7 people confess the biggest mistakes they made during the last recession — and how they’ll protect themselves next time

Courtesy of Peggy Atwood

If you spend every penny you make and don’t have a savings cushion to fall back on, you’re not alone. Most Americans fall into this camp. But as Peggy Atwood, founder of The Fretired Method, learned at the end of 2008, that’s a dangerous camp to be in.

“What I was not aware of back then is how important frugality is for long term financial well-being,” Atwood said. “Our townhouse rent was over $3,000 per month, and I was on unpaid maternity leave.”

On top of that, they were becoming new parents, and her husband’s job was at risk given that he was working in the banking sector. “Every day we feared for his job,” Atwood said. “We had no savings, no income-spend gap, and we were broke.”

Atwood explained that they should have been living well below their means to ensure financial security, and now they do just that by ruthlessly cutting spending, aggressively increasing their income, and investing the difference. “Being financially independent means you can survive on what you have squirreled away,” said Atwood. “It is an empowering place to be.”

However, she did one thing right during the last recession. Instead of liquidating her investments when the stock market bottomed out, she used a $5,000 bonus to invest more and didn’t touch her retirement accounts. “We heard many stories of people panic-selling at the worst possible times, stunting the growth of their portfolios forever,” she said.