In these uncertain times, a financial collapse could be personal, nation-wide, or global. The key to surviving any scenario is, of course, preparation and planning ahead. Here are 8 ways you can plan for your family to survive:
1. If you have debts, don’t pay them off – pay only the minimums. Now I know that contradicts probably everything you’ve ever been told. Under “normal” circumstances, paying down your debt is a great strategy. But nothing is normal right now. So let me ask you this: Would you rather have no debt and no cash to pay rent and buy food, or would you rather have debt and some cash to survive? Cash, right? Me too. That’s why you should not get over zealous and try to pay down your debt right now.
2. Do everything you can to keep your job. As long as you have income coming in, you’ll be okay. In a growth economy, it’s much easier to find a new job, but this isn’t that kind of economy.
3. If you have an interest-only loan but have also been making principal payments, stop. Just pay the interest for now. When things improve and there is more stability, you can start paying down the principal again.
4. If you’re paying a student loan, find out if you can defer payments if you are a student. Then take a class that increases your skills or employ-ability.
5. Call credit card companies and try to renegotiate your payments or interest.
6. Stock up on extra food each time you go to the grocery store, or invest in freeze dried food for long-term food storage. There could be a time when food is scarce or the shelves are empty in the stores. Don’t wait.
7. Go through your expenses with a fine-tooth comb and postpone, eliminate or reduce any that you can. Then set up a budget and stick to it like your life depends on it – because it may.
8. Get extra cash. If you don’t have extra cash to stash, take out a loan, preferably a home equity loan so you can deduct the interest on your taxes. But if that isn’t possible, get an advance on your credit cards. You should have 3-6 months living expenses tucked away. The key here is DO NOT SPEND IT. It is for emergencies only.
You might want to put some or all of that cash in a safe in your home rather than a bank. You know – just in case there’s no electricity and the ATMs don’t work, or the bank fails, or the FDIC runs out of money to pay everyone should there be a run on the bank.
Think about this: most of our money these days is just a lot of numbers being passed from one computer to another. What if everyone wanted hard cash at the same time? There is not enough physical cash to cover everyone’s “numbers”. The bottom line: hoard CASH by making minimum payments on all debts. CASH IS KING.