As I write this, the Dow Jones Industrial Average is under 8500. Wall Street is in panic mode. The mortgage industry is struggling to stay afloat. Congress doesn’t have a clue about what it should do despite pouring an additional $850 Billion into the industry.
Both of the Presidential candidates don’t seem to get the meltdown our economy is about to have. Spend spend spend is their answer. It is the wrong answer but they have to win an election.
Economists are predicting that this may be the next Depression. We are on the verge of sheer pandemonium. What’s a family to do?
I’m suggesting five very crucial but practical ways that we’ll be able to come through this mess.
Get out of debt
In the very near future, cash will be king. Pay off your credit cards. Add extra payments to your mortgage or car loan. Pay it off if you can. The more cash you have on hand, the better off you’ll be. Make absolutely sure you’re paying more than the minimum and avoid late fees.
Avoid unnecessary expenses
Postpone the trip to Europe or Japan. Don’t buy that shiny new car or upgrade into a newer, more expensive home. Now is not the time to spend money. Now is the time to save it. Save all you can. There are plenty of things to do on a limited budget. You should be in Save mode, not Spend mode.
Stock up on essentials now
Food, water, medical supplies. It might not hurt to get a gun and some ammunition. I know that doesn’t ring well with some, but remember desperate times calls for desperate measures. When people get desperate they’ll do desperate things. Recall the images of looting and lawlessness in New Orleans during Katrina. I’m not saying it’s going to happen but it could degenerate that quickly.
Plan Your Spending
When you go into the supermarket, make sure you’re buying only what is on your list. Don’t have a list? Make a realistic list. Cut out coupons if necessary. That will save you a ton of money from impulse spending. Check your receipt against what you purchased. Every penny counts.
Avoid Future Borrowing
Again, you’re in save mode. There will be a time again to borrow. Now is not that time. You don’t need whatever you want to borrow.
I know it seems like a harsh set of principles after so many years of spending. We’re not accustomed to these kinds of disciplines. The impending disaster will soon become a reality and we’ll be better prepared for them.
