| Online: | |
| Visits: | |
| Stories: |
| Story Views | |
| Now: | |
| Last Hour: | |
| Last 24 Hours: | |
| Total: | |
20 Tips For Soldiering Through An Economic Meltdown
Three years ago, I wrote about our deteriorating economy. As I recall, the words were “current lousy economy”. The good news is that so far, a global economic meltdown has been abated. And the bad?
From what I can determine by simply opening my eyes and looking around, we are nowhere near the recovery that politicians and the economists in their hip pocket are touting. If anything, we are barreling forward to a collapse not unlike the big crash of 1929.
I say this without intending to invoke fear. Quite the contrary. Living in fear is simply not my thing. Okay, I lied. I do fear the ramifications of Fukushima. But other than that, surviving an economic meltdown is something that I will do by continuing to build up my supplies, skills and knowledge so that I can soldier through whatever the bad guys (and you know who I mean) toss my way.
So How Bad is Bad?
Who is to say? I am lousy at textbook economics. I prefer to look around and be observant of the families around me. I watch what people are putting into their grocery carts and mostly, I read all of the comments and emails that are sent to me from Backdoor Survival readers around the world.
I see a lot of financial downsizing. I see people making the decision to pay for food or for medicine but not for both. I also see vacant storefronts while the thrift stores are doing a booming business. Most of all I see a thirst for learning how to do things the “old fashioned way” or like the Amish, the Native Americans, or our grandparents during the great depression.
I read things like 10 Stories From The Cold, Hard Streets Of America That Will Break Your Heart and my heart does indeed break. It is almost as though suffering has become invisible in power elite and upper class circles.
The Future Looks Bleak
Why? Here are some of the reasons:
- There is a continued lack of employment opportunities for those that are currently unemployed of underemployed. Or, sad to say, old of age but not of spirit
- Droughts, freakish storms and other natural disasters are affecting the viability of farmlands resulting in increased costs for for food
- Out of sight fuel costs affect transportation and heating costs
- The cost of health insurance, for many, has doubled if not tripled
- Devaluation of homes and real property continues in many parts of North America
- Cities are declaring bankruptcy and reneging on public employee pensions
- Crimes against persons (knifings, murders, even road rage) indicate a barometer of frustration and malcontent among citizens in almost every modern, first world country
These are just a few indications that an economic meltdown of horrific proportions could be on its way. (And since I am an economics knucklehead, I won’t get into the technical reasons having to do with the way monetary policies affect the economy. To me, the anecdotal and real-time experiences with real people are good enough).
Oh sure, there are pockets of economic growth here and there. But for the most part, I see and sense a feeling of helplessness and hopelessness when it comes to money and matters relating to the economy. As much as I hate to admit it, even I feel that the middle class life I have known most of my adult years will never be the same. Pretty depressing when you think about it.
What to do?
Prepping and learning to become self-sufficient are a good start. The problem, though, is that you can store water and food, stow away some cash or even gold, and insulate yourself from short-term off grid situations. But what happens if the economic meltdown lasts longer than six months or or a year?
I feel that the only solution is to embrace a lifestyle where consumption is kept to a minimum. And to that end, here are some tips that I have been noodling around (in no particular order).
1. Reduce housing costs. This may mean taking in borders or sharing your home with extended family members. Are you renting a large home or large apartment? Take it down a notch.
2. Manage food costs. Stock up when you see a great sale. Double up and by two instead of one, or three instead of two, and so on.
3. Create a mini-store in your own home and shop from your own supplies. Your pantry will become your friend when money or supplies are short. Don’t forget sundry items and personal items as well as food when it comes to stocking your home based mini-market.
4. Only purchase foods that you will eat. This is related to #3 above. Don’t purchase canned Spam if you will not eat it. That is just silly.
5. Limit eating out. If you want celebrate a special evening, go for a desert and coffee date instead of dinner. With a little planning, you won’t suffer the “nothing in the house to eat” syndrome.
6. Reduce the number of vehicles you own. Do you really need a fleet with the associated costs of insurance and maintenance? Instead of an expensive vehicle, get yourself a scooter or motorcycle as a second vehicle and be smug at getting 60 mpg. Better yet, walk or bike instead of driving your car.
7. Purchase used goods. You can find some steals on Craigslist or Ebay. Or, if that is not your thing, go to garage sales and thrift shops. I am not suggesting that you purchase everything used, but think about your purchases and when practical, buy used and pocket the change.
