Today, more Americans than ever are absolutely convinced that we are headed for an economic collapse. After all, it doesn't take an advanced degree in economics to understand that American consumers, American businesses, local governments, state governments and the U.S. federal government are all drowning in debt. It would be hard enough to deal with all of this debt during good economic times, but these are not good economic times. In fact, right now the U.S. economy is being pounded by an unprecedented number of economic problems. Tens of millions of Americans are unemployed or underemployed, 40 million Americans are on food stamps, the U.S. real estate crash continues to get worse, and the ongoing oil spill in the Gulf of Mexico threatens to drag that entire region, and perhaps all of the United States, into a devastating economic depression. So these days it is fairly easy to convince Americans that really hard economic times are coming. But now an increasingly large number of people have a new question. They want to know what to do about all of this. In fact, probably the biggest group of questions I receive from readers is regarding what to do in order to prepare for the economic collapse that is coming. People are tired of just talking about all of these problems and they want an action plan.
So what is the answer?
What should people do about this coming economic collapse?
Well, when I attended law school I was taught that there is a two word answer to almost any question that someone can ask about the law....
And while there are some fundamental principles which we should all follow in getting prepared for the coming economic crisis (which I will share below), the truth is that each and every person has very different circumstances that they are facing, so when someone asks what they should do I give them that same answer....
If you have a family you are going to prepare much differently than if you are single.
If you live along the coast you are going to prepare much differently than if you live in the mountains or in the city.
If you are wealthy you are going to prepare much differently from someone who only possesses limited resources.
If you are dependent on a job you are going to prepare much differently from someone who is self-employed.
If you live on a farm you are going to prepare much differently from someone who lives in an apartment building and has never even grown a garden.
The truth is that there are a ton of variables and there just is not a "one size fits all" answer.
However, there are some fundamental principles that we should all be following as we prepare for the coming economic collapse....
Get Out Of Debt
It is always, always, always a good idea to get out of debt, but this is particularly true during a time of economic crisis. During an economic collapse, it will be very difficult to get work, money will be tight, and the last thing you will want to be doing is to be making monthly payments on some debt that you accumulated five years ago. The reality is that when we borrow money we become a servant, and debt is a very cruel master.
You especially want to get rid of debt that is at high interest rates (such as credit card debt). There are very few things that are as good at bleeding your finances as credit card debt is. For example, according to the credit card repayment calculator, if you have a $6000 balance on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.
During those 54 years you will pay $26,168 in interest rate charges on that credit card balance in addition to the $6000 in principal that you are required to pay back. That is before any fees or penalties are even calculated.
Can you see how financially debilitating that can be?
The truth is that if you haven't already started, now is the time to develop a plan for how to get out of debt. Paying off debt can be very painful, but it will put you in a much, much better position to weather the financial storms that are ahead.
Reduce Your Expenses
Along the same lines, it is a very good idea to start reducing your expenses right now. The truth is that you cannot be sure that you will always have the same job or the same level of income. Times are going to be very tight in the future. Now is the time to start the belt tightening.
Yes, the truth is that the cost of everything seems to be going up these days, and most American families are already finding it increasingly difficult to get by each month.
But if your household is spending $5000 a month right now, are there ways that you could get that down to $4000 or maybe even $3000?
If we all start learning to live with less right now, it will be much easier to do when times really get hard.
Increase Your Income
Yes, this is much easier said than done. Especially considering the fact that it seems like there are hardly any jobs out there right now.
But the truth is that we are all going to have to work a lot harder and become a lot less dependent on employers.
It is going to become increasingly difficult to get good jobs in the months and years ahead. The big global corporations are figuring out that they really don't need us after all. In many ways, it is much easier for them to hire a workforce from the other side of the world.
So where does that leave us?
Well, fortunately there are still a lot of ways to make money in America. How long that will last is uncertain, but for now we should work while the working is good. We are all going to have to start becoming a lot more entrepreneurial.
Nobody is going to hand you anything in this life. If you just settle for your job ("just over broke") you aren't going to get too far in today's world.
Many people start developing an extra income during their spare time in the evenings after work. Yes, that would mean that you would have less time to sit on the couch and watch people talk about who LeBron James is going to play basketball for, but did you think that we were going to be able to get through this without making sacrifices?
Now is the time to rise up off the sofa and figure out how to make some more money. There is still a little more time to get prepared. If you keep putting off what you know needs to be done, eventually it will be too late.
In addition, learning to do things like growing a garden is another way of "increasing" your income. All of the fruit and vegetables that you grow will mean that you won't have to spend as much at the grocery store.
Stock Up On Essentials
There are tons of supplies still in the stores, and prices are still relatively low right now (especially compared to what they will be in the future). So it is time to stock up on essentials while the getting is good.
In a previous article entitled "20 Things You Will Need To Survive When The Economy Collapses And The Next Great Depression Begins", we listed 20 of the things that you will need in the event of a major disaster, an emergency or an economic collapse. These are the things that you are going to want to make sure that you have ready right now, because after the crisis begins it may be too late to prepare....
#1) Storable Food
#2) Clean Water
#4) Warm Clothing
#5) An Axe
#6) Lighters Or Matches
#7) Hiking Boots Or Comfortable Shoes
#8) A Flashlight And/Or Lantern
#9) A Radio
#10) Communication Equipment
#11) A Swiss Army Knife
#12) Personal Hygiene Items
#13) A First Aid Kit And Other Medical Supplies
#14) Extra Gasoline (But Be Very Careful How You Store It)
#15) A Sewing Kit
#16) Self-Defense Equipment
#17) A Compass
#18) A Hiking Backpack
#19) A Community
#20) A Backup Plan
In the comments to that article, our readers suggested the following additional items....
A K-Bar Fighting Knife
A Camp Stove
An LED Headlamp
Maps Of Your Area
Rifle For Hunting
Gold And Silver Coins For Bartering
Of course there are probably many more items you could put on the list.
The point is to get educated, get informed and start getting prepared.
When things get really hard, that brand new pool table isn't going to do you much good, but having a good supply of food and clean water will make all the difference.
Not that things are going to totally fall apart overnight. It is going to be a process.
But you don't start preparing when the storm is already on top of you.
Most of us know what is coming.
Now we need to start taking action.
This is how Americans got through the Great Depression of the 1930s - they tightened their belts, they were resourceful, and they did whatever they needed to do to provide for their families.
Now it is our turn. Sure some people will laugh as many of us adjust our lifestyles in preparation for hard economic times, but it is those same people who will come knocking on your door when the rain does start pouring.