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any advice for preparing for economic hard times?
Chaotic Descent
Registered User regular
Registered User regular
So far I haven't heard any good advice except don't panic. (at the very least, they want to avoid people getting overly reactionary and doing crazy things like withdrawing all their savings and putting it in their mattresses. at the very worst, we're all screwed and panicking will waste precious energy that others could be eating off your bones. Nobody wants stressed out, stringy human flesh.)
There's no advice about what NOT to do with your money. (besides putting it in your mattress) Is absolutely everything equally at risk? My mom owns her own house.
I know I'm probably wasting my time asking about this (but maybe other people could gain from it) because I'm in the midst of a severe depression (and spending all my money on luxuries). I don't want to turn this into a depression thread, but some general advice on the psychology of following through on financial plans and nipping excessive spending would be good.
My current economic plan is to save a minimum of $167 a month so I can at least have $10,000 savings after 5 years. (assuming that if I'm still on disability, that a Great Depression wouldn't have such social services eliminated.)
And currently, I'd like to get a driver's license, which is unrelated to any Great Depression. After I get my license, and visit my best friend in the USA for a month to have some fun (which I haven't been having all alone), I'll get a job. (not much point getting a job if I'm going to disappear for a month)
PS: I'm in Canada. Slightly different situation than the USA, in addition to financial things like investments/retirement being different.
BTW, let's say I give up my extravagant spending. Let's say perhaps we don't get a Great Depression for at least 5-10 years, but things still get rough leading up to it. In the middle of economically hard times, could I still one day live out my dream of opening a Transformers toy museum? I've been hearing a lot of lectures about what makes people happy, fulfilled, productive, successful... and let's say I realize how to be of value to my community enough that I am wealthy enough to fulfill that dream. Should I give up that dream because of the economic times? Because there's no point in preserving what is predominantly a huge commercial brand? A monument to consumption? What happens to museums during a great depression? Ransacked by ignorant and desperate people who don't realize that they won't be able to find anyone willing to buy the worthless items anyways?
Oh yeah. There's also other things other than economical factors to consider. Like how will I eat when there's no money?
I just caught an article on Reality Sandwich (bleh. lots of tripe on that site, but it seemed interesting at the time I bookmarked it.) about people going survivalist or trying to make self-sustaining communities, and the comparisons to the attempts at communes during the Great Depression that failed because people didn't realize it required 1) a ton of physical work, and 2) a lot of skill. (the lone or group survivalist strategies can not support modern life, the article argues. It wastes a LOT of text just to say that, so just skip down to the paragraph after that if you want to bother at all.)
Sure, the article strikes me as alarmist (PEAK OIL!!! The world as you know it will be over! We'll all revert to pre-industrialized society!) but let's just argue about another Great Depression rather than the end of fossil fuels, and consider whether a farm could afford gas to run any machinery to make their jobs easier.
Has there been any attempt to improve the technology of non-gas-powered farm tools? Like... I dunno, are cattle/horse drawn plows still more efficient than... a light-weight, wheeled plow, powered by possibly multiple people with bicycle pedals? I dunno, is that crazy? It strikes me as something in between cattle/horse plows and a tractor. (although with the energy coming from a human rather than something else in both other cases)
I hope the USA and Canada both start building new nuclear reactors NOW. well... that'll solve the energy problems, but not the economy. (sorry, reverting to "PEAK OIL" issue)
There's no advice about what NOT to do with your money. (besides putting it in your mattress) Is absolutely everything equally at risk? My mom owns her own house.
I know I'm probably wasting my time asking about this (but maybe other people could gain from it) because I'm in the midst of a severe depression (and spending all my money on luxuries). I don't want to turn this into a depression thread, but some general advice on the psychology of following through on financial plans and nipping excessive spending would be good.
My current economic plan is to save a minimum of $167 a month so I can at least have $10,000 savings after 5 years. (assuming that if I'm still on disability, that a Great Depression wouldn't have such social services eliminated.)
And currently, I'd like to get a driver's license, which is unrelated to any Great Depression. After I get my license, and visit my best friend in the USA for a month to have some fun (which I haven't been having all alone), I'll get a job. (not much point getting a job if I'm going to disappear for a month)
PS: I'm in Canada. Slightly different situation than the USA, in addition to financial things like investments/retirement being different.
