Can There Be Good Things Coming Out of A Recession?
Written by: Gilbert Goh
This article first appeared here in March 09. Sometimes, because of the prevailing negativity surrounding a recession, we failed to spot the lessons that could be learnt from the situation. For physical stuff, big items such as house, car and stocks will get cheaper due to the adverse market environment. I remembered we sold off our first HDB flat in 1996 reaping an enormous profit and that was the peak of the housing resale market then. The golden bull run was charging fearlessly in 1996/7. Prices bordered on the ridiculous and we could not find anything suitable after selling our flat. So we decided to rent and waited for things to be more stable before plunging in for another property. As we waited, the financial crisis in 1997 came and prices of property tumbled. I remembered we saw a 2-bedroom apartment in Tg Rhu area going for $600,000 after TOP. The foreigner from Hong Kong was pleading with us to buy her flat which she paid $1.04 million for! Imagine the loss that she has to bear? Financial Wisdom We did not purchase that unit but went on to buy a brand new townhouse from the developer at a huge discount. So if you are shopping for property, a recession is the best time to enter the market as prices dropped like bricks especially when there are foreclosures and auctions from distressed home owners waiting to offload. Of course, if you are the one selling now, you could have lose a fortune base on today’s prices. My take after having survive three recessions in 1985. 1997 and 2009, is that less is more as we all need to learn to spend within our means. Too many people spend their money as if there is no tomorrow. We also take on too many loans be it mortgage, car, holiday or study loans for our own good. When someone in the family loses their job, the situation is exceberated when there are loans to be paid on a monthly basis. Stress builds up within the family and often marriages break up as a result. The lesson to learn here is to minimise debts and if possible staying debt free as soon as you can. For my family, we try to buy a house without taking any loan from the banks after a torrid time with them during my unemployment period. Banks tend to take away the umbrella when it is raining and you felt drenched from all the repayment calls from them. We now learn to spend within our means and our life’s mission is to minimise debts without incurring new ones. We bought a HDB resale flat from whatever CPF funds we have two years back without taking out any loan and this proved to be the main financial freedom we have. for a long time. The previous occasions, we would calculate how much we can borrow from the bank so that we can buy a bigger house paying tens of thousands of dollars interest to the banks – this seems silly to some but many people actually do that! It may be good now to only spend what we have in our bank accounts without resorting to borrowing from the banks. If we don’t have the means, don’t drive that nice 2000 cc car or buy up that nice condo by the river side. Our conservative approach to expenditure may help save us from financial disaster if we are to be laid off. Those who face severe nightmare when they are retrenched are likely to be those that have borrow heavily from banks to buy up something expensive when things are still good and stable. Nothing is stable it seems if we have live our life for the past twenty years. More Homely During a recession, I realized people are more homely as they cut down on entertainment and even business outings. Children get to see their parents more at home and this can only be good for the whole family. People also eat more at home together with their family while trying to save cost and this can only be healthy for relationship strengthening. We may have strive too much in our jobs and a recession helps us evaluate our life’s priority. I realized that life is more than making money. There are some things in life that money cannot buy. Some people are actually more relaxed during a recession than when the economy is steaming ahead full blast. People entertained and traveled less for business and they have more time for their family. So a recession does slow down one’s lifestyle and for busy business people this may not be a bad thing. Services at restaurants and shopping malls also improved tremendously as staff realized that in a down period, it is extra difficult to attract customers to their shops. AS their jobs are on the line if the shops can’t attract enough customers, they double up on their efforts to provide better service to attract repeat customers. This happened in Hong Kong immediately after the Sars epidemic as their service staff undergone a big cultural shift to provide tiptop service to attract customers as the country was coming out of a deep seated recession then. This is also so true for us here as during the recent crisis after 9/11, restaurants were virtually empty and many closed down due to a lack of business from a very harsh business environment. Those who survive manage to attract regular customers to their eating joints as a result of fantastic service and good food of course. Comfort Zone During a recession, many people also took risk and dabble in jobs that are way beyond their comfort zone. As they are already jobless and have nothing to lose, many took the plunge to sink their teeth into something that they have always wanted to do but got no guts. A friend of mine went into property sales during that dark period and till this day was churning six figure revenue every year and have never looked back. Property sales are also recession-proof and people need to sell and buy even during a recession. I am happy to see that many jobless people took the plunge out of their comfort zone and tested something that they have never wanted to do before. They don’t only feel better but also found out that they can excel in things that they think are beyond their normal self. It brought them so much fun and adventure when they ventured out of their comfort zone. So in a recession, there are many bright spots for us to look out for. It is not all gloom and doom as some have anticipated in a down period. Learn to see the positive in seemingly begative territory situation. Some people have actually changed for the better. We all need some down time in our life for self reflection. When we are doing well without any shortcoming, there is little time and need to think about our life. Crises often either bring out the worse or the best in us it seems. Though we may have face with a crisis in our life when we are being laid off, how we react to bad news is significant for our self growth. For example, I used to drive myself alot when I worked but during those dark valley period, I took time to reflect and evaluate my life. I used to work 12-hour daily as an insurance agent. Though the money was good, I paid for it with my time and health. I fell sick monthly and suffered from the flu regularly. After a prolonged period of ill health, I decided to throw in the towel and even forfeitted my recurring commission. In insurance sales, an agent is paid for five years but on a reclining basis. Now you know why some insurance agents can drive big cars and stay in district 9 homes! Conclusion Dr Spencer Johnson in his book ”Peaks and valleys” pointed out that we can learn much more during the down valley period as we are forced to take time out to think through our options and life values. We also emerged much stronger when we are mounded by life’s adversities that we appreciate life a little more than when we are cruising along fine. We take things less for granted and treasured relationships around us. It is also a time to seive out new opportunities and have a taste of humility. It is when we stay humble even when we reach our peak that we can stay longer in the peak period without feeling conceited. Many people have also told me that they are stronger emotionally after going through a baptism of fire during their unemployment period. Many learn how to be resilient after trying all ways to survive in a tough situation. When one lands a job after many months of fruitless searching, the person also tend to treasure his work better. We are famous for job hopping and hopefully after this dark period of recession, we will all learn to see the value of just having a job. Life shrinks or expands in proportion to one’s courage. Anais Nin
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