When America’s most well-known financial collapse, The Great Depression, happened, the lives of many Americans went into a tailspin. Unemployment rates we hovering around 25% and foreclosure rates reached an all-time high. People were, by and large, unprepared for what was coming at that time, and it sent the United States into a financial hellhole for a good decade or more. We experienced a bit of this again in 2008, as many people lost their jobs and homes due to the recession, however I wonder if we are truly “out of the woods”.
Is Financial Collapse Here Imminent?
Grayson wrote a post over at Frugal Rules a bit ago with the startling news that consumer debt is on the rise again in America. That fact, coupled with the extraordinarily high government debt topping 17 trillion, and record-high DJIA numbers hanging out in the 17,000’s, makes me quite nervous, honestly, that we are on the brink of financial disaster once again in America.
Whether or not you agree with me, let me ask you one thing: What plans do you have in place should another large-scale financial collapse set in here in America? In case you have none, let me share with you a few tips that will help make you better prepared for a major financial blow, whether it be on a personal level, such as a job layoff, or on a national level, such as another recession or worse.
1. Get out of Debt. ASAP. No more messin’ around. Get your debt off your plate as soon as possible. The less monthly obligations you have to pay, the easier you’ll be able to weather a reduction in income. That $500 or $1000 a month in payments you have, whether they be student loan payments, car payments, credit card payments or whatever, might not seem like a lot now. However, if your job or your spouse’s job suddenly goes away, every penny will count, and the slightest amount of reduced income could mean the difference between making it through and not making it through.
2. Have an emergency plan in place for your finances. People often have a fire escape plan in place, or a tornado warning plan in place, but often they neglect having a financial emergency plan in place. Your financial emergency plan can include, among other things, a bare minimum budget (a list of the monthly expenses that are absolutely necessary to survival and the total amount of cash you’ll need each month to pay those expenses), a list of savings sources (there should be a wide variety of these because, for instance, if the market collapses that money is technically “gone” for the time being), and a plan for basic survival needs such as food, shelter, water and clothing. Depending on what causes a potential financial collapse and how widespread the impact is, these things might not be readily available to you.
3. Prepare your mind. Whenever one is facing a crisis, monetary or otherwise, your mental and emotional strength is a large factor as to whether or not you’ll make it through. Perspective, strength of mind and the refusal to give up are paramount when facing a financial collapse.
Financial collapse may or may not be in America’s near future, but if it is, I want to make sure that my family and I are prepared. Don’t you?
What plans do you have in case of a financial collapse? Is this something that you think is a real risk to America’s near future?
Image via JefferyTurner