What do we do to weather the coming financial storm?

[Ian David]

Well, it looks like Bush is going to trash our economy.

He's going to "freeze" spending.

Countries are going to start de-valuing our currency.

Gas prices will probably go through the roof.

What should the average person do to prepare themselves to survive the coming financial storm?

[DemocratSinceBirth]

1. Buy Canned Goods

eom

[SheilaT]

2. It will simply mean

imports will become much more expensive. Traveling abroad will be more costly. For the average stay at home American it will hardly matter. Prices at Wal-Mart will hardly be affected.

[Bluebear]

4. China says the dollar is "not a stable currency"

If they start demanding payment in, say, euros, you don't think Wal Mart prices will be affected?

[ramadoss]

3. Invest in

Solar power for the home and hybrid vehicles for the street. Shop at local stores so you do not support the global trade of goods via truck, boat, train, or plane. Lessen your personal dependance on oil. the more people that do this, the more the power companies Bush supports so much will suffer. What could be better than saving hundreds of dollars a month while at the same time showing Bush that you want alternative energy sources and don't support his current energy policies.

[punpirate]

5. The very first thing...

... is pay off debt--particularly revolving credit. Most people erroneously believe that interest on prior credit card debt is calculated at the interest rate in effect when an item is purchased. Not true--whatever the current rate may be, it's applied to the entire unpaid balance. Cutting down on spending and applying money to the unpaid card balances also has a net positive effect on income in the form of reduced interest payments, which should then be converted into savings.

When the currency starts getting shaky, interest rates will rise--probably dramatically. The only thing to counter this will be a sharp drop in consumer spending, creating some nominal deflation. As difficult as it may sound, saving something for emergencies is also absolutely essential. These days, that means putting all available discretionary income into saving, not spending. Savings can also mitigate some of the negative effects of unemployment by ensuring funds for, say, COBRA payments (which, for some families, can exceed the amount of unemployment compensation).

Belt tightening now helps preserve one's advantages later, when times get better.

Cheers.

[ayeshahaqqiqa]

7. good points

I recall that during the inflationary rise after the OPEC embargo interest rates rose dramatically-not only on debt, but also on savings accounts. I didn't have any credit card debt at the time, but a little savings, and getting a rise in interest on it helped cope with the infaltionary pressures.

Don't have any credit card debt now, and would encourage folks NOT to get any if possible. Been there, done that, and escaped the trap.

[punpirate]

9. While inflation does move savings interest upwards...

... it's still a good deal less than the actual inflation.

Unfortunately, the situation in the late `70s is completely unlike that of today. Consumer debt is extremely high today, and national savings are almost non-existent. I think the national savings rate then was around 4%, while it's a good deal less than 1% today; there have even been some recent quarters where it's been slightly negative, and per capita consumer debt then was nothing like it is now.

These days, given the overall screwing that banks have been giving customers (especially in transaction fees), I doubt one will see sudden and dramatic increases in savings rates as inflation jumps up. Rather, I expect there to be more competition (within a fairly narrow range) in credit card rates, since card interest is much more profitable than having savings money on hand with which to operate. That situation will only change as the money supply starts to dry up. With much of national disposable income going to continuing consumer spending and paying on credit card interest, there won't be much pressure on banks to increase savings rates. With few serious savers, there's no competitive pressure to do so.

Cheers.

[ayeshahaqqiqa]

13. I didn't know that!

Thanks for the information!

[Ian David]

10. Thanks. I've already done SOME of that

I've got a Hybrid car, bought triple-glaze windows, insulated doors, and we've cut down on other expenses.

We've downgraded our cable, canceled our Verizon land-line service, canceled AOL, lowered the thermostat, installed flourescent bulbs,

We've stopped going to Dunkin Donuts and go to Honey Dew instead.

We don't buy at Walmart anymore except for diapers. That was a compromise with my wife, who thinks this is all crazy.

She gets her bonus this month, so I'm going to try and convice her to pay-off all the credit cards first.

But then we've repairs to make on the car, on the roof of the house, and a few other things.

[punpirate]

12. Well, at least use the argument...

... on her that getting rid of some or most of the credit card debt frees up money that is currently spent on interest, and does so every month in the future....

Cheers.

[ayeshahaqqiqa]

6. so many good ideas presented here

We have boxes of rice, bags of beans, and other goods that are not perishable. We have solar panels that will soon be installed (waiting for good weather). We have an energy-efficient car, and can modify it if need be. All these ideas have been mentioned, but here's another-
get to know your neighbors. They may be who you need to count on when things get tough. We already swap and trade things, like carpentry work for work on vehicles, or food swaps.

Another thing to start doing is buying not only locally but also buy used whenever possible. This recycles, which in and of itself is a good thing, but it also means you get something that might be better in quality and you are not supporting sweatshops overseas.

Contrary to what one poster said, I do believe there will be inflation on all fronts, especially for any imported goods. Since Wal-Mart gets most of its stuff from China, I would say prices will rise once the dollar deflates on the international market. I remember when OPEC stopped oil shipments in the 70s-all prices went up, due to the cost of delivering goods.

[Eurobabe]

8. move away

maybe we could get mexico to let us in?

[mattclearing]

11. A lot of these answers are right.

You can buy up gold or other currencies like the Euro. Move to another country with a sunnier outlook.

Most western countries are going to hurt when the dollar goes down, so eventually it will affect everything except nations that do not rely on US trade.

We are looking at a global economic shift away from the US and towards other countries, which is kind of the whole aim of Free Trade. It's good for the world in the long run, but probably bad for us in the short term, meaning the next twenty or so years.

[AngryAmish]

14. Dig a big hole

Move into said hole.