We live in an interconnected world and a global economy. A financial crisis that happens on the other side of the planet or the other side of the city can affect our financial survival. And we are well aware of countries and companies that are in trouble financially right now.
Let's look at some of the things that may affect us financially:
Inflation? Or Deflation?
Government debt
Fluctuating oil prices
Inflation or deflation
Employment and unemployment
Incomes not rising along with inflation.
Stock and bond market volatility
These are just a few of the indications of a financial crisis.
8 ways you can prepare and plan
If you have debts, don't pay them off — just pay the minimums.Now I know that contradicts probably everything you've ever been told. But here's a question for you: 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. And, if hyper-inflation comes our way, which looks to be a sure possibility, debts will be paid with useless currency while saving your money to buy the things your family really needs - like food. Under “normal” circ*mstances, paying down your debt is the best strategy. But your financial survival plan is for times that are not normal.
If you're paying a student loan, check the rules of your loan.Many government sponsored loans do not require you to pay payments if you are a student. Take a class (one that increases your skills or employability) for $50 and find out how to stop paying on the loan - for a while. (The number of children you have will also affect your payments - more kids, lower payments.)
Renegotiate your credit card payments or interest.Call the credit card companies and ask if they will give you a better interest rate. Or take advantage of a low interest or no interest balance transfer (usually available to those with good credit).
Stop contributing to your children's college savings plans.(You can start this up again when your financial situation improves.)
Set up a budget.Go through your expenses with a fine-tooth comb and postpone, eliminate, or reduce any that you can.
Do everything you can to keep your job.As long as you have income coming in, you should be okay. In a growth economy, it's much easier to find a new job, but in a crisis, jobs may be scarce.
Find ways to have multiplestreams of income.Can you make extra money with some skill or hobby you have developed?
Buy gold or silver.Use any extra money to buy some gold and/or silver — not as an investment but to use for money if necessary. If precious metals rise as some predict, it could be worth enough to pay off all debts, even possibly your home.
The bottom line: hoard CASH by making minimum payments on all debts.
You might also want to put a bunch 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.
Do not expect help from the government.
If you are a small business person and your business is in trouble, do you think for one minute that the government is going to bail YOU out? Can you raise your prices 100%, 500% so that you can make a profit and keep your business going in these tough economic conditions? Only if you want to kill it completely!
Self-reliant people do not need the government to provide all the services that it tries to give us. Governments that provide too much take away our power and, unfortunately, too many people are allowing it. They are willingly giving the government their power.
Being prepared isn't just putting some buckets of wheat, rice and beans into your storage. It also means being prepared to survive a financial crisis.
Helpful ideas abound, so plan spend time researching ways to become more self reliant, and therefore, able to survive a financial crisis in your life.
Increase Your Knowledge:
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Start with a financial review. The first step in managing your financial health during a crisis is knowing where you stand and what may need your attention. ...
When the economy is in a recession, financial risks increase, including the risk of default, business failure, job losses, and bankruptcy. Avoid becoming a co-signer on a loan, taking out an adjustable-rate mortgage (ARM), or taking on new debt.
Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution.
Build up your emergency fund, pay off your high-interest debt, do what you can to live within your means, diversify your investments, invest for the long term, be honest with yourself about your risk tolerance, and keep an eye on your credit score.
Take time to think about what matters most to you. Your financial advisor can help you make a plan to bring these goals to life. Getting financially unstuck usually starts with understanding why you're stuck in the first place. You can then lean on your financial team to find your way through it.
You may want to speak with a financial advisor or credit counselor, for example, and get a clear idea of where you are right now and where you're going. Your plan may span several years, but it's important to have an idea of how you're going to handle this crisis.
Set Goals for Savings and Debt: Determine how much you want to save each month or how much debt you want to pay off. Plan for Variable Expenses: This includes groceries, entertainment, and personal spending. This is where you can adjust if you're trying to save more or pay off debt faster.
Introduction: My name is Merrill Bechtelar CPA, I am a clean, agreeable, glorious, magnificent, witty, enchanting, comfortable person who loves writing and wants to share my knowledge and understanding with you.
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Inflation? Or Deflation?