5 steps to economic survival
To be an economic survivor, it helps if you are prepared before the crisis occurs. As the old saying goes, "hope for the best but plan for the worst." Below are some steps to getting prepared for an economic crisis, whether it be a personal crisis like getting laid off, or a world wide global depression.
1) Get out of debt. Instead of buying that new television, pay down your existing debts. When the crisis hits you do not want to find yourself unemployed, broke and saddled with large debts. Pay them down now if you can.
2) Build your savings. Most Americans live paycheck to paycheck. This works fine in boom times, but you need to start building a nest egg in case you find yourself out of work, or for when you eventually retire.
3) Stock up on goods you use. In other words, buy in bulk. While most Americans only buy enough to last a week or so, it is smart to buy enough of the goods you use to last months, or even years. This will be very beneficial to you if you lose your job or if the economy collapses to such a degree that goods are unavailable or inflation has driven the prices to unreasonable levels. Plus, you can often get goods at cheaper prices when you buy them in bulk, thus putting more money into your savings. Be sure to make this investment in nonperishable products. In other words, don't try to buy a year's worth of eggs. However, there are several foods that last for years or even decades. In my opinion it is good to keep a supply of food on hand just in case the worst happens. This could be anything from a hurricane or earthquake, to a hyper inflationary depression, to World War IV. Jim Rogers advises buying a case of scotch (or whatever liquor you prefer) in case the economy completely collapses and you need to barter for other goods. If the economy doesn't collapse you can always drink the scotch.
4) Invest your savings wisely. Most financial advisers will tell you that you should diversify your investments. In other words don't just keep your savings in any one thing, but invest it in different things. I advise always keeping some in cash, and then investing the rest in safe and reliable assets. Some safe investments are low risk stocks, precious metals, and real estate. The main thing you want to do is make sure you are invested in something that will never completely lose value. For example, gold will never completely lose value. It may drop in value but it will always be worth something. So if you buy it for $1,000/oz and it drops to $100/oz it still holds some value, and you can hold on to it until it eventually goes back up (and it will eventually). Once you have acquired a large amount of savings then you can start making more risky investments.
Invest in your friends. Instead of you leaving your money in the bank earning 2% interest and your friend borrowing money from the bank at 5% interest, you could loan the money to your friend at 4% interest. That way you both benefit on the interest rates. But be sure to do this only with a reliable friend. I have some friends that I would loan any amount of money to, because I know they will pay me back if they have to get a third job or sell their blood to do it. I have other friends I wouldn't loan any amount that I did not need to get back, because I would assume they would never pay it back.
5) Prepare for different scenarios. Sometimes money becomes worthless. Sometimes stocks don't recover. Sometimes you can't find a new job. Prepare for every eventuality that you can think of. What happens if we go into a hyper inflationary depression? What happens if you lose your job? What happens if the stock market crashes? What happens if all three occur at the same time? Be prepared. Never assume the worst can't happen, instead assume it will. Try to think of absolutely ridiculous scenarios, like events in 2012 making the world into a Mad Max type planet and ask yourself how could you prepare in advance. Your friends may laugh at you, but if the worst does occur, and remember it has many times throughout human history, they'll be the ones knocking on your door begging for a can of creamed corn. But also keep in mind that the world might not devolve into such a scenario. So don't spend your life savings on toilet paper. Instead be smart, invest wisely, but realize that the worst could actually occur and be prepared just in case.
1) Get out of debt. Instead of buying that new television, pay down your existing debts. When the crisis hits you do not want to find yourself unemployed, broke and saddled with large debts. Pay them down now if you can.
2) Build your savings. Most Americans live paycheck to paycheck. This works fine in boom times, but you need to start building a nest egg in case you find yourself out of work, or for when you eventually retire.
3) Stock up on goods you use. In other words, buy in bulk. While most Americans only buy enough to last a week or so, it is smart to buy enough of the goods you use to last months, or even years. This will be very beneficial to you if you lose your job or if the economy collapses to such a degree that goods are unavailable or inflation has driven the prices to unreasonable levels. Plus, you can often get goods at cheaper prices when you buy them in bulk, thus putting more money into your savings. Be sure to make this investment in nonperishable products. In other words, don't try to buy a year's worth of eggs. However, there are several foods that last for years or even decades. In my opinion it is good to keep a supply of food on hand just in case the worst happens. This could be anything from a hurricane or earthquake, to a hyper inflationary depression, to World War IV. Jim Rogers advises buying a case of scotch (or whatever liquor you prefer) in case the economy completely collapses and you need to barter for other goods. If the economy doesn't collapse you can always drink the scotch.
4) Invest your savings wisely. Most financial advisers will tell you that you should diversify your investments. In other words don't just keep your savings in any one thing, but invest it in different things. I advise always keeping some in cash, and then investing the rest in safe and reliable assets. Some safe investments are low risk stocks, precious metals, and real estate. The main thing you want to do is make sure you are invested in something that will never completely lose value. For example, gold will never completely lose value. It may drop in value but it will always be worth something. So if you buy it for $1,000/oz and it drops to $100/oz it still holds some value, and you can hold on to it until it eventually goes back up (and it will eventually). Once you have acquired a large amount of savings then you can start making more risky investments.
Invest in your friends. Instead of you leaving your money in the bank earning 2% interest and your friend borrowing money from the bank at 5% interest, you could loan the money to your friend at 4% interest. That way you both benefit on the interest rates. But be sure to do this only with a reliable friend. I have some friends that I would loan any amount of money to, because I know they will pay me back if they have to get a third job or sell their blood to do it. I have other friends I wouldn't loan any amount that I did not need to get back, because I would assume they would never pay it back.
5) Prepare for different scenarios. Sometimes money becomes worthless. Sometimes stocks don't recover. Sometimes you can't find a new job. Prepare for every eventuality that you can think of. What happens if we go into a hyper inflationary depression? What happens if you lose your job? What happens if the stock market crashes? What happens if all three occur at the same time? Be prepared. Never assume the worst can't happen, instead assume it will. Try to think of absolutely ridiculous scenarios, like events in 2012 making the world into a Mad Max type planet and ask yourself how could you prepare in advance. Your friends may laugh at you, but if the worst does occur, and remember it has many times throughout human history, they'll be the ones knocking on your door begging for a can of creamed corn. But also keep in mind that the world might not devolve into such a scenario. So don't spend your life savings on toilet paper. Instead be smart, invest wisely, but realize that the worst could actually occur and be prepared just in case.



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