How to Survive the Incoming Financial Crisis

JPMorgan put the odds of a recession happening in the next two years at 60%. (That jumps to more than 80% over three years.)

And though there’s debate about when, exactly, it’ll happen—sensible, well-argued points saying that the economy is strong on one side; equally salient counter-arguments that we’re getting close to approaching some kind of meltdown on the other—there’s no debate about this: you probably want to prepare (as best you can).

If you don’t have a lot of liquid cash, let alone real estate or an investment portfolio, there’s not too much you can do to prepare for a recession besides sitting tight and trying your best not to get laid off. To put that more bluntly: we’re all going to take some kind of hit.

But there is good(ish) news. A young entrepreneur and investor named Ankur Jain has been rolling out new businesses to help young people girding themselves for upcoming economic contractions.

Lest you doubt his credentials: he launched his first company at 11, and spent his teenage years mastering the art of entrepreneurship, before ending up at Wharton. There, he launched another startup called Humin—backed by none other than Richard Branson—which was eventually acquired by Tinder, who then made Jain VP of product.

But now all of his attention is on Kairos, a venture fund that backs companies hoping to protect you from the deepest pitfalls of an imminent recession. The president of Verizon Wireless, the commissioner of the N.F.L., the C.E.O. of the New York Times, and a former President of Mexico all sit on the board of Kairos—and if they trust Jain, you probably should, too.

Jain is marketing the full suite of Kairos-backed services with an actual, physical Financial Crisis Survival Kit. It has info on all his new companies, as well as a copy of Student Finances for Dummies, a stress ball, and a tiny bottle of Jack Daniels. We sat down with Jain to talk through the Kairos portfolio and the things you can do to prepare for a crisis—no matter your current financial situation.

Step 1: Those Pesky Student Loans

Student loans are something of a non-starter because, after all, there’s only one way to make them go away: pay them off. Even if you file for bankruptcy, you can’t get out of student debt. So Jain backed a brand-new company called Pillar—a digital roadmap to the best (translation: least expensive) way to pay your way out from under your loans.

Okay, great—how? First, consider refinancing from a variable interest rate (a rate that changes, or varies, with changes in the market) to a fixed interest rate (a rate that stays the same over the course of your loan).

In the last ten years, Jain explains, variable interest rates have been so low that lots of students taking out loans understandably picked the variable rate. But after years of favorable lows, interest rates are rising, and as we get closer to a crisis, they’ll only rise more. Which means: monthly payments on variable rates will go up.

But fear not, Jain says: it’s still early enough now to refinance and lock in a low fixed rate, one that will stay the same for then ten-year life of your loan no matter how volatile the rest of the economy might be.

Get That Rainy Day—or Stock Market Apocalypse—Fund In Order

“66 million Americans have no emergency savings,” says Jain. “Zero.”

Theoretically, every household should have emergency savings equivalent to three to six months of expenses. That kind of safety cushion is, of course, a fantasy for families and individuals living paycheck to paycheck—or for individuals who already have areas where that money is needed more urgently (like credit card debt).

But it’s crucial to have a cushion of some kind in case of emergency—medical or otherwise—especially in an economic downtown. And there’s an unexploited nook in our daily lives where a not-insignificant sum of money has been sitting around: security deposits.

Nearly everyone pays one to their landlord when they lease an apartment. But usually that money lays dormant in an Escrow account. What if, instead of paying a lump sum security deposit, you paid a small monthly premium to an insurance company who would pay your landlord in the event of any damages? That way the landlord was still protected, but you could keep your money and invest it so that it grows over time—or keep it for emergencies.

Kairos and Jain, recognizing this opportunity, backed a start-up called Rhino, which does just that, providing landlord insurance.

“You can’t pull money out of thin air,” Jain says. “But it’s almost like pulling money out of thin air when you get your deposit back.”

Safety in Numbers Roommates

The startup that seems most timely for impending economic doom and our digital nomad future is Residenz. It provides short-term, flexible, fully-furnished housing by taking four- and five-bedroom apartments and leasing out individual rooms within those apartments. This capitalizes on the fact that price per square foot is much cheaper in a large apartment, since those units are harder to rent out. Residenz lets solo renters find a bedroom without paying the premium put on the high-demand one-bedroom spots.

This is an especially important service in the freelance era, when a remote job might suddenly relocate you to a new city.

“Now you can land on your feet without going broke,” Jain says. “You have a comfortable place to live, fully furnished with cheaper rent, while you transition into longer term houses.” (Right now, the service is just available in New York, but it's working on expanding to other cities.)

Plus: The Financial Collapse’s Bark Might Be Bigger Than Its Bite

After getting the crash course in financial survival from Jain, I checked in with Josh Brown, CEO of Ritholtz Wealth Management/Twitter finance guru/regular CNBC contributor, to see if he had anything to add about what Millennials can do to prepare for a recession. His response surprised me.

“A protracted recession,” Brown says. “Would actually not be the worst outcome. Recessions don’t necessarily adversely affect the younger population in the labor force. It’s not black and white. Because what tends to happen in recessions is older people in the top of the income scale find themselves more expendable and younger workers get those jobs because companies can afford to pay them less.”

As concerning as it is that the next recession is coming and that there’s no way to completely protect yourself, it’s comforting to know that it’s not all bad, and that someone like Jain is backing companies that can make a downturn slightly less harmful—and also giving you a mini bottle of Jack Daniel's in the event that's still not comforting enough.