Thread: Prepare for the worst

I'm not chicken little but I'm not walking around wearing rose colored Oakley's either.

It seems like we have gone from trying to revive the economy to trying to avoid a depression. In my opinion it's time for smart people to prepare for the worst case scenario. If the economy falls off the deep end I think it will happen very rapidly and there will be very little time for any preparation.

I would like to hear others thoughts about how you will financially or otherwise prepare for this scenario should the dominos continue to fall. It appears to me that we have about a 50/50 chance at this point and that's way too close for my level of comfort.

My thoughts at the moment are to drain all remaining credit sources and hold on to the cash before they cut off all lines. Separate "essential" bills from "non-essential" bills and hang on as long as possible.

I've gone from fastlane thinking to survival lane thinking. I don't care about the politics of the situation. If anyone thinks that this is not a possibility then please carry on and don't participate in this thread. If you think this is something to be concerned about, I would like to know what you think are some essential things that need to be taken care of now. I think all remaining lines of credit will be cut-off very soon if things don't change immediately.

I am (poor) but also thinking opposite of you. I am trying to pay off all my credit so that I am free and clear if all goes under. Not having to owe money gives me peace of mind. What would your strategy be after you max out all the credit? How would you pay it back?

Oh, that makes much more sense. We are looking to get into a house soon, but I think we will have to wait for a good rebound in lending.

Justin
I'm guessing I may have more good and bad debt than you. I'm only making that assumption based on our ages. I try to use a low level of debt to leverage myself with what little business and investments I do have. You may be used to making $4000 a month and paying $2500 a month in bills, hypothetically. Imagine moving 10, 20, or $50,000 a month or more through your system every month. I LIKE having credit available in case something (depression) happens that causes a heart attack in the system.

Honestly I've never put any thought into this precarious situation we are in. I like to think positive and love the game of business. Thankfully I've done my homework and can survive if need be. This whole post is based on the possibility of having a depression rather than a recession. I hope it doesn't happen but I wouldn't rule it out.

Lightning
Yes, I mean credit cards, equity lines, bank loans, whatever. I'm a veteran and have access to a "Patriot express loan." I'm just wondering if this is what other people smarter than me may be doing at the moment. These things for all I know may be drying up as we speak.

Aroundtheworld
I like your ideas. I like mobile homes right now too. My neighbors would have a cow over the chickens but hey, if times get bad enough you'll probably have to protect the chickens from the neighbors.

I have been wondering about this lately also.

the survival aspect I have no problems with. I can grow food and hunt if need be.

the financial side is a bit more interesting. I feel pretty comfortable that I have great job security as a teacher. Will I be able to survive on what I make? I don't know. Lately I have been buying physical gold and silver. Unfortunately I don't have enough disposable income to buy the amount I would like. If the dollar actually tanks I want some kind of tangible asset to barter with.

I would love to see bartering again over exchange of paper money. I used to barter a lot when I was in College.

Personal Finance: I consolidated all of my credit cards in December and cut them up. The lines of credit are still there but I haven't touched them since then. Might need to charge a tank of gas just to keep the lines open. Just bought a newer used vehicle. All 3 house are fixed loans with 1 paying off in 9 years. No 401k because of teacher retirement package, not sure how the state has that invested though. Roth IRA had less than 500 in it after Cisco stock tanked a few years ago.

Other than inflation killing my paycheck we aren't sitting too bad. Texas never had the run up in housing prices that many other states did. Our property values are pretty steady and have remained unchanged for the most part. The equity we have in our properties was not eaten up by a readjustment of values.

Bartering and hunting food? Are you guys serious?

In order for the dollar to collapse, it means other currencies are exploding. If you believe that will happen, all of your assets should be in commodities or overseas.

There are a lot of things that can or could happen. Hedge your bets and focus on what you know. If your ability to make money depends on leveraged and/or appreciating assets, it might be time to rethink things.

I always look at worst case scenario as a part of life. If it never gets to the worst case then life is good!

Wow,

I better build a bomb shelter!

I will stock up cans of beans and twinkies... And I better start stuffing cash under my mattress!

There are many people who say the depression IS coming and it's going to be even bigger than the last one. I wish they are wrong, but from what I know today about the way the markets work it doesn't seem to look so good.

When it comes to preparing for the depression, a saying I've recently heard of suggests to stockpile "food, bullets and gold". Food for basic survival since, I suppose, it wont be as conveniently available for sale as it is now. Bullets because of all the people who were caught unprepared resorting to robbery as they desperately try to get to food and other necessities. Gold (and precious metals in general, silver being probably most practical) as an alternative to the collapsing currencies.

That said, I've started buying some physical silver, but it's in quite low quantities since my surpluses aren't big. However, I'm still holding off on food and.. bullets (I don't like guns and I'm more likely to just buy stun guns or tasers instead of real stuff). I need to define what would be my "cue" to start doing that. With regards to that I have a question:

How do you think would the depression in US affect Europe? Perhaps euro would still hold on even if USD fails, keeping the overall european economies more stable, even if in deep recession reflected in higher prices of everything, but still not a total collapse?

Regarding food stockpiling, one thing to consider is that the more you have stockpiled the greater a target of robbery you potentially are, so it may be better to have some land to fall back on and just produce food when necessary than to stockpile too much.

Thoughts?

Originally Posted by Russ H

BTW, Andrew, the depression in the 1930s was worldwide. When the US stock markets crashed, they did not go up everywhere else.

Correct. But I was addressing the value of the dollar -- "If the dollar collapses" -- meaning the value of the dollar drops, that means the value of whatever the dollar is being valued against, euro, yen, yuan, has to go up.

I never said this would happen, nor do I believe it will happen.

Hypothetically, say I was in Germany in the 1920s. I would have been better off converting all of my German marks into US dollars and buying stock in the US stock market before its collapse. Had I kept my life savings in German currency I would have been completely wiped out.

If one believes that the US dollar is going to collapse, which I don't, then I suggest that they follow my suggestion concerning Germany.