students home a month early and many didn’t come back on campus until 2021. The college students also did not experience in person graduations and many lost their internships because they could not go into an office. Every one of these circumstances plus many more caused financial stress for students as well as the k-12 system and colleges around the country.

The federal government poured tens of billions of dollars into uplifting the education sector. Money that could be there in the future if the economy takes a downturn, but this time it will be much less and probably only for k-12.

So what does this mean for higher education institutions?

It means you were able to see how financially vulnerable your institution was when this health crisis hit. The cost it would take to get students home that did not have a way because they were not scheduled to leave for weeks. The cost of having to develop virtual learning environments for an entire campus of students. The eventual cost of creating a covid safe environment for students to return to. The cost of keeping students in college. These costs were enormous and imagine going through that all again, but without the help of the federal government.

Would your institution be able to financially carry the load? Do you have systems in place to make sure your most vulnerable students don’t fall between the cracks? However you have been preparing for another 2020 accelerate that preparation. According to Higher Ed Dive there has been a 3.5% decrease in enrollment from the previous year. That means institutions are working with less money than the year before.

The goal should be to increase enrollment, but what are you doing to help current students stay in college. The number one cause for dropout for most college students is money. The pandemic showed this to be true because as soon as emergency grants became available, they were soon gone. The need may have been a surprise for many administrators because students tend to keep their money problems to themselves.

The key going forward is to help students get the financial stress out of their lives so that they can focus on their academics and have a stronger connection to campus.

A couple of ideas:

1. Fundraise money so that the institution always has emergency grants available for students with the most need.
2. For first year students instill the importance of searching and applying for scholarships the entire time they are in college.
3. If students are not able to get a work study job then help them to get a work from home (dorm room) job that fits their schedule. There are WFH jobs that pay $10-25 an hour.
4. Show students how to monetize their hobbies so that when they need money quickly they know how to get it without waiting on a job interview and an eventual check.
5. If you have a TRiO program identify potential new students that could benefit from their vast resources and support!

If you are a college student reading this here is some of the advice I share with the students that I speak in front of around the country.

1. Think of something you love to do and find a way to make money off of it. Do you love to do artwork? Take an entire weekend to learn everything you can about NFT and start to sell your artwork in a new way.
2. Start searching for paid internships now and if they pay for relocation costs then that is a bonus. If you are a first generation college student like I was you can not afford to be working for free. Also if they are going to make money off you, you should get paid.
3. Don’t wait for another economic crisis like 2020 to hit. You need to be proactive and not reactive when it comes to your money. I tell first year college students to have $500 saved and upperclassmen need to have $1000 or more saved in a savings account that you don’t touch unless it is a real emergency.
4. Do not give your refund check to family members and don’t spend it on wants. You need that refund check for emergencies. If family members are asking for your refund check help them to find a better paying job. Right now this is a worker’s market so they can get higher wages. To help them find a job you can go to Twitter’s search box and put “jobs in (insert city)”. All the jobs in the area will come up.
5. If you are a student that hears me speak live then take the money lessons I show you and teach them to your family so that everyone can be on better financial footing.

Businesses:

If anyone felt the economic crisis of 2020, businesses did. Large corporations and small businesses all felt the wrath of the pandemic. Brick and mortars had to close down and go into quarantine. Those of us who rely on face to face to run our business were immediately thrown into uncertainty. That uncertainty was also felt by businesses that did not have a strong online presence.

Many businesses didn’t have an online presence at all. If you did not buy their product in their store then you were out of luck. Now these businesses had to move all of their products online if they wanted to survive. Many businesses did not make it out of 2020 because either they could not adjust or they adjusted too late. You can name any industry and they suffered financially during the pandemic.

10’s of millions of their customers were losing their jobs and trying to survive so they did not have the money to buy wants, but only their needs. Then there were a turn of events. The PPP and EIDL became available. Supercharged unemployment put spending money in the pocket of millions of Americans. Now businesses had money to pay their employees and their customers had money to spend. And spend they did!

Fast forward to today. All of that extra money is gone, but Omicron is here wreaking havoc on businesses again.

