I am certainly no economist, and my math skills are pretty rusty as well, but for all intents and purposes it looks like we are in an economic depression and it doesn't look like it will get better any time soon. Even though the powers that be don't like the term "depression", finding that it tends to scare the populace, I looked up the definition here and it certainly seems like that is exactly the economic state we are currently in.
So now that we've got that determined, let's determine how to survive such an event...
- You need to be out of debt. In times of great economic uncertainly, the last thing you want is to be hounded by debt collectors. If you have any sort of debt, get on the Dave Ramsey program and get it taken care of. Now.
- You need a home that is all yours. When you rent, when you live in welfare housing, when you are underwater on your mortgage, when you own a huge house that you can barely squeak by on the mortgage payment each month, your living situation is at the whim of someone else. Not a good place to be during financially turbulent times. You may want to downsize to something you can pay cash for even if it is a 50'x50' piece of land and a fifth wheel that has seen better days--if it is all yours, then you are in control of your destiny.
- You need money. The good news is that you probably don't need as much money as you think you do. If you have a huge lifestyle and thousands of dollars in bills to pay each month, you will be happy to find that you can take radical action to cut your lifestyle to the bare minimum and easily survive on much less than you ever thought possible. Note that you will have to reset your ego in this process, sooner rather than later is better.
- You need a job. You don't need a 60-hour a week job with your own parking space and a 401k but you do need some source of income. Preferably you will have lots of "micro jobs" which all bring in multiple sources of income but take only small bits of your time and attention. Not only does this expose you to many different people (good leads for future work) and many different types of work (good information that you can put towards future jobs) but in the event that you lose one job, you don't lose your entire source of income.
- You need lots less crap than you currently have. I know this because I basically liquidated everything I had accumulated over past decades last month and I can honestly say I don't miss any of it. Everything you own impacts your economic situation--you need to store it, maintain it, update it, protect it--now multiply this effort and cost times the amount of stuff you have. Scary huh?
- You need to do for yourself as much as possible. With less money coming in, but on the flip side, less time being spent away from home, you have the opportunity to both save a lot of money by doing stuff you once hired out, and learn a lot of useful skills because you have the time to study and practice. Make the most of this. Among the things you can do: cook at home, can some vegetables, learn how to use your HAM radio, take the kids camping, paint a room...and on and on and on.
- You need to be flexible. If tomatoes are $3.50 a pound, you need to be able to go without tomatoes until they come down in price or until your garden starts producing this summer. That's flexibility. If you want to pad your emergency fund a bit, you might want to consider taking in a border for the next six months or so and use what they pay for rent to bulk up your savings. Again, not a common thing to do, but that's being flexible.
- You need to be frugal. My wild spending days of the late '80s and early '90s were fun. Lots of fun. I assume that is how a previous generation looked back on the Roaring '20s. But, those days are past and everyone has had to reset their expectations to the common sense range. Doing so leads you to being frugal. Granted I will splurge on things that are important to me but now I refrain from splurging on everything. Shopping has been cut back to the bare minimum and frugal options are looked at for nearly every situation I find myself in.
- You need to be as healthy as possible. I know I say this about every ten posts but it is a fact. A medical crisis will sink you faster--both personally and financially--than just about anything else. Averting a medical crisis, in many respects, is often as easy as making a good decisions about what you put in your mouth and how resolute you are about exercising each day.
- You need to have the right attitude. I know some of my wild-spending friends from a couple of decades ago never really recovered from the fact that they can no longer spend like they have a money tree in their backyards. They find the current state of affairs depressing and live with the hope that the good times will roll once again. I tend to think that the good times are right now. I enjoy a challenge, tend to enjoy a new adventure, and tend to enjoy being clever and creative in the face of difficulty so basically any time is a good time for me.
The bottom line: surviving just about any difficult situation comes down to being able to quickly see what is going on, quickly make the adjustments needed to put yourself at an optimum place for response to said situation, and quickly adjusting your attitude to embrace the changes as something new (a "learning experience" as most people call it) and something that will benefit you in the future.