8. Become self-entertaining. Read (use the library for heaven’s sake), watch videos (same thing, use the library as a great source of DVDs), find some puzzles you enjoy, hike, bike, dance. There are many things you can do to entertain yourself while spending very little money.
9. Reduce communications costs. Now tell me, do you really need 100 cable channels? And what about that smartphone that is costing $150 a month. Scale back as test – you can always add the extra services – and costs – back later if you simply have-to-have them. (Preaching here; I know this is a recurrent theme on this website.)
10. Earn extra income. Sell your unused stuff on Ebay. Get a part time job if you have a skill. Flip burgers. Become a sales clerk or a barista. Do yard cleanup. Anything to bring in a few extra bucks.
11. Barter your time for goods or services. Walk dogs, water plants, help out with someone’s garden. Be creative.
12. Grow food. This does not take up a lot of space (as I have recently learned). Practice Square Foot Gardening and you will be amazed at how much you can grow in a tiny area.
13. Use what you have. Become Ms. and Mr. Fix-it and make repairs instead of buying new. Find new uses for old things. See 12 Tips to Use It Up, Wear It Out and Make It Do.
14. Avoid debt. If cash is short this week, wait until next week. Live within your means even it means that you will eat beans and rice for a few days. Put a moratorium on clothing purchases for one season.
15. Secure the homestead. Firearms, weapons, pepper spray or even a baseball bat. The choice is yours. Don’t brag about what you have and do everything you can to make sure you and your supplies are safe.
16. Have an escape plan. I am a big believer in the concept of shelter in place but if you need to evacuate, be ready. Have a plan so all family members know how to communicate with each other and where to meet. Learn about escape routes in your area and practice getting out of dodge.
17. Stay healthy. Eat good food and not a lot of junk. Get physical exercise and try to maintain a decent weight. (I recently read that a good rule-of-thumb guideline is to take you height and divide it by two. Your waistline should be no larger than the resulting number.) Overweight? Try the Dukan Diet to quick start your long term weight loss plan.
18. Be a nice person. Treat those that are less fortunate with respect and be mindful that hard times may affect their behavior. Be friendly and neighborly and do not shun them because they are down and out. Remember, under different circumstances, it could be you that has fallen upon bad fortune.
19. Recognize that frugal is not a dirty word. It is a smart word. Frugal is not being cheap, it is being sensible. Being frugal now will allow you to get the most mileage out of your funds with something left over for a rainy day – or for the day when an economic meltdown occurs.
20. Prepare your mindset. If you plan for the worse and it never happens, be joyful. On the other hand, if you plan for the worse and you are prepared, you will reduce the possibility of panic in the short term and depression in the long term.
The Final Word
So there you have it. This is the lifestyle design that I currently embrace not so much because I am worried and afraid, but because I don’t want to be worried and afraid. I want to be able to enjoy life and I plan to do so by learning to do things not buy things, learning to smell the roses, and learning to enjoy the simple pleasures provided by a walk along the water with my husband and my dog.
Our world and our society is changing. Don’t be left behind because you forgot to prepare for a time when frugality becomes the norm.
Enjoy your next adventure through common sense and thoughtful preparation!
—————-
Gaye Levy, also known as the Survival Woman, grew up and attended school in the Greater Seattle area. After spending many years as an executive in the software industry, she started a specialized accounting practice offering contract CFO work to emerging high tech and service industries. She has now abandoned city life and has moved to a serenely beautiful rural area on an island in NW Washington State. She lives and teaches the principles of a sustainable and self-reliant lifestyle through her website at BackdoorSurvival.com. At Backdoor Survival, Gaye speaks her mind and delivers her message of prepping with optimism and grace, regardless of the uncertain times and mayhem swirling around us.
The article 20 Tips For Soldiering Through An Economic Meltdown published by TheSleuthJournal – Real News Without Synthetics
Source: http://www.thesleuthjournal.com/20-tips-soldiering-economic-meltdown/
“..An old economics joke is “A recession is when you are out of work. A depression is when I am out of work.” However, the differences between a recession and a depression are not simply how many people are unemployed. It is important for investors recognize and understand the significance of the differences between recessions and depressions.
The key difference between a recession and a depression is that a recession can be ended by monetary policy alone.
