I was talking with a friend recently. We were talking about preps and money and he said "I just don't know what to do". As I lay in bed waiting to fall asleep I thought about that. It has been in my head for a couple days now.
What to do? Well first I have to say that I do not have a crystal ball or anything. If I did we would have won several hundred million dollars in Powerball. Our time would be split between a little place near our families, our retreat and our awesome sail boat. However since I still have a job and no awesome sail boat this obviously isn't the case. [I guess it is probably smart to have an explicit disclaimer. I am just a guy who writes a blog, not a financial adviser or an accountant or whatever. You're an adult and you make your own decisions.]
What should you do to prepare for the future. Here are some thoughts in no particular order.
1. Make yourself as employable as possible. In more situations than not our current economy will be functioning in some form or another. You are going to work to get money to live. If/ when unemployment goes up even more less qualified people will find "crap jobs" as their only options.
2. Stay out of debt as much as possible. In particular avoid adjustable interest debt.
3. Diversify. I don't know what is going to happen but I think it is going to be a wild ride. Compound interest working in your favor is good. Having some gold and silver is good. Real estate if done in the right way is good. Having a few things you could barter if need be is good.
4. Don't get too attached to anything. If the area you are in goes down the tubes in terms of crime or the job market then consider moving somewhere else. Saying "but I live here" isn't much conciliation when it is hard to get a job at McDonalds because unemployment is 25%. I have a distinct feeling that economics and or crime will make some regions of the US undesirable places to live. [I don't think the odds are long that economics are going to continue to drive people out of the rust belt. However if I had to wager one trend I would say that people will start moving away from the Mexican border/ Southwest in the coming years.]
5. Going along with the last one. Do not be afraid to act decisively. If it is time to convert one currency to another or get the heck out of dodge a couple days (heck even a few hours) can be the difference between preserving your wealth or safety and being left broke or stuck in a bad place.
6. Save, Save, Save. I think the next decade is going to be a wild roll a coaster of a ride. Periods of income disruption and unemployment are going to become more common. Unemployment will go up (probably then back down then up again, etc).
7. I say this one last because it is pretty much survivalist bread and butter. Have the means to feed, protect and generally carry on as normal of a life as possible for a reasonable period of time (if not longer).
What are you going to do?
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9 comments:
I agree with most of what you said above.
You may be right about that move away from the southern border sentiment, but the way U.S. Government is going, it might swing the other way if a citizen needs to escape at a moment's notice. Airports can be grounded rather quickly (false flag incident) as can interstates. A short 'Run For the Border' would be easier, close in.
I live hard up against it, the border about 10 miles away from where I type this and I could see this area become a 'no man's land' really easily. The roads leading here are pretty sparse and the border stations have infra red cameras going both back and forth - nobody goes unnoticed if you are traveling by ground vehicle.
Right now, having a home of modest needs seems like a good idea. If you aren't living in it, certainly will have more interest in rent rather than a McMansion just losing ground over the years. Also stands out for Bad Guys - good place for a home invasion companeros, que no?
Going along with the first point -- it looks like skills in the middle of the spectrum are dropping out of the economy. A lot of the jobs lost in this recession are probably going to be permanently lost. No longer can you get along with a high school education, or even trade school or an associate's degree. The jobs seem to be falling in two bands: hourly "crap jobs," and skilled professional/trade positions.
So, in my opinion, now is the time to get school done. If you're in the military, use your tuition assistance to get a bachelor's done and then GI bill for a master's, professional degree, or top-off trade school. If you're not in the military, get yourself to school however possible -- consider a four year enlistment/ROTC if you can't afford school. Or, just suck up the loans and go to a reasonably priced state school.
Don't major in something fluffy. There are not a lot of jobs for "communications" or "minority-of-your-choice studies" majors. If you are a go-getter and independently motivated, a liberal arts major can work if you focus on the classics and really hone your critical thinking, analytical, and leadership/team building skills. Otherwise, I'd lean towards the sciences or engineering. As a note, the education you get in school is not just good for the economy; those skills are certainly useful in any sort of disruption as well. That civil engineering degree could be useful in a whole lot of ways!