BTW, let's say I give up my extravagant spending. Let's say perhaps we don't get a Great Depression for at least 5-10 years, but things still get rough leading up to it. In the middle of economically hard times, could I still one day live out my dream of opening a Transformers toy museum? I've been hearing a lot of lectures about what makes people happy, fulfilled, productive, successful... and let's say I realize how to be of value to my community enough that I am wealthy enough to fulfill that dream. Should I give up that dream because of the economic times? Because there's no point in preserving what is predominantly a huge commercial brand? A monument to consumption? What happens to museums during a great depression? Ransacked by ignorant and desperate people who don't realize that they won't be able to find anyone willing to buy the worthless items anyways?
Oh yeah. There's also other things other than economical factors to consider. Like how will I eat when there's no money?
I just caught an article on Reality Sandwich (bleh. lots of tripe on that site, but it seemed interesting at the time I bookmarked it.) about people going survivalist or trying to make self-sustaining communities, and the comparisons to the attempts at communes during the Great Depression that failed because people didn't realize it required 1) a ton of physical work, and 2) a lot of skill. (the lone or group survivalist strategies can not support modern life, the article argues. It wastes a LOT of text just to say that, so just skip down to the paragraph after that if you want to bother at all.)
Sure, the article strikes me as alarmist (PEAK OIL!!! The world as you know it will be over! We'll all revert to pre-industrialized society!) but let's just argue about another Great Depression rather than the end of fossil fuels, and consider whether a farm could afford gas to run any machinery to make their jobs easier.
Has there been any attempt to improve the technology of non-gas-powered farm tools? Like... I dunno, are cattle/horse drawn plows still more efficient than... a light-weight, wheeled plow, powered by possibly multiple people with bicycle pedals? I dunno, is that crazy? It strikes me as something in between cattle/horse plows and a tractor. (although with the energy coming from a human rather than something else in both other cases)
I hope the USA and Canada both start building new nuclear reactors NOW. well... that'll solve the energy problems, but not the economy. (sorry, reverting to "PEAK OIL" issue)
Chaotic Descent on
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The best advice in this, or any other time, is to build relationships. Stay close with your family and friends and share what you have. The more people you know with skills and contacts, the more likely you'll be able to weather any storm - financial, emotional, whatever. That's one of the big keys that people who went through the real depression shared with later generations.
Fortunately there were a lot of things done to help stabilize the stock market and the US economy after the first depression. With luck, those things will make things much less likely to bottom out.
But if they were, make sure that you and your prepare. Economic emergency? Natural disaster? It's all the same if you're worried about where your next meal is coming from. Prepare now to have some extra stuff on hand and make sure your friends do the same and lean on each other when you need each other.
Check out "How to Break Into the Industry. Any Industry."
"I thought this was solid and I will shamelessly steal it. Hope you don’t mind." ..... Paul Barnett, Design Manager of Warhammer Online
*groan* Relationships are so much harder than economic plans or material preparations! Well, I'm dead. :P
I had been reading this book "creating community anywhere"... I know what it says, but it's just so hard to actually DO IT. :S I'm AFRAID of people!
How about this guy? http://www.chrismartenson.com
If you're continually thinking about an economic apocalypse, it might be a form of catastrophic thinking: a cognitive habit that accompanies depression and anxiety where you constantly worry about the worst thing that could happen. I can tell you from personal experience that basing financial decisions around a symptom of a mental health condition is not sound financial planning.
That said, the savings rate in the US is extremely low, and most people really do need to save more. It sounds like you're one of those people. I used to be that way, too. Now, I have a simple rule. If I'm buying anything that I don't strictly need, I take 50% of the purchase price and put it in a savings account that I don't touch. That account is at a different bank than my checking account, and I don't have a debit card for it. When I make a deposit, I just slip a check to myself in an envelope and drop it in their quick deposit box.
This way, I'm never denying myself the stuff I really want. I just make sure that I'm always living below my means.
the "no true scotch man" fallacy.