If every few years you got the flu and now you had a strep throat it would be incorrect and possibly dangerous to think that you just had a bad case of the flu this year. Over the last hundred years there have been numerous recessions but only two depressions, the depression of 1929-1941 and the depression that began in 2007. The symptoms of strep throat and scarlet fever may be similar to that of the flu or common cold. However, causes of the former are the streptococcus bacteria while influenza is viral. Hence, strep throat and scarlet fever require antibiotics which are useless against viruses. Likewise, believing that the depression that started in 2007 is just a severe recession is quite dangerous to both investors and policy makers. As long as many policy makers appear not to realize the distinctions between recessions and depressions, investors ignore those distinctions at their peril
The effects of the 2007 depression are much less severe than the 1929-41 depression because of safety-net benefits now provided. Consider the horrendous, though not uncommon situation of a household in 1932 comprised of elderly grandparents being supported by their working-age children with young children of their own, when the breadwinners became unemployed. The 1932 family would be destitute. Today the grandparents would have social security and Medicare benefits. Their working-age children could now collect unemployment benefits for up to 99 weeks. Additionally, the entire family could also be eligible for food stamps, Medicaid, rent subsidies, heating fuel subsidies, free school lunches and other benefits. The 1932 family might also have had a bank account in one of the many banks that failed and lost their savings. Today, Federal Deposit Insurance protects such bank accounts. You might say we are now in a depression with benefits.
The difference between a depression and a severe recession are not just semantic. Recessions occur when the Federal Reserve raises interest rates in an effort to slow down an overheated economy. Most importantly, recessions end when the Fed lowers interest rates. In a recession the pent-up demand for housing and durable goods means that monetary policy alone can cure the recession. Just as antibiotics can be effective against bacterial infections but not against viruses, monetary policy alone cannot end a depression. Furthermore, modest fiscal stimulus and the automatic stabilizers that can hasten the end of recessions cannot end a depression. There can be ups and downs in the unemployment rate during a depression. However, the unemployment rate remains elevated. It was 14.5% in 1940 and 9.7% in 1941.
If we are in a recession, economic activity will fully resume just from the monetary and fiscal stimulus that has already occurred. Ultimately interest rates will rise. However, if we are in a depression, even one with safety-net benefits that mitigate the hardships, interest rates will remain relatively low for decades as was the case in Japan and the USA of the 1930s, where only World War II ended the depression. The ideal investment for an extended period of low interest rates is agency mREITS.
Depressions occur after investment bubbles burst. In free-market capitalism, capital generates income for the owners of the capital which in turn is used to create additional capital. This is very good. Sometimes, it can be actually too good. As capital continues to accumulate, its owners find it more and more difficult to deploy it efficiently. The business sector generally must interact with the household sector by selling goods and services or lending to them. When capital accumulates too rapidly, the productive capacity of the business sector can outpace the ability of the household sector to absorb the increasing production.
The capitalists, or if you prefer, job creators use their increasing wealth and income to reinvest, thus increasing the productive capacity of the business they own. They also lend their accumulated wealth to other business as well as other entities after they have exhausted opportunities within business they own. As they seek to deploy ever more capital, excess factories, housing and shopping centers are built and more and more dubious loans are made. This is overinvestment. As one banker described the events leading up to 2008 – First the banks lent all they could to those who could pay them back and then they started to lend to those could not pay them back. As cash poured into banks in ever increasing amounts, caution was thrown to the wind. For a while consumers can use credit to buy more goods and services than their incomes can sustain. Ultimately, the overinvestment results in a financial crisis that causes unemployment, reductions in factory utilization and bankruptcies all of which reduce the value of investments.
If the economy was suffering from accumulated chronic underinvestment, shifting income from the non-rich to the rich would make sense. Underinvestment would mean there was a shortage of shopping centers, hotels, housing and factories were operating at 100% of capacity but still not able to produce as many cars and other goods as people needed. It might not seem fair, but the quickest way to build up capital is to take income away from the middle class who have a high propensity to consume and give to the rich who have a propensity to save (and invest). Except for periods in the 1950s and 1960s and possibly the 1990’s when tax rates on the rich just happened to be high enough to prevent overinvestment, the economy has generally suffered from periodic overinvestment cycles.
It is not just a coincidence that tax cuts for the rich have preceded both the 1929 and 2007 depressions. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increases in savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in the USA) caused the depression that made the rich, and most everyone else, ultimately much poorer.
Since 1969 there has been a tremendous shift in the tax burdens away from the rich on onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers. …”
http://seekingalpha.com/article/1543642