When you think of preparedness, the old saw about beans, bullets and band-aids is the first thing that comes to mind. Most of us concentrate our efforts, and often our limited amount of prepping cash on amassing supplies for a collapse, a situation where food, medicine and civil order are in short supply. We prepare for hurricanes, blizzards, floods and tornadoes and all manner of other natural disasters.
But here’s the thing: What if none of these happen, but instead we are faced with the most likely of disasters, a collapse of the monetary systems more or less worldwide? If you look at the world financial news and the behavior of the markets, it seems to be more of a possibility than ever before. Really, what happens if there is a financial crunch as big as or even bigger than that of 2008? Are you prepared?
Statistics would say not. Canadians seem to have fewer savings and more debt than ever before. Should we get into a situation of even tighter credit, rising interest rates, hyperinflation, deflation, or any combination of those things, Joe average is likely to see life get a lot harder. So what to do?
First, get out of debt. Yes, I know that everyone tells you this, but other than the fact that you are paying often usurious interest that could be spent on better things, there is a pressing reason to eliminate as much debt as you can. That reason is that your cost of borrowing is not fixed. Read the fine print of most credit cards. That excellent rate you are enjoying can be jacked up for as simple a thing as a late payment. All of a sudden, you’re paying 29.9 % instead of 10.5 %, more than a little shock to your budget. If you think that credit card companies won’t do that to try to squeeze profit out in a crashed economy, I have a bridge in Brooklyn to sell you….
Mortgages are another thing entirely. It may be worthwhile to lock in for a longer term right now if you feel the interest rates are unstable. Right now, Canada seems to be unlikely to see a sharp increase in mortgage rates, but that can change rapidly.
Another reason is to ensure that your goods and property cannot be seized or lien placed against them. Your nifty bug out vehicle does you no good if it’s locked in a compound awaiting sale to cover your debts. Right now, it’s a fairly time consuming process to do that to a person, but look out for streamlined procedures to be pushed through in crisis times by those that have money owed them.
Second, save some money. Start by getting cash in the bank, and then perhaps invest in some physical gold and silver. I believe that at some point, there is going to come a time when someone presenting a credit or even a debit card for payment will be met with a refusal. As the financial situation worsens, there will be a surge of businesses and people that will deal only with cash or silver and gold.
It’s up to you where you stash your cash. If you choose to keep your reserves in a bank, so be it, but in essence, it is electronic money that can disappear in a crash. I would recommend that you keep 50% of your currency in physical form, and have at least some of it as silver and gold.
Third, watch what you invest in. Right now, the markets swing without regard to the realities, but are actually driven by both fear and speculation. If you truly have money to spare, and won’t be significantly harmed financially by its total loss, jump in. on the other hand, if you can’t afford to lose, don’t gamble.
So it’s simple, right? Reduce debt, increase savings, and invest wisely. Easier said than done, I know. But I believe that in the years to come, carrying low or no debt is the most important thing of all the things you can do to prepare financially. If you are beholden to no one, then your prospects, possibilities and potential for comfortable survival in a shit hitting the financial world situation is far greater.
It’s just common sense