I've started putting $500/month away for "the future" now that my finances have settled from the jump into a "real" job. It's for a downpayment on a house, but in a pinch it is also my "oh crap" money. Save as much as you can and get yourself in the habit of only purchasing commodities after you have met your "saved" money quota for the month. Feral has this down pat.
This is the only way - whether in economic downturns or upturns, that way you're always ready for whatever life throws at you. We were desperately poor when our children were little - us eating absolute rubbish so they could have decent food, skipping utility payments so we could eat at all,Lewie's dad having cardboard in his shoes so he could still wear them, ice on the inside of the windows of our home for 3 months cos we couldn't afford to heat it, basically living in the one room cos everywhere else was too cold. As we've got jobs and gradually earned more money, we've still lived below our income - partly cos it was hard to shake off that fear of being in poverty again, but in more recent years, so that we could have savings to fall back on if we needed to.
I'm off work again atm, as I've had to have surgery to correct the damage done to my shoulder in an accident in April, I will go on half pay soon, but we have savings, so it doesn't matter. We do use credit cards, but make maximum use of interest free periods, and regularly change the cards, so we have almost free loans - even then, we could pay what we owe off right now if we chose to. Our closest friends have used pay rises and bonuses to pay off chunks of their mortgage, so that they are quickly reducing their repayments - they were hit several years ago by both negative equity and life insurance payout failures, so do what they can to reduce their debt.
For paintings in progress, check out canvas and paints
"The power of the weirdness compels me."
Mmm, H-Grade fish!
Get out of debt to the fullest extent you possibly can. That's just good advice in general, but especially if things are going to get lean.
Get in shape. Buy a bike, and get in the habit of riding it everywhere. The fuel savings are largely moot, it's just good to be as car-independent as possible, and being fit is surprisingly good for your pocketbook across the board.
And lastly, you'll probably be happier if you ignore all of my above advice (except about debt and exercise). Don't worry about a second great depression, peak oil, the 9/11 conspiracy, deadly polar shifts, space dust holocausts, or the flying spaghetti monster's rapture of his chosen. Odds are none of these things are even real threats, and even if they are, how do you plan or prepare for something when we have no idea how it will play out? If you put your money in the stock market and the Dow crashes, you're screwed. If you put your money in the bank and the dollar and loonie crash, you're screwed. If you put your money in dry goods and it turns out there's no clean water available, you're screwed. It's like worrying about nuclear war or anything like that -- there's nothing you can do to prevent it, or even prepare for it in any meaningful way, so just don't worry about it.
Now I have good indicators that, even if there's no Great Depression, and even if Canada isn't hit as hard, the USA is going to have some really hard times. I don't need depression to make me view the world like it's falling apart. It's in the news.
... what? I don't understand any part of that. Is it possible that what you're saying is that "when you buy something" (that you don't need), you actually don't buy it? (by making sure you can't)
I understand living below your means. I understand it, but I'm having trouble DOING it. It probably is the smart thing to do. and selling everything off before people realize that everything is worthless. eBay is still just going along like nothing's happening. If Canada gets through this easier than the USA, I could probably buy all the things I wanted at a discount. If the timing's right and eBay doesn't close down. :> Here I am thinking "Oh I really wanted that rare statue and someone has it for only $100!" It is really hard to get out of this toy fanaticism.
Why? Is debt worse during economic whatchamacallits? (the things that aren't as bad as Great Depressions) Does the government come and take away your house and belongings?
Yeah... not really what I was getting at. Sorry to muddy the waters with talk of communes and stuff, but that actually IS examples of the past during the actual Great Depression, so it's valid comparisons of what does or doesn't work. I thought I already put enough of a disclaimer about Peak Oil and crazy theories in my post that maybe people would stop treating the whole issue of a economic hard times as crazy as 9/11 conspiracy theories. The two are NOT AT ALL THE SAME.
