Xavier Epps is an expert in money management, with 15+ years in the finance and accounting industry. In this episode, he’s answering questions about the state of the economy, cryptocurrency, housing market, and more. As well as providing tips, on how to thrive.
Anna-Lysa (2:20): Today we are talking about that ‘R’ word that everyone keeps bringing up that we don’t really know if it’s really here. But we know inflation and gas prices and the cost of food and everything is high right now. So, tell us a little bit about what people should be doing as we wait to see what happens in the next couple months.
Xavier (2:42): Right? So just so the viewers and everyone understands what defines….recession. So recession, the academic term, is two consecutive quarters of negative GDP growth. That’s the gross domestic product. So whenever the economy is declining, negatively over two quarters that defines an actual recession. So right now, what you have going on is the the economy is shrinking, but it’s not slowing enough to actually go into negative territory. And because of that, that’s why we have this whole word possible recession, because of you know, technically based on the term itself, we’re not in it.
Now, the the interesting thing is what happened leading up to the point that we are now is that the economy was held up with all this free money. And I know you remember, last year and a year before that we had PPP, and then we had all the stimulus money, economic stimulus, one, two, and three, and then we had all of this new child tax credits, all of that money has the cost. And the cost is hyperinflation. Because now you have all of that free money out there with no support and account and you know, the stocks and the companies were reaping the benefit of it. But then what happens when that money stops going flowing through the economy, you have what you have going on, now you have inflation, because there was such a support for the level of price going up that people didn’t care what the price was, because they had just, you know, newfound money from a year or two ago from all of the stimulus. But now that we’re coming to grips that that money is going to be there anymore, we’re talking about recession. Let’s say they still have some type of continuing packages of stimulus for the economy, we wouldn’t be talking about recessions, because the government is still pumping up the economy with this free money, but because that free money has stopped, we’re now looking at we’re talking about the word recession. And to me, it’s interesting because I’m really big on data and statistics. And I’m interested to see what the next quarter of GDP looks like and eally looking at the details on what’s driving the the degradation of the economy?
Anna-Lysa (5:08): Wow. Yeah, there was a lot of people with also good savings. You’re so right about that. Because we weren’t going anywhere. And now we’re active again, outside as people call it. So what should people be doing to try to maybe cut costs, with the rising prices? of gas? Well, it’s going down a little now. But with gas prices, with the cost of food being so high, should people cut back here and there and say, or put that money somewhere else? We’re gonna get to the stock market soon. But what should I be doing?
Xavier (5:44): Yeah, no, those are good questions. So I mean, I’m always big on preservation of capital. Whenever you’re going through economic issues or turmoil in the marketplace, you want to look at preserving cash, it goes back to the whole theory, cash is king. So cash is always King, when you know, everything else around you, is blowing up in smoke, because you know, the dollar has its own value. And it stands on its own leg, it’s not interdependent on what, you know, what the stock market is doing, what other items are, you know how high the price of you know, a milk carton goes, as long as you got cash, you’re good, so preservation of capital is the is number one right now. But really examining the things that you’re doing and looking at job security, we spoke about job security, briefly. And if you’re feeling not so secure In your job, then now’s the time to do one or two things, you know, cut out a lot of things that you don’t need that are just wants in your in your monthly budget, or to look for alternative streams of income, you don’t want to be sitting around knowing that you’re unhappy or knowing that your job may not last very long, and get canned, and you didn’t have time to prepare. So, if you can foresee that something negative is going to happen with your income, this is the time to try to multiply that streams of income or look for something else elsewhere, or two or three –cut back on anything you possibly can, while you’re getting prepared for the worst. Because I always tell people, having a a strong credit score means nothing if you have no job. If you have no income, thene having a strong credit score just means you got good credit. But if you ain’t got income to fall back on, you’re going to end up using, you’re going to end up damaging that credit, because you’re going to go get credit elsewhere to make ends meet until you get income. So I will say focus on preservation of capital and cash right now until things get better in the economy.
Other topics discussed:
Real estate (12:55)
Segment also available on YouTube.