Short question

[Sam]

Recession times, everybody have no money, how to save more money and still have fun?

[Tony T]

YOU WRITE: "Recession times, everybody have no money, how to save more money and still have fun?"

 

You are very incorrect. People do have plenty of money during recessions...except for the five or six percent who are not working...and they usually live off unemployment, savings, friends, relatives, etc.

 

A recession occurs because during good times, people max out on credit card and other debt, buy all sort of big ticket items like cars, appliances, cameras, TVs, homes, etc. and they are so in debt the spending cannot continue.

 

So they still have money but rather than buying things that keep the economy going, they pay back the money that kept the economy going during the good times. Once they get more confidence in their own financial situation, they start charging up the cards again and spending more money...and the recession is over.

 

Recessions are a good thing. They give people time to breath and live within their means. While governments try to encourage continued borrowing and spending by lowering interest rates in order to prevent recession, if you have everything you need and it hasn't broken down yet there's just no good reason to continue spending even if interest rates were ZERO.

 

We will probably never see the kind of good times we saw in the 90s, at least not for a long time. That period was compounded by greed and an irrational stock market where people were using their life savings to buy dot com and other stocks that were basically worthless. And they have lost their butts. But that's what happens when you get stupid.