Like you said, if you put your money in the bank and the bank closes or the currency is worthless, you're screwed. If it's LIKELY that that's going to happen, and it's possible to avoid losing your money in some way, you should do it. I was hoping there was a method OTHER THAN buying gold or silver, (because there isn't enough gold and silver for everyone to do this) but so far that's the only advice I've heard on what does work against that, despite it being from yet another "craaaaaazy person" who believes in peak oil. ( http://www.chrismartenson.com ) I don't know about peak oil. but right now it's not really a priority. economic hardships are a priority for me, because I'm prone to outright being killed off during one. I don't mean from crazy mobs, I mean I'll starve and wither away because I can't take care of myself. I'm in bad physical condition and underweight (still within healthy BMI, but that's meaningless) and I have no savings.
If I was in the USA, I'd tell my mom not to put money into retirement. Here in Canada, I don't know what our odds are. My mom wants to take the risk of her retirement money making it through this.
Great deals because they're becoming and will be worthless. Housing bubble. That's why I'm not sure what real estate will mean during all of this. My mom owns her house. Is that a good thing, a bad thing, or makes no difference?
There's no way I can afford a house. I have no job and no skills to get a job that could afford one. Even if I managed to save enough money and the housing bubble bursts so that I could afford one despite having a fraction of the money they had cost before, before the currency inflation goes into effect and my money is worthless (assuming that even happens in Canada to the same extent as the USA. The housing bubble sounds more likely), would it be worth it for me to buy a house?
I'm thinking in addition to being dissatisfied with my current living situation (apartment buildings SUCK), that it's also more expensive than it should be. I get $1,000 a month, and my rent is $555 plus electricity and other utilities. (water's free) I pay for high speed internet and phone and it's like almost $70 a month which is insane. My mom doesn't want me moving back home. (of course I could if there were an economic collapse) If I could find a place that costs less than this even if I pay to put all my toys into storage, that'd be fine. hm... I wonder if those places will have problems during economic hard times... a LOT of those places have opened up with people moving into the city from the suburbs. A LOT of North Americans have a LOT of material possessions.
THIS
I didn't have time to read this entire post, but what you said above stood out to me. Collecting something like toys is a lot like playing an MMORPG; it never ends, there will be always more loot to collect or something to see and do (thats why I never started playing them). Toy collecting is very similar; there is constantly something new, something cool, etc. I'm not trying to insult your hobby, I'm just trying to say that there will be no completion or sense of accomplishment, there will always be something new/something you have to have. The longer you resist the temptation of spending money on toys the easier it will get.
Lastly, the best thing you can do to prepare for a competitive job market (besides saving money) is to make yourself more marketable as an employee. When unemployment spikes, you have a lot of competition with jobs. You have to find a way to set yourself apart so that you are the one that lands "x" position.
And doctors and nurses. No matter what the economy is doing, people will always get sick. They may pay you with eggs and chickens and fruit, but when the economy is down, who couldn't use eggs, chickens or fruit?
No.
Let's say I want Rock Band, which is $200 after tax in my area. Before buying Rock Band, I make sure I have $300. Then I spend $200 on Rock Band and put $100 in a savings account.
If I don't have $300, then I don't buy Rock Band. Pure and simple.
Edit: Needless to say, that's after paying bills and putting 10% of my income into a mutual fund each month.
the "no true scotch man" fallacy.
#1: Don't spend money you don't have.
#2: Save.
These two are very important. If you're borrowing money to buy things, you pay a premium on the borrowed cash - basically, you add x amount to your monthly expenses so that you can afford a PS3. The opposite works the same way - if you give your money to someone else, they pay YOU x amount every month for the same privilage. So, DON'T borrow money if you can at all afford it. The only times when you will almost certainly have to borrow cash is when you buy real estate or maybe a car. Never, ever hold a balance on a credit card. 21% interest will eat a hole through your wallet right quick. Other debt is just slower.
If you have a good credit rating already, snag a credit line from a bank, but don't use it - most banks won't charge you a thing unless you actually draw on the credit line. Keep it for emergencies. FYI, good credit means you rarely/never miss payments on bills, and you've borrowed money in one form or another in the past. A student loan, credit card, or even those "buy now, pay later" things will work, just as long as you didni't miss payments/default.
#2, as many people stated, save money whenever you can. Try upping your savings plan to 200 per month, and have it go into a mutual fund account. I'm assuming you're young here, but if you put your money into equity funds (i.e. the stock market), you could earn on average around 9-10% a year, which after 20 years would give you 150K to play with.
