Part II
Continued from yesterday…
In yesterday’s post, I started with some basic ideas for how to survive a depression. The signs aren’t looking good yet (despite what some tee vee shows want you to believe.) Think we’re headed for a depression? Having trouble keeping your head above financial water? To survive a depression, you’ll need as many resources as you can muster – money saved, skills learned, low expenses. We’re just starting here with some options for you to start putting even a little bit of cash away, and build a financial base on which to stand…Here are some ideas to deal with basic financial issues facing many people today.
Tough Decisions For Many Families
As a result of the financial turmoil, there are plenty of families which will be torn between putting aside money for retirement, and saving for college for their children’s college education. Many parents now paying for private school in grades K-12 are now rethinking that decision. As for college costs, they keep rising, and enrollment in local community colleges is skyrocketing. Yet do parents always have to pay for college? If high school age children are encouraged to do everything they can to apply for all available grants, treating it almost like a part time job, they may find that there is cash available. In addition, holding down a part time job or two in the summer can give teens a way to afford school. When parents give up financial security in their old age in favor of paying tuition today, that is probably a far bigger danger than the impact on their children of having to attend a community college instead of a major private university.
There are plenty of state colleges that are priced under $20,000 per year for state residents, including tuition, fees, books, and room and board. A part time job that pays $10-15 an hour can cover a large portion of that amount. Community colleges are far less, especially if the student lives at home for a year or two.
The biggest takeaway however is that students should treat any kind of college loan as an absolute last resort. The last thing a student needs, or a parent, is another pile of debt in an economy like this, which could be sluggish for a decade or more. Getting real about your finances is the only way to protect yourself in a depression – and that means that the American “but I want it NOW” attitude has got to change in favor of a prudent, smart, long-term wealth-protection strategy.
Saving as much as possible, getting a job, and spending time researching grant money, as well as attending an affordable school, is a good, Depression-defense strategy. Parents should just keep socking away as much as possible for retirement.
How About Vacations?
As of this writing, airlines are lowering costs as gas prices have come down and people are staying home in droves to save money. Vacations while of course wonderful, are a casualty of reductions in credit spending. How many vacations have you taken that were paid for in full with cash? Avoiding credit card debt can mean avoiding expensive vacations.
Yet there are plenty of options. Home swaps are one; there are agencies online that help you find a family interested in a trade. There are campgrounds with modern cabins, and hotel discount websites. Cheap travel websites about, including last minute travel deals, discount airfares, discount cruises and cheap hotels. Cutting the length of your stay is an option too. Visiting relatives or renting a vacation home together with friends is another way to keep costs down.
Why not explore locations closer to home too? Big cities like New York and San Francisco can be expensive, but history and sightseeing abound in out of the way locations like
Easton, Pennsylvania (a couple hours from New York City), or off the beaten track locations like St. Augustine, Florida, or Bethlehem, Pennsylvania, or medium-sized cities like Memphis, Austin, or Minneapolis-St. Paul. Get out into nature by exploring one of our greatest national treasures: the
National Park Service system.
If you’re taking a driving holiday, you might consider going a shorter distance. Anyone with an RV is still taking a hit on fuel costs, but consider staying longer at one location instead of more mileage.
Spend Less for Entertainment
Do you really have to cut back on entertainment jut because your budget is cut back? Not really. There are really hundreds of things you can do, for less. One website, GoCityKids, offers lists of things to do, free and paid, for dozens of locations around the country. Public libraries are now swamped with requests for movie rentals, music rentals, and the old-fashioned book. Many municipal and college libraries show films to the public. Schools, colleges and local orchestras offer free concerts. Some communities sell discount tickets to events like theater and concerts, along with movie and museum tickets.
Start a game night, movie night, potluck night with friends, or a neighborhood wine tasting. There are more ways to connect with your community than you probably knew – and it can enrich your experience of where you live.
Are We Addicted to Debt?
There’s a lot of finger-pointing out there about who caused the current economic crisis. It’s likely that we all had a part. Clearly, the warning flags have been up for some time, as Americans’ saving rate went negative (we borrow more than we earn in income) and we just kept spending money we didn’t have.
With life spans increasing, you’ll need more money to retire in any type of comfort level. If you start getting on track now, you can protect your retirement, rebuild what you might have lost, and avoid getting sucked in to the casino we call Wall Street. One important way is to break your debt addiction by getting rid of credit cards. Pay them off; cut them up. Will it hurt your FICO score? Who cares? You want to move away from a debt-oriented way of thinking, which FICO encourages. And if you bank cuts your credit line, that will hurt your FICO too, without your agreement! Having money in the bank and learning to live within your means is a better strategy than building up a credit-borrowing score to borrow more in the future. It’s time to break your addiction now!
Do you want to be 75 years old and having to work to pay off your credit card debt and rent? I didn’t think so.
When Will It Get Better?
Everything in our world is cyclical. It might take ten years to start to see improvements, or a return to personal wealth that we saw a mere one or two years ago. but in the mean time, you will be able to build a much stronger foundation than you had before, and learn more about being a good neighbor, and how to build real wealth and not just borrow money to have the image of wealth.
To survive a depression, you’ll need to seriously cut costs, and increase the money you do have, as well as skills that make you marketable or which you can barter or use to maintain your home, vehicle, lifestyle. But belt tightening doesn’t have to be painful, if you find creative ways to enjoy life instead of just buying more and bigger stuff. You can instead save money, build real wealth and pay down debt. That way, when “good times” return, you’ll already be there.
