Charles Kirk linked to an interesting post on a site called Economic Survivalism that gave 12 "survival" tips for the coming great depression (the article's assessment, not mine).Coincidentally several of the tips have come up on this site although the context is a little different.
Below are the 12 without Economic Survivalism's commentary but instead a thought from me.
1) Avoid debt at all costs
Depression or not this is not a bad idea. This ties in with our ongoing theme of living below your means. Literally no debt is tough for most folks but no credit cards, less house than you could otherwise afford and holding on to a car longer than five years is within people's reach.
2) Get out of your mortgage
I don't really know what they mean by this one, it just warns that you could be underwater by lot if you don't but it doesn't say that you should leave the keys in the mail box either. Hopefully you've got enough financial cushion if you ever need it.
3) Buy cheap land in a rural area
Like in Chile or Uruguay? I would put this one in the I doubt its this bad category but if you are going to do this, do it before you walk away from your mortgage in item number 2. This one goes on to say that once you buy your rural parcel park an old RV on it or build a house yourself. I had a similar idea a few weeks ago here about cheap mobile homes and refurbishing the hell out 'em.
4) Go off the grid
This is another one from this week. It plays on fear and appeals to the greenie/survivalist in all of us. There are mixed opinions out there about the economics on this but it would be better to be off the grid if the infrastructure failed economics be damned.
5) Cultivate some skills that will always be in demand
Again this is a good idea depression or not. When I was in high school I should have had more respect for this and taken a class or two like this. As an adult I have come to learn more than I ever expected, clearly not any sort of expert, along these lines and I would say it is never too late to learn how to replace a water heater, do basic electrical or (sticking with my favorite example) operate a back hoe (don't have this one yet).
6) Offshore yourself
This one is about being cheap labor for a foreign company that would pay you in very cheap dollars. I think a better idea is to be self employed but that won't be a fit for everyone.
7) Invest in the ultimate counter cyclicals
They mean booze and tobacco stocks and I can't argue with that.
8) Invest in some euros
The bigger macro is own foreign currency. I've been on board with this one for quite a while now and still believe it is quite important going forward.
9) Have some liquid funds on hand
This one is more about SIPC than anything else but like several items listed so far this is a good idea regardless of whether there is a depression or not.
10) Learn to hunt
Ouch. I'll just say again I don't think it will get that bad.
11) Stockpile medications
Again, I don't see it getting that bad.
The title said 12 ways but I only saw 11 in the article.
Part of managing a portfolio is contemplating what to do in a bear market. In that vein part of being a financially responsible adult, IMO, is contemplating negative events like losing a job having a large unexpected expenditure.
The commentary from Economic Surivalism that this post refers to is an extreme line of thinking but is not that unique. I think the more realistic application is to think about what you would do if you lost a job you needed. How long would your savings last, what could you do for work right away and how much of your nut would that work cover? Losing a job seems more likely than your prescribed medicines not being available.
16 comments:
i am beginning to think housing may go lower than I had expected. I am obviously a bear from my previous statements. But the page you are referencing is just inciting fear to an unwarranted degree. I do not think you should dignify these positions by commenting on them.
I think this bear will be worse than people expect but their is no reason to expect things to go as bad as this article sites. Which is not to say their will not be foreclosures (or more likely many people simply walking away) and bankruptcies.
Trust me the sky will not fall, although it may not feel pleasant.
seg
There is no mention of automatic weapons and an arsenal supply of ammunition. Seems a bit odd or is that a given when you talk with survivor nutcakes? This blog normally is filled with great wisdom but this subject matter appears to be nonsense to me.
It looks like the 12th was partially cut off, but the gist appears to be about changing your dependency on expensive food. The fragment looks like this:
"...or take part in a community garden in your neighborhood. Try to position yourself so you can get as much of your diet as possible from food you've grown yourself, instead of being hooked on sushi."
Another thing I might add is to reduce your reliance on cheap gasoline. And if you believe what the peak oilers are predicting -- and there's news every day to support them (e.g. this yesterday) -- it might not be too long before $4 per gal seems relatively cheap...
Hunting is an extreme recommendation, and not useful for those of us who live in urban and suburban areas. Are we supposed to gnaw on mouse kebabs?
But we may have to reassess our food buying habits, as they are now predicting that supermarket prices will increase again next year as much as they have this. That makes life tough for a lot of people just getting by.
the ES post said that in the 1930s squirrels were almost hunted to extinction.
to be clear i am not in this camp at all but i do believe there is utility in knowing a little bit of the mind set of either extreme.
Five years from now will this survival guide thing seem ridiculous or prescient? You all seem pretty sure it'll be the former. But it's interesting how quickly the definition of "extreme" can change. Five years ago the peak oil idea was generally considered pretty wacko; today it's creeping into the mainstream. Paul Krugman (pretty mainstream himself) had an interesting post on it the other day.
i never said ridiculous, i disagree with the magnitude, i simply do not think it will be that bad.
This is definitely blowing things way out of proportion...the Great Depression had a number of factors that the coming recession doesn't have...social support systems weren't as sophisticated/well funded as they are now, the US didn't play such a vital role in the global economy (it's in other countries' best interests to make sure the US consumer is well fed and working), and speaking of globalization, that alone could prop up the economy when things get too bad...we sell goods overseas now, corporate America isn't JUST limited to corporate America.
Learning how to hunt sounds fun and all, but not necessary to weather this storm.
-Wayne
we have deer season less than four miles from my house if it ever comes to that.
how long could one deer feed two people?
Roger,
I have just found harry dent and starting to read his books. He belives there will be something like a 10 depression starting in 2012-13. Do you have any comments on him?
http://www.hsdent.com/
todd
While this article was extreme, it never hurts to have information from all sources to form one's opinion. I believe part of the problem in the financial arena today is the current administration not being cognizant of all factors affecting the economy, ie, poorly regulated mortgage brokers, excessively rising home prices, unregulated hedge funds, off-balance accounts, CDO's, etc, etc.
i have heard of him but have not read him.
i think the odds of actually meeting the thresholds of depression are quite low. the extent to which the economy and world have evolved, the way in which the global economy is integrated and how much more is known about markets and economics gives me confidence of depression as low probablity.
i do not say zero probability and as i've mentioned before i have explored the investment implications in case i am wrong but for now i stick with staying within the realm of normal.
If we write enough negative sentiment commentary, do we qualify as helping to establish the bottom?
;-)
R in NY
Hopefully, we won't have to return to a black & white world.
I do agree with having cash in the house. I don't agree with paying off one's house.
Stockpiling medications sounds very dangerous to me, I think they all have a shelf life and taking out of date medication could be harmful to your health. Maybe looking into alternative medicines would be a better alternative as it's sustainable.
Offshore yourself is plain bizarre, if the financial system fails I'd rather be in a culture I fully understand with family and friends nearby. I could grow food and feed cattle with help from the local library, my garden and the millions of acres of arable land available in the country. I'd never be the best farmer ever, but I can grow a decent vegetable patch.
Larry the more i think about the mortgage issue the more i think the math is trumped by the sentiment of the individual and to be clear from a math standpoint the mortgage should not be paid off but for some folks, me included, the math does not matter.
old medicine? what could go wrong?
to be clear the offshoring idea is live in the US work for a foreign company. although this is a bad example because this company would not survive in the post economic apocalyptic world (sarcasm all over that one) but a guy from Alabama working for the Toyota plant there.
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