Since you're in Canada, I can actually offer some good advice: If you don't have one already, get an RRSP account - any savings (which can be anything from cash to mutual funds to whatever) will grow tax free and youg et to deduct whatever you contribute from your taxes. Saves you money right there. Also open a Tax Free Savings Account - they're new, and they do exactly what it says on the tin. Again, you can put anything in there, not just cash. Most banks have systems that will do automatic deposits into your savings for you - set one up and forget about your savings until you get more money to save.
Lastly, some financial advice on the economy: We're in Canada. We have one of the most highly regulated banking systems in the world, and it shows. We're in no danger of collapsing (recession yes, but thats not a big deal). Don't put your money into guaranteed investments or a savings account. They interest on those will barely outstep inflation. If you have time to let your money grow, always, ALWAYS put it into the market in one way or another. The longer you have to wait, the more aggressive (risky) you can afford to be, since you'll only actually lose money when you withdraw from your funds during a recession.
Also, its fairly unlikely that we'll actually hit a Depression (a big fat recession). Economics was barely understood in the 1920's, and the reason the depression hit so hard was because the government did jack all to stop it. Basic economic policy these days lets us deal with recessions properly, so they don't self-perpetuate and get worse. Essentially, Don't Panic.
If you really want to pursue this line of thought further perhaps do some reading on the UK in the late 1970s/early 80s, or any country that has faced severe economic constraints. It may not happen in this current situation, but get a good fear up requires research imo.
Oh and building nukes is going to solve our energy problems? Hmm. I'm not sure massive long term capital investment in a recession is necessarily a good thing when there may be cheaper alternatives.
You do realize that there was no statistically meaningful increase in deaths during the actual Great Depression, right? Even during the worst economic disaster in US or Canadian history, there was enough food to go around. Malnutrition? Sure. People skipping meals to keep the kids fed? Sure. People starving to death because there was no food to be had? Just didn't happen.
You're fretting about a disaster on par with the great famine in the 1840s, which took place before the existence of modern logistics, air travel, the modern automobile, mass communication, mass transit, alternating current electricity, or even the traction engine (the first useful tractor). Something like that can never happen again barring a complete, Mad Max style apocalypse. There is no sense at all in worrying about this.
Why are they becoming worthless? Do you think that all companies will collapse? Very few will. Plenty of large companies have great futures ahead for them, but aren't doing well during this recession. As far as the housing bubble, yes exactly, it burst, houses are being forclosed on, so right now, houses are extremely cheap. Perhaps you think that we are entering a recession/depression that will never end and we'll all die. In that case, yes, don't invest in anything. However, the people who made it through the Great Depression, were the people who bought when everyone else was selling at a bargain.
Limed for truthiness. If you have money you can afford to play with, now is the bestest time ever to invest. Things will improve, unless we have a total economic collapse.... I can't really see that happening, considering it hasn't, ever. Maybe if the nukes start flying you can worry.
You can't really look at the markets, see them down 50%, and go "Shit, I suppose everything is worth half of what it was 6 months ago".
Firstly, since you're in Canada you need to make sure that your depression is being managed properly by the healthcare system. Not doing anything about depression is not an answer, unless you're wanting to set yourself up for failure. If you feel that the shopping is tied to the depression, then the therapy of whatever kind you have opted for under your current health care management should be able to assist with this manifestation and provide you with some coping mechanisms. Generally, I would advise slowly training yourself to use other methods to cope such as reading, working out, taking a long bath. Things that could add to your personal feelings of worth and/or assist with relaxation that might be why you seek the retail therapy. If you are not opted into some kind of depression management (whatever that may be, medicinal or therapy related), then my advice is to stop making excuses and get on that.
Second you need to get a job. What are you paying your rent from? Savings? Don't even start asking about real estate if you aren't even living within your current means.
You need to do a budget. This is in regard to your question about curbing spending. You should tally your income from disability and wherever else you are magically getting this money from (and later, your job). Savings is often 10-15% of this income, minimum. With regard to where to store this savings, really whatever the banker guy said is fine. There's no need to go mattress style.
