Part of the Cycle

DJ is a college student and focusing on his future financial life. Is the down economy usual and just a part of life? Dave says that the economy does occur in cycles, and it is a part of life.

QUESTION: DJ on Facebook is a college student and focusing on his future financial life. Is the down economy usual and just a part of life? Dave says that the economy does occur in cycles, and it is a part of life.

ANSWER: It is just a part of life. Good times do come again and there are always cycles in the economy. There are also times when it has been worse. You hear all the talk about how this is the worst recession since the Great Depression. No, it’s not—1982 was worse.

We had double-digit inflation, double-digit unemployment and interest rates on homes were 17%. Thus, the Jimmy Carter era came to a close. Ronald Reagan was elected in that environment. It’s been a long and kind of boring recession because it didn’t really drop down and then come back.

It dropped down fast and was exciting and crazy and everybody thought the world was coming to an end. And it hasn’t really rebounded; it’s kind of just wallowed and crawled along. There’s a lot of argument as to why that is—I think it’s because the government has kept its finger in the dyke too long. They screw up everything.

But it’s part of life. Times will be good and times will be bad in your life. That’s why you need a financial philosophy that works in up times and down times. The stuff that we teach about being out of debt and investing conservatively works all the time.

Right now I’m really tempted to not invest conservatively. I’m tempted to invest like a wild man. I’m squeezing every dollar out of conservative I can squeeze to invest because everything is on sale. It’s a great time to buy real estate. It is a great time to be investing in mutual funds. The best time was actually about a year or a year and a half ago.

Just keep investing and keep working your plan. If you think you just graduated at a bad time and you’re never going to have a good life, that’s just bull. That’s someone walking around with a cloud over their head. There’s always something good and there’s always something bad out there. You can count on both.

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