How to Survive the New Depression
Posted by jonathan on 9/18/08 • Categorized as austerity, banking, making money, money, personal finance, saving
Photo Courtesy of Improv Everywhere
It appears we’re on the verge of a new Great Depression. Unemployment is up, wages are stagnant, inflation is up, major corporations and banks are collapsing left and right. There hasn’t been this much instability in the international economy since the Great Depression.
The old Boy Scout motto is ‘Be Prepared” and that’s a great creed to live by. Nothing in life is guaranteed.
So, how can you prepare for this?
The people responsible for this mess aren’t losing any sleep, neither should you. Things may be getting bad, but they’ll only get better. The nature of the capitalist systems is a series of up and downs. Bad fiscal management by the Federal Government and the Federal Reserve has smoothed out the grooves for the past 30 years or so, the problem is that you CAN’T get rid of the ups and downs. That’s just not the way it works. That’s why it’s important to prepare for the valleys just as much as the peaks.
Your money is generally safe in a bank. You should be monitoring the financial health for your bank. Since most banks are publicly traded, this information is freely available. Don’t trust that the bank will always be there. Many banks have failed already. Luckily the FDIC has your deposits insured up to $100,000.
So, what if you have more than $100,000 cash in the bank? First, you shouldn’t have that much money in a savings or checking account to begin with. If you’re truly investing your money, passbook accounts are terrible places to keep your money. Your money should be invested in mutual funds, retirement funds, bonds, etc. So, what if you do have more than that in the bank anyway? Split it up, there is nothing to prevent you from spreading your cash around to several different banks. That way you’re completely protected.
If you’re completely disgusted by the banking system, like my wife and I, you don’t have to continue participating in it. Join a local credit union. You’ll have more of a say in how your money is handled. Credit Unions are not for profit, so they won’t be consolidating and joining bigger banks and then making stupid multi-billion dollar investments that will bring down the economy. Credit, above all things, are local, which is great. Credit Unions can also get you a car loan, mortgage and other products. Your money is also insured by the Federal Government under a separate insurance program as the FDIC.