After this savings is deducted, add a section for things which are fixed, such as your rent, electric bill, etc. You can add about $100 a month for food here, but if you spend more than $100 on food, forget it, you're going overboard and this is going into the luxury section.
Personally, I then add a section for luxury bills. Frankly, a cell phone, internet, cable are luxuries. If you're broke you cancel these luxuries when possible. Food, if you're going overboard, put anything over the $100 limit in this bucket.
You need to build an emergency fund which will cover necessary expenses for at least 3-6 months (more like 6 in today's conditions). Then once you've done that, you can set aside your spending budget for all these extravagent things you seem to be buying.
If (I'm saying IF, not that this is the case necessarily) you don't have the ability to manage your own spending, and aren't willing to get help if it's tied to a medical condition then basically you'll just have to wait until you hit rock bottom. If (IF) you can't train yourself some harsh times might do it for you.
With regard to the toy museum, it depends what you are asking. If you're wanting to make a business of this, you should wait for the appropriate economic climate, and maybe some courses in business will help you determine this. Poor economic times usually relate to less spending on luxury visits which would probably impact your museum. If you're asking whether a wealthy person can open a toy museum during economic times - sure do whatever you want with your money, if it doesn't matter whether its a business or not, who cares? This kind of dream is probably best served as a hobby. I don't think this should be a money/career making move. You need to shape your dream that way. It's not about giving up, just about picking the right time for success.
and from that website I linked to that has some kind of audio (with minimal video) presentation, they said that the recession and the bailouts were all part of this inflation system that constantly pays for things by devaluing currency. Canada's has the same kind of currency, right? or is it just that we're not going to crash at the same time or to the same degree that the USA is because of the regulation?
uh... we don't need peak oil to motivate the USA to make more nuclear reactors. How the hell else is the USA going to get it's energy? Are they just going to start rationing electricity to force US citizens and businesses to cut back, or are they going to ignore the problem and keep importing oil in the middle of a huge recession?
Especially if the USA does something like switch to electric and/or hybrid cars for the cities. MORE electricity requirements, not less.
I remember someone saying that Obama had to be planning on switching residential transportation to something else, because that would be the only way to stop foreign dependence of oil which Obama DID state he was going to do.
You have some valid concerns about the state of the economy, but they are exaggerated. You're looking at some bad turbulence and getting scared that the plane is going to crash. I think you're really perceiving these problems as worse than they actually are.
I really think that you need to talk to a therapist about your financial anxieties, because I personally do not think they are an accurate reflection of reality.
the "no true scotch man" fallacy.
And don't believe everything you read in the news. If I had a dollar for every time CNN had a "breaking news" story about how stocks were down for the day (but ended up positive at the end of the day/week), I'd be a rich man. Hell, right before christmas there was a breaking news story about how the market was going to get pounded due to something or other, and we ended up +300 on the day and like 1000 for the week.
You're talking about the federal reserve system collapsing; do you have any background or education in economics, or are you just listening to Ron Paul and his ilk screaming that the sky is falling?
I'm not trying to troll you here -- swear to God -- but it seems like your entire world view is shaped by alarmists and extremists, and you're getting yourself all worked up over a recession that will probably be over and done with by 2010 at the latest.
Edit: And yes, I'm going to second Feral's question. You're speculating and worrying to an unhealthy degree. You're talking about the end of the world like it's going to happen no matter what within the next five years, and there's just no logical reason to believe that at all.
The world isn't going to drop into chaos either because the Great Depression taught us many things and helped establish laws and institutions that will prevent the same thing from happening again. I know Canada and the rest of the world learned from that as well.
What our grandparents and great-grandparents went through was nothing like we will ever go through. But people seem to want to create that, even if it's just in their heads, to say "I lived through those (not really so) tough years." We have it so easy these days we will look for any way to make what we go through seem as tough as prior generations. And the constant echo chamber of the media isn't helping at all.
You want to prepare for tough times, live within your means. No secret there. Debt is not bad, debt is a motivator, but you plan accordingly.
Edit: and in writing this post, everyone said the same thing.
HAH! Yeah, you're skimming alright. No, that's not what I said.
