Monday, February 11, 2008

How to Survive a Potential Recession

How to Survive a Potential Recession. First of all, if you have already been through a recession like the one about 7 years ago you already know most of this. Second of all what I'm sharing is pretty basic and won't apply to everyone because there are as many different kinds of incomes as there are people on earth pretty much.

However, the basic rules go something like this:

1. Don't use your credit cards unless it is a once a year emergency(like Christmas).The main reason for this is in a recession you can't always count on your job being
there and if your job isn't there you will not be able to pay off credit card debt and might have to declare bankruptcy. There are exceptions to this rule like gasoline credit cards that you pay off completely monthly or credit cards you completely pay off monthly.

2.(related to number 1)Only spend what you are making monthly within any one month. This does several things. First, it keeps you solvent and second it keeps you out of debt and third you might be able to save some money too.

3. Calculate how much per year you are wasting on credit card interest. Once you do this you might never want to use credit cards again. HOwever, before you cut up your credit cards don't do it. Because in an emergency you will need those cards. I had a friend who was able to live for a year while out of work because he had credit lines through credit cards of $50,000. It kept he and his family afloat while he started another business instead of going homeless or something like that. Within 5 years he had paid off the $50,000 and bought another house. However, I'm not recommending you do this because what he did was pretty risky.

There may be other ideas that you or friends have but I would say these are the basic three that apply to most people.

Next What to do if the Potential recession turned into another World Great Depression.

As my Grandfather would say, "Don't buy a G-- D--- thing!" During another Great depression a basic rule would be don't ever buy new clothes. Your only new clothes would be made by a member of your family or else be 2nd hand.

Part 2 would be if you own land and have access to water that is either free or inexpensive grow your own food or at least some of it any way you can to maintain the health of your family.

Part 3 would be safety. Crime rates start going up in a recession and might go through the roof in a full on Depression. Because at that point it becomes a lot more a life or death struggle for almost everyone.

Part 4 is if you have a subprime loan on your home try to find a way through Chapter 13 not to lose your home. Your family will become extremely vulnerable in ways you can't even imagine now if you go homeless or are forced into bankruptcy. It is better to consult with a lawyer right now as an empowered person as long as you have a job and can make 10cents on the dollar payments for your non-home or non-car debts. Many people through a Chapter 13 can drastically reduce not only their home payments but also their interest rates and some even can get 3% government sponsored loans.

In another blog article I mentioned that though it is strange to say, if you are stuck in a subprime loan and thinking of defaulting the most patriotic thing you can do for america and the planet as long as you have a job that will last is to keep your house and get Chapter 13 protection for you and your family.

It is my guess that if more and more people default their subprime loans in the US over the next 5 years there will be almost nothing anyone can do to stop a potential Worldwide Great Depression.The last one was 10 years. With Global Weather changes increasing yearly if we go into a depression the next one could be longer than the last.

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