How to Get Ahead of Recession

There are many economic projections that predict a serious amount of layoffs during the coming 9 months. The December inflation results suggest that there will be no soft landing for the Fed and their efforts to control inflation. The usual response is to worry. I submit there is a silver lining to any layoff. Let's look at the opportunity to bet on yourself in this circumstance.

If you believe you could be targeted for layoff and are a home owner, your first move is to immediately get a HELOC and bank your equity. (Houses are highly over valued, which is diminishing your euity value) Prior to being laid off you will have your income to leverage for lending. So, that is #1 action to get done now.

If you are laid off you will be able to liquidate your 401k plan and I can show you how to do that with no present taxation. There is a little known strategy to accomplish this. Of course I'm not going to simply release that strategy in my commentaries. I can safely tell you I have helped 100's of clients effectively end their partnership with Uncle Sam for their retirement. A layoff is the perfect circumstance to put this strategy in play.

The required mindset is to increase your income. Everyone needs to make that their priority. Increasing income is the pathway to financial independence. The present strategies that have been regurgitated for 60+ years might have had value 50 or so years ago, in the days of lifetime employment, pension plans and excellent benefit plans for employment longevity. That started to evaporate in the 1980's. It was during this time that ERISA was created. Uncle Sam did this because the baby boomers would become the largest retirement demographic in US history. While they were responsible for one of the greatest wealth accumulations and economic expansions they would also overwhelm the social security and medicare systems. Thus the defined benefit plan was placed on the back burner and defined contribution plans would be the plan of choice. This was to force individuals to take more responsibility for their retirement funding. Of course Uncle Sam provided the narrative of how the government was doing this to help individuals. That help would be a small tax deduction on a portion of the funds they put away for retirement. This was the lure. Take a moment to consider the value of a tax deduction in a lower tax bracket to delay money to a higher tax bracket at a time in life when you have limited income. That is the tax deferral pitch which was the hook. And so the IRA and 401k were created.

The 401k would become a boom for Wall Street. Mutual Funds were thrilled with this massive investment vehicle in which people were sold on a partnership with Uncle Sam. It was a perfect storm. And so the public ate the whole pie hook, line and sinker. They were sold on seeing a bit more take home pay through deferring a portion of thier income. They were thrilled, it appeared they would win on all fronts. But the real winners were Uncle Sam and Wall Street. The funds locked into the 401k's were a massive bank for Uncle Sam to lean upon. Wall Street would make billions of dollars in the form of hidden fees and costs that the investors would never see. It was the chinese water torture concept. What difference would a few dollars in fees from every depositor make for the depositors. And so the 401k would be one of the greatest revenue providers on Wall Street and the individual participant would never figure out how they got screwed until it was too late for them to do anything about it. Those fees would be hidden in statements that very few individuals would pay any attention to. It would be easy to train them to trust the plan administrators and advisors. After all they would be passed off as authorities and most employees would trust and pay little to no attention to the results of their savings. This has led us to our moment in time. The ERISA funds locked up for retirees now is close to $40T and the US debt is $34T. Not much room for Uncle Sam to create money out of nothing.

Lastly, the real concern is never discussed and that is the ratio of US debt to revenue. Forget GDP the main concern is how much revenue the government takes in and how far is that leveraged. Debt to GDP is 135% and growing. That is scary as it is the greatest ratio in US history, but if you really want to gulp, the Debt to Revenue is 700%. WOW, WOW, WOW. How is that sustainable?

Your exit strategy is the bet on yourself plan and the coming recession will open the door for you to take control. Kindly, take this opportunity to create financial independence.

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