8 Suggestions for the Road Ahead -- Self Preservation

I do not propose to be some sort of expert on survival, but we can all see that these are not normal times and it is time to prepare for the worst of times and pray that we never reach that destination. I have compiled some information about personal finance and personal responsibility. You can move as close to these targets as possible or you may ignore the advice. I only give you this advice, because my soul moves me to. In the end you are responsible for your own countenance.

1) Get out of short term debt - You should be in no more short term debt (credit cards) than what you can pay off immediately. I believe that 5% of your take home pay would be about the Maximum amount of debt you should be carrying in this recession. If you get laid off, then you can easily pay that off.

As inflation rises, the adjustable interest rates on short term debt will also rise. You could very well see 20%+ interest rates on credit cards (if not way higher than that). How would you ever pay these debts off, if that were to happen?

2) Keep cash on hand and tuck it away somewhere that no one can find it. I am not saying that banks will go bust like they were in the 1930s, but on March 5, 1933 Franklin Roosevelt (the day after being sworn into office) called a 4-day bank holiday. The banks were closed and people could not withdraw cash from their accounts. Some people say that this same scenario nearly played out last September. What would you do if the bank was closed for a week or two? Remember the gas shortage last September and how everyone panicked?

3) Put some of your money in precious metals. Most of us can't afford $1,000 an ounce gold, but we can afford $14.50 an ounce Silver or even cheaper Copper. These metals will hold there value during inflationary times. In 1980, during the last inflationary period in the U.S., the price of gold spiked to $850 an ounce in 1980 (an equivalent of $2,178.05 in today's dollars). The same year Silver spiked to $48.70 (an equivalent of $124.79 in today's dollars). U.S. Inflation Calculator Link

I am not saying that we will see those levels in the coming year, but unless our government gets its spending under control, I believe we will burst through those levels by the end of Obama's first term. At the end of the year 2000, the Dow Jones Industrial average was trading at 39.5 times the price of Gold and 2,345 times the price of silver. Today the DJIA is 7.17 times the price of Gold and 494 times the price of Silver. This has all been brought about by the tanking of the U.S. Dollar. Until our government starts reigning in the ridiculous spending and comes back towards fiscal sanity, it is time to get out of our currency and into something real.

4) Be Thrifty and quit wasting your money - Don't throw things away unless they have no value. Eat at home, use coupons, share meals with your friends and neighbors, look for cheap entertainment, turn that heat down, use the fan (instead of the AC), and consolidate you trips when driving. This is not the time to throw money around. It is time to spend wisely.

A good investment would be to buy dry and canned goods in bulk. Remember the price increases last year during the fuel run up? Buy these goods and store them for the rainy day. If that day never comes, then you can use them; but if a truly inflationary period does hit, then you will have bought yourself some valuable time.

5) Grow a garden. The only thing that this will cost is the money for a few tools, the cost of some seeds, and some labor. You will be handsomely rewarded. You'll have something to eat to get through the summer months and you can can, freeze, or dry this stuff to get through the winter. This will help you get outdoors and get some exercise. You can be basic or elaborate. That is up to you. The deal is that this will save you money, when your budget gets tight, and that is money that may be needed elsewhere. You can also barter these vegetables for other food or maybe to get something else. Growing a garden creates value.

6) Secure your house. Crime is naturally going to increase. You need to get deadbolt locks for the doors and hide your valuables in safe, secure places. Don't flaunt what you have. You need to be humble and thrifty. Be aware.

7) Get to know your neighbors and look out for one another's well-being. This goes hand-in-hand with number 6 and maybe even number 5. One thing that we have lost in the age of gluttony is that sense of community. Neighborhood Watch will be very important if times get tougher and we will need to look out for the elderly, who will become very vulnerable as their fixed incomes are attacked by inflationary dollars.

8) Pay attention to what the Government is doing - It is time that people figure out that the condition our economy is in today is a direct reflection on the economic choices that have been made by our leaders and the bureaucracy over the last 40 years. No one expects perfection, but we also should not expect utter incompetence and/or corruption either. It is time for accountability.