lean yearsYou’ve no doubt heard the expression, “make hay while the sun is shining.” When conditions are favorable for productive endeavors, you should use that opportunity to get things done! Well the sun has been shining for several years. It may not feel like it, but the economic malaise of the last few years has provided an opportune time to be productive. With few negative shocks but also few high-return opportunities, our current economy is a perfect environment to structure your finances and prepare for times when the sun isn’t shining—or, hopefully, when it’s shining extra bright.

            If you subscribe to a demographic approach to economic modeling (as I do), you should be prepared for six more years of economic malaise. Simply put: Boomers have been leaving the labor market and tightening their spending habits in large numbers since 2006, and it won’t be until the Millennials enter their high-productivity years in 2020 before the Boomers’ lost economic activity is recovered and, eventually, surpassed. The false-starts and meager economic growth of the last six years seem likely to continue for another six.

What, then, should you be doing over the next six years? On the show, we discussed twelve action- and thought-items (that is, things you should either be doing or be thinking about) that are perfect for such lean years as we’ve been living in. They are:


1)    Know your goals and choices – You should decide now what your personal and financial goals for the future will be. When the economy is booming, a multitude of opportunities can present themselves and distract you from settling on disciplined goals.

2)    Remember history repeats itself – There is nothing new under the sun. Economies ebb and flow, and you should anticipate that the economy will recover—and, eventually, contract again. You should prepare for the next recovery and, also, the next contraction.

3)    Debt is the grim reaper – Since there are few high-return investments around, your best bet is to eliminate debt and save on the interest. If your debt isn’t being productive, get rid of it!

4)    Build your cashflow – There are many high-value properties for sale. Use the recovering-but-still-depressed real estate market to add investment properties to your portfolio and build your cashflow.

5)    Follow the fixed income play – Capital gains may prove lucrative, but they’re highly volatile. The fixed income model of consistent income, such as through rental properties, is more stable, secure, and is easier to plan around.

6)    Time yourself in and out of stock market – The market is cyclical, and often it isn’t too difficult to spot upswings and downswings from a mile away. It’s crucial to use advisors and your own intuition to time yourself in and out of the market.

7)    Play Monopoly with your home – Use your properties to generate income. Rental income is far more valuable than appreciation.

8)    Buy stuff cheap – As Warren Buffet says, “buy low and sell high.” Often this is easier said than done, but having cash reserves makes it easier to buy cheap assets when their value is deflated.

9)    Commercial real estate will be last sector to recover – Commercial real estate lags the residential market considerably. We won’t see a rebound in the commercial sector until the residential sector is in full swing.

10)  Avoid government and rising taxes – Structure your income to avoid the uncertainty of government action and future taxes. Different savings programs, such as IRAs or Roth IRAs, allow different approaches to avoiding the taxman as much as possible (but not completely).

11) Work for and with professionals – Your employer and business network should be populated with professionals. People who devote full-time attention to their careers are more reliable, more competent at what they do, and will help you excel in your own career.

12)  Consider your employment – In lean years, you want stable and secure employment. You should also consider it an opportune time to start your own business.


This is a comprehensive but not exhaustive list. The theme behind each item is the same: Use the present state of the economy as an opportunity to plan for the future and structure your finances and career in preparation for better times. Although things aren’t as good as they could be, they aren’t as bad either.


10-4-2014 The Lean Years

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