The Great Depression may have taught us many things, but I don't think anyone currently in charge in the USA is paying any heed to any of that. (which isn't much of a surprise.) Maybe Canada's sufficiently regulated, but the USA isn't.
... I'm sorry, but haven't people who have a better understanding of economics been saying that it's likely we're entering a big recession and it's not just effecting the USA, but the entire global market? I mean, the biggest banks in the USA going under, that's not big?
no. no therapist. and how's a therapist going to tell me what news is painting an accurate picture of the world? :P
The current economic troubles are largely irrelevant to good financial habits.
The best advice now is the same as the best advice five years ago which will be the best advice five years from now: pay off any high-interest debts, save at least 10% of your income but preferably more, invest in low-fee mutual funds, don't buy anything you can't afford, learn to live below your means.
You and I are not economics experts. So why don't you listen to people who are? If you're really worried, go read some of the advice sections on reputable, mainstream websites like Motley Fool, Yahoo! Finance, or CNNMoney? And when you go to one of those sites, don't click on the most melodramatic headline... look in the areas where they give personal advice. Like this article on CNNMoney for instance answers a lot of your questions very well. I guarantee that those sites are all going to say basically the same thing Apogee and wasted pixels and pretty much everybody else in this thread have been saying: don't worry about the apocalypse, things are going to get better, just practice good basic financial habits. Warren Buffett, the multibillionaire who is both the richest man in the world and probably the smartest man in the world when it comes to business and finance, is keeping money in the stock market right now because things are going to bounce back.
So far, in a thread about financial planning, you've managed to bring up: peak oil, survivalism, buying gold and silver, the great depression, dying of starvation, national debt, currency failure, energy rationing, and total market collapse. Those things are all dramatic and scary and catastrophic but none of them change the very basic advice that I've outlined above. That tells me that maybe you're exaggerating things. Just a little.
the "no true scotch man" fallacy.
We are entering a significant recession, yeah. And it will affect the rest of the world. Down here in New Zealand we're already feeling the effects, though experts are saying it'll take six months for the shockwaves to really come through.
But recessions are a natural part of any economy. There's good reason to be concerned and try and be frugal, and things will definitely be a bit tighter over the next couple of years. Just remember that it's an economic recession, not an economic collapse. There's no reason to believe there won't be enough food to go around. Social infrastructure will remain intact. There aren't going to be mobs roaming the streets stealing all your shit. It's just a recession.
You just say you don't watch the news except from some crap comedy on TV, yet you don't expect the government to learn from their mistakes? Go pick up the book Basic Economics by Thomas Sowell. It doesn't matter which way you lean politically, it should get you on a good understanding of the basic economic principles.
Things are in place to prevent total collapses. That is why money can be printed, bonds can be sold, and taxes increased.
See, this is just not true at all. It doesn't matter who the president is, these systems that have been set up go through regardless of who is in charge. The FDIC is the way it is today because of the Great Depression. Banks don't just up and run out of money because thanks to mass transit/communication/interdependency a local bank isn't going to go under and fuck a town because a larger regional/national bank will swoop up and save them (thanks to the FDIC, Treasury and the fact that when things right themselves it equals more business for the bigger bank). Stocks don't plummet into oblivion because there are halts on certain types of trading and they will even shut down the market completely.
These things didn't happen in the Great Depression, and regardless of who is running the country the systems will prevent the same thing from happening again.
It almost sounds like your mom is your own "retirement/emergency" fund. In your posts you mention that you "get" $1000 a month and half of that goes on your living arrangements. This is generally above average. It is acceptable to spend roughly 30/35% of your income on housing arrangements. Of course you are saving on some of the bills which are included but I think even that aside, you are way over the percentage.
Given this, you have two choices - earn more or live cheaper.
I don't know which Canadian city you are living in, but if you hate apartment living and need something cheaper than $550 I think you honestly have a pretty good deal unless you're in like Saskachewan on a farm or something. You might be able to shave some money off that by going into a shared house with people but you don't have a job and apparently need huge amounts of space for your transformers collection which doesn't mesh well with roommates.
