How to Prepare for the Coming Depression Part 2:
In the Part 1 I outlined the importance of having a reserve of food set aside for you and your family. Regardless of it being an inflationary or deflationary depression, you would not want to be vulnerable to skyrocketing prices or a food shortage. This was the main reason why you want to invest in your food supply today, because the longer you wait the more the prices will rise.
After you have 3-6 months food supply stored up its time to take care of your finances.
1. Eliminate Debt
If you can not get completely out of debt, then you should focus on the one with the highest interest rates first. The basic idea is to reduce the total amount of any future expenses and money going out. To be prepared for a possible job layoff, or cutback in hours you should pay off as much as you can today. Tomorrow it might hurt you twice as much to make the same payments. You want to be able to get by with the minimum amount of money.
2. Build Your Emergency Fund
Save up a CASH reserve of 3-6 months (if not more) of expenses. You should be able to survive on this reserve if the event you were laid off from your job. Even if you are able to work through depression will you be prepared if the president declares a “bank holiday”? Look back to 2008 when IndyMac was taken over by federal regulators. People were lined up for days to get limited access their money. This event was isolated, in the future (as it has happened in the past) it could happen to hundreds of banks at the same time.
In your emergency fund only keep small bills, $1, $5, $10, and $20 dollar bills. The majority of people have difficulty breaking larger $50 and $100 dollar bills even today. You want to make sure that the money you have can easily be spent.
3. Invest in Gold, Silver, and Tangibles
If you have a considerable amount of money saved up already in retirement funds or stocks. It may be time to look at re-distrusting your investments. Many people lost 50% of the net worth in the last stock market crash. Could your portfolio survive through another? Throughout history gold, silver, and precious metals have always held their value. The prices of gold is on the rise and not coming down anytime in the near future.
Aside from gold and silver, you want to invest in real tangible objects. A Good set of tools and equipment, books, medicine, firearms, ammunition, and other supplies will all be worth their weight in gold. In a serious long term depression paper assets with be worthless to you. If you can’t touch it and hold it in your hands then you don’t want it.
4. Cut Expenses At All Costs
Many of us live way beyond our means. It shouldn’t take an economic crisis for you to take a look at the thing you may not actually need. Cancel the cable, and netflix memberships. Downgrade your phone plan from the blackberry plus line to a cheaper normal line. Stop running the a/c 24 hours a day. Cut out junk food and fast food. They have little nutritional value and they are more expensive fresh fruits and vegetables. There are several small things that can add up over the course of a month. Staying at home on the weekends could save hundreds of dollars over time. Instead of going out to eat, you could take turns having people cook.
No matter how you choose to do it, its important that you find some way of reducing your expenses and increasing your savings. Be creative. If you stick to your plan you will be in much better shape than the rest of the people out there, who may have been caught by surprise.
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