Surviving the Times in Which We Live

Over the next 6 to 18 months, we will likely see an increase in inflation, an increase in interest rates, and a devaluation of the American dollar. Americans pay approximately $2 trillion a year in taxes. However, the budget deficit is about $3.5 trilllion. Therefore, a huge tax increase is likely― not just for the rich but for everybody.

There will likely be another crash on Wall Street, causing people to lose millions of dollars invested in their pensions. People are also likely to lose money that they have invested in life insurance. Therefore, people with universal life and whole life insurance should buy term insurance policies.

Now is a better time to rent rather than buy real estate. If you already own real estate, it would be better to refinance for a fixed rate of interest, if you haven’t already done so. Since it is not a seller’s market, you should hold onto your holdings if you can; inflation can benefit people with secured debt at fixed rates of interest, provided inflation isn’t too high.

If you can’t pay your mortgage and are in danger of foreclosure, file for Chapter 7 or Chapter 8 personal bankruptcy. You will at least receive protection from your non-secured debt holders like credit card companies. Since bankruptcy doesn’t absolve you of secured debt like car loans, you should try to pay off your car loan as soon as possible.

Oil prices will continue to skyrocket. However, petroleum is a risky commodity to invest in because high prices at the gas pump reflect the fear that supply will not keep up with demand. Robert Widemer advises people to invest in precious metals like gold and mining stocks. However, I am sceptical. While mining stocks may look like a good investment now, gold looks another bubble, because it is rising faster than the rate of inflation while generating little economic growth. Several times in history, somebody has illegally tried to corner the markets in gold and silver, causing investors to lose millions. Therefore, look before you leap: the stock market and commodities markets like gold should never be seen as a get rich quick scheme. You should never invest more than you think you can afford to lose.

Over the past several months, unemployment has held steady at around 10%, according to the Labour Department. While advances in technology have driven economic growth since the start of the Industrial Revolution more than 250 years ago, changes in technology have also resulted in the disappearance of whole trades and occupations. For instance, AT&T has eliminated almost all of its human telephone operators. US Steel has cut its work force by 90% in the past 30 years while doubling productivity. Therefore, unemployment will continue to be high for the immediate future.

Good professions for people in college to go into are fields like the health care professions and wholesale food distribution. However, these fields are only secure enough to guarantee employment over the next few decades; they aren’t very lucrative. This indicates a downward mobility trend. College graduates will be very fortunate if they make as much as their parents or grandparents did. Expect to see people with advanced degrees facing extended periods of unemployment.

There’s good reason to believe the gloomy economic forecasts for the months ahead. However, it could always be worse, and it may get worse. If you are fortunate enough to still have a job, work hard, save your money, and give 10% of your earnings to your church or to a charity. The younger you are, the older you will more likely be when you retire. You should count on working past the age of 70 if you have just entered the job market for the first time.

At some point, there will be another economic boom. There will be young couples who will need new appliances like washing machines, dryers, refrigerators, gas or electric stoves, and microwave ovens. People will need home improvements, like vinyl siding and new shingles. People will finally conclude that they can no longer put off buying a new car or SUV. Seventy percent of this country’s wealth is generated by consumer spending, but you must look out after yourself and your family first. If you can hold off on a new set of golf clubs, maybe you should do that.

In the meantime, the first order of the day, is survival. See if you can limit your monthly grocery expenses to $200 a month, like people on food stamps have to do. You can go far just buying these 12 items once or twice a month: 1 gallon of milk, 1 loaf of bread, 1 pound of butter, 1 dozen eggs, 1 pound of cheese, 1 pound of bacon, 5 pounds of potatoes, 5 pounds of onions, 1 box of cereal, 1 gallon of orange juice, 1 pound of rice, and 1 pound of beans. You should still be able to buy fruits, vegetables and meat, as well as flour, sugar and coffee. You should learn to make use of leftovers. Five pounds of hamburger can be used to make an Italian meatloaf, the leftovers of which can be used to make a meat sauce for spaghetti.

With every crisis, there is both danger and opportunity. We could all go under with the economy the way it is, but we can also learn to live within our means.