Limed so incredibly fucking hard. Words to live by not just for those "preparing for hard times" - though ITT it seems to be more like "preparing for the motherfucking apocalypse" based on the OP's slant towards the future.
Can trade TF2 items or whatever else you're interested in. PM me.
I still don't agree that everything is going to be absolutely fine and the government and regulators all know exactly what they're doing, how to avoid problems, and that they actually WILL avoid problems.
The USA the way it currently is, is totally screwed. Unless Obama gets a good economic guy and reins this in tight and fast, it's going down hard. and I'm not sure Canada has anything to avoid going down just as hard as the USA since we're so dependent on them. I heard 90% of our import/export is with the USA and Mexico. Even if we're girded against hyper-inflation unlike the USA, our business will still be in the crapper. And UNLIKE the USA, we have idiots running the country who don't care. They're going to ride the money train until the very last second it crashes.
Just indulge me for a moment. Let's say we have another Great Depression with hyper-inflation. Does anything you do before that have any effect on your life? With people who had savings be in the same position as those who were in debt?
I'm not sure how much time to waste trying to learn sufficient economics to discern what the true situation is.
I'm not in debt any more. well... $1,000 to my mom. but my income tax rebate will cover that plus a lot more. I have quite a few years saved up, and each one is probably $1,000.
Perhaps the best strategy is to save some and put it in gold and silver, and invest the rest directly in myself through education and getting life and trade skills.
Also, as far as investing... if there's any point... is it best to sell everything now, and then buy it back when it's cheap? I guess the timing is important. You need to buy while the money is still worth something but the items aren't, and while the systems are in place to buy and sell. (like eBay, PayPal, internet services, shipping services) and probably early, so that people aren't so desperate that fraud is high.
It already is cheap. In fact, since you are discussing strategies for long term growth it was probably even kinda cheap at the very peak of the market. While I disagree that buying risky stocks is a good idea for long term returns (why take risks, when you can get near guaranteed solid returns on boring companies?) buying secre stocks for long term returns is nearly always a good idea. For some suggestions, people will always need to eat, drink, get about, and build machines with which to build other machines.
Your first step however in any situation should be to acquire an easily accessible emergencies fund, probably equal to a couple of months of income. This in my opinion should come before paying long term low interest debt like student loans. Without such a fund, if something bad happens, then you can rapidly run up high interest debt and find your life thoroughly messed up by an otherwise insignificant event (car breaks down, you break your ankle, building you work in burns down one night)
After this you pay off all remaining unsecured debt (ie anything which isn't like a mortgage)
Then you pay off the premium on secured debt (which is effectively saving, and cost cutting in one)
Then you save money, since you are Canadian you don't need to save to American levels, but it's sensible to save as much as you can. You should also never exceed your income, and should use your credit card only as a method to show banks what a good credit customer you are, repaying any debt accrued on it as soon as it registers in the account.
The world will not end, and if it does, then no amount of investment advice or survivalist training will help you.
Edit - And if we do have an event like the great depression it will not be characterized by hyperinflation. The US even then did not have hyperinflation like Germany did, and Canada is certainly not going to begin printing money to try and revive things. If you save wisely, and keep your funds in a diversified set of holdings (banks, property, markets) then you will enter the 'depression' with cash. The problem in the great depression was not hyperinflation, but that there was no cash available. People held debt, and required loans to continue business operations, this meant closures and an increase in debt as people could no longer pay the interest. Those with cash in a depression will actually be doing well, as there will be far more investment oportunities than investors.
There will not be another Great Depression, period.
Economist by training here echoing the wonderfully true statement by this upstanding member of civilization. The material, political and social circumstances were entirely different. The Great Depression really didn't have much to do with the stock market.
Also, the doomsaying is a little premature and likely incorrect. Sorry for the curt response that may only be of the slightest usefulness, but I am working at the moment
Also: Obama has the best economic guys (plural). He has taken some of the brightest and most accomplished economists in America to You're likely ignorant of the situation, OP. That may sound insulting, but it also can be comforting. After all, if your understanding of American history and economics aren't sound, then the predictions you are making based on them likely won't be either. Confidence or the lack thereof is what truly is corrosive in these situations.