Survive In A Depression

For the first time since the 1930s, people everywhere around the world are experiencing a severe economic contraction, a recession which some belief will go into a depression. Everyone’s quality of life is being affected, and will probably continue to be affected, for some time. The big question is, how to survive a depression: what do you need to do to protect your savings, your retirement, your job, and make sure you have some solid footing somewhere.

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The first step is to get a view of what’s happening out there. We’re busy, we’re scared – but you have to stay informed. If you haven’t already, start reading, watch informative tee vee (if you can find it: we recommend Bloomberg or in a pinch, CNN, but skip CNBC altogether). Read the web, follow the money.

Of all the experts being trotted out to talk on television about when to start investing again, I haven’t seen any who have said, Now’s the time. In fact, they say the opposite: Things are too shaky, too sketchy, the profits just aren’t there. So let’s forget the stock market for now. Hopefully, your money, or what’s left of it, is in a money market, a cash vehicle, under your mattress, or a high interest online savings account where you can at least earn a couple percent while yo figure out what else to do.

Will The Economy Will Improve?

Well, of course, the economy is always in transition – but get ready for an economy where things could plateau for a very long time. Prices could fall in a deflationary environment, but for the short run, it won’t matter, if we don’t have available cash to buy with. So, one step you can take is to hope for the best but prepare for the worst.

Start finding ways to cut back, and live on less, and if you are working, then stash the difference in a high-interest savings account. Most of these are online savings accounts, with HSBC or ING Direct. You’re not alone, as many families are cutting back, or doing without, just to make ends meet.

Nearly every family has two working parents. Now adults are taking on more than one job apiece. Find a way to make extra money online, or start a side business, to bring in some extra cash, even if it’s only a little, like selling things on eBay , or Craigslist. Given that companies lay off employees as their profits go south, it’s a good idea to get ready with emergency funds in case you lose your job, and if you’ve already lost your job, more ideas appear below.

How To Save on Gas As Prices Climb

While not so high right now, many economists say gas prices will keep rising partly due to less availability, production cuts, and weather storms causing gas to climb. Or, speculators could easily drive the price up again as they did in 2008 which led to $4 a gallon gas.

Even though as of this post, gas prices aren’t that bad, the likelihood is that forces will work to keep prices from falling very far either. Oil producing countries won’t lose much money before cutting production. To save money on gas is pretty easy: Drive less! Or, drive a more efficient car. Combine trips, walk, bike, or just don’t drive around just for fun. Carpool to work, skip the mall, and you’ll save money almost automatically.

The Looming Food Crisis

Food prices are relatively low right now, but a big problem is that weather patterns are more unstable. In addition, ethanol production has caused corn prices to rise. In 2008, there were food riots when this caused high prices around the world, including Mexico and Pakistan.

Oil prices, weather, and futures speculation can all cause prices to rise suddenly. Two good ways to combat food price hikes, as well as save money are (1) grow your own, and (2) buy less processed food and (3) eat less meat. Guess what? Coupons are not the way to go! Coupons offer a very bad return on investment. For hours of time, you may save $3, $4 or maybe even $10, but if you spend 3 hours “couponing“, that means you got paid $3.30 an hour! Not worth it. Not to mention, most coupons are for salty, fatty, processed foods with less nutritional value than what you can make yourself.

So, start a garden, even if it’s a small container garden. Look for local farmer’s markets. And at your grocery store, buy “around the edges” where the produce, dairy, and fresh food is. Reduce your purchases of processed food. And make one or two meals a week meatless, like pizza, rice dishes, beans or tofu. It’s really not that time consuming to whip up a wonderful quick dinner, that’s healthy and affordable.

Particular to groceries, try comparing price per pound for items across the board. For example, eggs are about $1.50 per pound, and tofu is about $2 a pound. The nutritional value is greater than frozen meals that cost $3-4 for a 9 oz. serving. Compare, shop smart and save.

Where To Find Fun Money

So if you’re broke, or just trying to save, does that mean you can’t have fun? No! As far as I’m concerned, eating “beans and rice, rice and beans” like Dave Ramsey says, is bull-bleep. There are plenty of easy ways to save money. If you’re budgeting, just include one or two fun things in your budget. For example, we spent a weekend away by getting amazing airfares and hotel prices using sites like Priceline, and “raised” extra money by selling stuff on eBay to cover our purchase. We shopped hard, budgeted and saved up, and had a great time! You can do the same. Go out to dinner using coupons from, where you can buy $25 gift certificates for $10. Have a fancy potluck supper with friends. There are many ways to have a good time on a budget.

Discretionary income was always a joke anyway – since we all just used credit cards to buy our fun stuff! Real “discretionary” income is cash you really have that’s extra that you set aside not for paying bills, but to enjoy life. So what Dave Ramsey, if it takes me an extra six months to pay off my credit card!

Still, Try To Get Rid Of Credit Card Debt

Americans are said to have between $4,000 and $8,000 average credit card balances. We’ve had a spending addiction for decades, and it’s coming home to roost. Plus, now that the credit card banks are hurting, they’re jacking up fees and interest rates, cutting credit lines – who needs it!? Personally, I’ve lived without credit cards for more than a year. It sometimes is hard to want to buy something, and not have the cash – but it sure feels good at the end of the month to NOT have that bill! Anything that’s not on my monthly budget, I don’t really need anyway.

Paying off debt should come after putting aside emergency money. You don’t want to be paying more than the minimum on your credit cards if you then lose your job an have no cash saved up! So, better to put aside 3-6 months of income into savings, and then pay more than the minimum on your cards.

Of course, it practically goes without saying, don’t apply for more credit cards. Store cards, gas cards, al are really tempting when you have no ready cash. But it’s part of the learning process we’re going through – how to live within our means. When you live within your means, that’s great, but then you can start spending less on your expenses than you earn – and that money goes toward your wealth! Better than it goes to your own family’s wealth than the wealth of Bank of America’s credit card arm.

Remember that credit card offers like rebates, air miles or cash back all increase prices for everyone, and 80% of those “benefits” are never used. No matter what, you should use plastic only when necessary and not support a lifestyle. don’t fall for the trap that the more you spend the more you’ll get back.

Help From Government Stimulus?

We are, most of us anyway, now the recipients of reduced taxes thanks to the stimulus plan. This will account for a few bucks each paycheck, but hey, every little bit helps. Just don’t’ use this s a reason not to stick to your budget – you might consider putting it instead into your 401(K) or an IRA to make it work for your future.

Remember, saving even $10 a week is $520 a year, and that’s real money!


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