Restaurants don’t have enough staff because of breakouts. Airlines are cancelling thousands of flights because lack of employees and weather. (Lufthansa has cancelled 33,000 flights) Conferences and award shows that were supposed to make a comeback this year are once again going virtual. That means lost revenue for those local businesses in the cities where the conference was supposed to be held.

Millions of dollars gone again.

If you owned a business in 2020 and still own it today I want you to think about to how you felt during that time. Were you worried about how you were going to make it? A big part of my income at the time was speaking at colleges face to face and colleges were sending students home with no sign of bringing them back in the Fall. So I will admit worry set in for me.

Think about how you pivoted within your business to make sure that you were able to survive.

Now is the time to go back to that survival mode type of thinking.

Type of strategizing.

The difference this time is that you have been in this place before so you should be able to put some plans in place just in case this variant or another one causes the economy to go south again. This time you should not be caught off guard. This time you should be ready and not wait until it is time for you to act.

I have spent the last couple of weeks adjusting my business to be able to operate in an economy that is doing good or an economy that is not doing good. In a in person world or a virtual world. This is what I did March 2020 and now I am just adding to it and strengthening it.

If you are a business, money in the bank is your power move.

Those businesses who had the financial reserves in place in 2020 were able to weather the storm at least until PPP and EIDL came available. This time around if things don’t turn around it is even more important to have money in the bank. To have your own personal capital. If you have been following me for a long time you know that I fund my entire business with my own money so I strongly believe in being my own bank and my goal is to make sure the bank vault is FULL!

The benefit of having your own money in times of a down economy with or without a virus causing it is that you can stay on the offensive when every other business is on the defensive. That competitor of yours that has to give up that six figure contract because they didn’t have the money to complete the contract now has created an opportunity for you to swoop in and get the contract.

You get this opportunity because cash talks and everything else walks.

If the pandemic taught us anything is that you need to have money in the bank because life can come at you at the blink of an eye.

Everyone Else:

We all learned a valuable lesson in March 2020. That a health crisis can cause a deep recession. This was not like 2008 where banks misbehaving caused the economy to go off a cliff. This was a virus that shut the world down and with it took the economy. Throughout this post I am writing in a way to help you to remember that time. To remember how you felt, because those who forget the past are destined to repeat it. I don’t know about you, but I don’t want to repeat it.

That is why I am being vigilant this time. I am making sure I am paying attention. I vowed in 2008 that I would never suffer through a recession again and thanks to the measures put in place I did not suffer in 2020 during that recession. (Other than my investment portfolio taking a Mike Tyson beating!)

For the next recession (because they always come) I want to not only move through it smoothly, but I want to be able to take advantage of opportunities. That means I am building up my treasure chest and I am telling you to do the same. Whether your treasure chest is to help you get through a financial dry period during the next recession or if it is for you to take advantage of opportunities in your life I want you to start throwing money at it.

I also want you to remove financial threats in your life. What has helped me navigate the last recession and the ones to come is that all of my debt is paid off with the exception of my home.

Debt is a threat.

The payments you have to make to that debt each month are a threat.

Each one of those payments are going to build up someone else’ bank instead of your own bank and in the world we have been living in since 2008 that is unacceptable. It is time for us to invest in our future. A future that does not involve financial stress. A future that does not have us worrying after watching the news.

Strive for a future that you live outside of the economy.

You live within your own economy where the negative financial effects of the US and world economy doesn’t touch you.

What To Do:

1. Save at least $1500 in a savings account you don’t touch. It would be great if you could get 3 months of living expenses saved. This will help you get through three months if something happens to your job or if you want to look for a better paying job.
2. Start to aggressively pay off your debt after the $1500 is saved. By this time next year your debt total should be lower than it is today.
3. Look for multiple streams of income. You don’t need seven different streams, but you do need more than just the money coming from your job.
4. Set financial goals (save for a house, money for a business, start investing, etc). This will help you push your money towards what you want most.
5. Look for financial opportunities. This is for those of you who are already financially thriving. Whenever a recession happens there are opportunities for those who have the money to take advantage of them.

Trust me I could keep going, but this should give you an idea of the feeling that I have been having for a few months now. This should give the why. If the economy continues in the direction that it is going everything above plus much more can happen. I am hoping that everything turns around before that happens.

Whichever way it goes please be ready.

I will.

Video Recap:

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