This makes sense. It is just getting too expensive to hire a bunch of average workers of middling training and productive. Between FICA taxes, minimum wages, and now the new health care law, as an employer I'd prefer to have 20 highly trained and highly productive employees making $90K/year than to have 60 average employees making $30K/year.
By the way, I totally agree on points 4 & 5... Perhaps it is just that I was a military brat, but I don't understand people that are incredibly committed to one place. I read about gun owners/small business entrepreneurs who refuse to leave California and just don't get it. I've met people in the military who could have established TX residency and paid no state taxes for the rest of their careers but enjoy seeing 4% of their income siphoned off by the place they grew up. Sometimes it is necessary to vote with your feet.
One caution about #5 in terms of investments; be aware of the tax implications of various moves. For example, dumping a bunch of dollar-denominated investments may trigger a large capital gain. Cashing out your 401K will trigger a penalty tax. 2010 is a good year for many people to shuffle things around as the capital gains for folks in the 10% & 15% bracket will pay nothing in capital gains taxes. Unless congress acts the capital gains tax will snap back with a vengeance in 2011 so I would watch developments carefully and be prepared to act this fall/winter if necessary.
11:10, We aren't there yet but it may not be that far away.
Chris, You are right about the jobs. I talked about that in a past post. The jobs aren't generally going away. It is just that wages didn't keep up with inflation for so long that what was a solidly livable wage is now barely getting by. Benefits also dropped off.
I love where I am from and intend to move back to that region but if it really started to suck I would go elsewhere.
As for #5 I was mainly talking about pulling the trigger before significant inflation turns into hyperinflation. In the 1998 Russian collapse waiting a single week would have meant the difference between preserving about 60% of your nest egg and approximately 20%. At that point you are just looking to keep as much as you can, hang the tax implications.
Indeed. Cash (or PM) is king. Every debt you have reduces your flexibility to do as you want, or need to do.
Preach it, bruddah!
Sometimes, the deal breaker in moving to a new location is already owning a great piece of land you are attached to. Especially when the land was inherited. You can sell it, but you lose the family history. Really hard when you are attached to it.
On careers, I'd recommend something you can do anywhere. I spent considerable time getting an advanced degree and now have a good job making good pay. But I can work in only a few places in the country, so relocating from where I am (DC) to where I want to be (out 'west') takes time.
If I'd had any aptitude for it, I'd have become a plumber - one of those occupations people have to have. Though less appealing, butchers are becoming scarce in some parts, and funeral directors will always have business. Think along those lines, and you'll have a job you can do in any town.
Savings is tricky. If hyperinflation hits, your savings could be worthless, except for putting a dent in the mortgage or other preexisting debt. PM are good, but if TSHTF, it too will be worthless until trade resumes. I think there is a higher probability of this than you allow for.
Hope for the best, prepare for the worst, as usual. That's why I have a 401k and a bunch of guns/ammo/food/etc.!
Chief, Will do.
4:02, I can see that. Guess everything is a trade off. If one could swing it getting a little place (or maybe an apartment) in a place you could work and keeping the land would be a good way to go about it.
Suburban Survivalist, I agree about a job you can do anywhere. That is at least a nice idea.
As for savings and hyperinflation or a move to a barter economy. My first thought is that point number 2 in this post is DIVERSIFY. If you have money in the USD in addition to precious metals and a mutual fund that focuses on non US businesses plus preparedness/ barter stuff and maybe real estate (if you can afford it) the risk of any one thing is managed.
Do keep in mind that if you drive into Mogadishu today and have a briefcase full of hundred dollar bills you can buy stuff.
I have met very few people within the military who are able to keep very strong local connections with any place. It is an unfortunate nature of the job.
Most of the commenters do not seem to have strong local connections to the area they live in. That unfortunately is true of many people and can be very much a necessity with certain types of professions and careers.
But living within an area where you have strong local connections can be extremely important. When I was a youngster our house burned down. We had insurance, so we were not destitute. But none-the-less, people we knew and neighbors would come and help us with no expectation of recompense.
When things really get rough, knowing people you can trust, and having people who will help watch after you are a big force multiplier.
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