One of the major disasters that people are still talking about is the likelihood of a financial collapse. While it hasn't happened as soon as some have predicted, that doesn't mean that it's not coming. In fact, the threat seems to keep looming larger and larger, as we all wait for it to come.
Perhaps that's part of people's fascination with Donald Trump's presidential run. As a well-known businessman, many are looking to him as the one who can prevent that collapse and turn the economy around. Were he to actually accomplish that, he would probably go down in history as one of the greatest presidents this country has ever had.
But there's no saying that Trump will win the election, or even if he does, if he has enough savvy to do everything that he's promised. Granted, he is a successful businessman, who has gained a net worth in the billions, but running a business and running a country are two different things. Whether his business acumen will be enough to turn our economy around is something we may never have the opportunity to see.
So it's clearly not time to declare victory over our country's struggling economy, regardless of what Obama says. The economy has been stagnant ever since the 2008/2009 housing bubble burst and unless someone does something to turn things around, it's not likely to get better any time soon. You and I are most likely to be paying more taxes, fighting more inflation and hearing more lies from the government.
That means that the economic collapse is still on schedule. We don't know when it's going to happen, but there's really no reason to think that it won't come. We're still on the long slide towards the cliff, even if we haven't reached the cliff yet. We don't seem to be slowing down either.
Will You Still Have a Job?
The first question any of us have to ask ourselves about this is how we will survive. Of course, a lot of that depends on how badly we are hit, personally, by the collapse. Not everyone will lose their jobs and their homes, even if it might seem like everyone will.
During the Great Depression, the biggest financial collapse this country has ever had, only about 25% of the population lost their jobs. While that was horrific in its magnitude, it also means that about 75% of the people managed to keep working. So the situation wasn't absolutely hopeless. Many people were able to keep working, keep paying their bills and keep feeding their families.
Unfortunately, I can't find any accurate data which tells me what types of jobs were lost and what types of jobs were retained during that time. But there is some pretty good data available on what happened in Argentina during their financial collapse. As Argentina had an industrialized society, much like we do, they form a good model for what we can expect. Amongst the things we can look at is that there are several key job-related conclusions that can be drawn from Argentina.
- People who work in manufacturing and sales of luxury goods will lose their jobs; those factories and those retail outlets will most likely close. There won't be enough people who can buy those goods to maintain those businesses.
- People who work in retail will be hit hard, as sales will slow across the board.
- Automotive manufacturing and sales will drop, as people keep their cars longer. However, the market for repair parts will see a boon.
- Many businesses, especially small businesses, will have to cut staff. Those who are cut will be those who are worth the least to the organization, either due to their job knowledge, skills or productivity.
- Those who work in the financial markets will be hit the hardest, just like during the Great Depression.
- Many workers in service industries, other than essential services, will lose their jobs.
- Travel will drop significantly; so businesses associated with travel, from airlines to hotels will suffer.
Based on this, we must look at our own job security, asking ourselves is whether our own jobs are at risk. Keep in mind that the fourth point that I've made above. The first to lose their jobs will be people who are of less value to their employers. So, if you are of high value, you have greater security. If you aren't, then you need to look at what you can do to increase your value to your employer.
In today's day and age, the greatest value that any employee can offer their employer is to be the one person who goes above and beyond. Way too many people think that their job is a place to sit and text with their friends or play games on their phones. Those who do everything asked of them, and then look for more, become prized employees.
Longevity is a factor here, as well; as employees who have been with the company longer usually know more. But that's not something that's set in stone. Some employees put the effort into learning, while others don't. If you don't know enough about your job, then it's time to learn some more.
Of course, changing jobs carries a lot of risk in the current financial situation. If you have to change, do whatever you can to make sure that you are going somewhere where you will be considered to be a high value employee. Otherwise, your new job could evaporate under you, when the collapse comes.
Expand Your Sources of Income
The greatest thing you can do to help ensure that your income continues during such a crash, is diversify your income sources. If you, like most people, depend on your job for 100% of your income, then losing that job is a catastrophic personal disaster. But if you have additional sources of income, then the problem becomes more manageable.
What do I mean by additional sources of income? I mean having some sort of business on the side. Whether that means consulting in your normal work field or selling something on eBay, create and build up some sort of business. Just make sure that it is something that people will need badly enough, that they will continue to buy it, even in a bad economy.
The other way to create a side business with security is to do business with the government. Our government currently approaching about 25% of the GDP. That means that there are countless businesses, large and small, doing business with the government. So find something the government needs and see if you can fulfill that need.
Put your imagination to work on this. You'd be surprised what some of those needs are. I know a man who composes and arranges music for high school marching bands. He gets a few grand for every piece of music he composes. While that may not seem like a lot of money, it's a great sideline.
Another way to diversify your income is to help someone else get a business started. If you have some money in savings and your child, a friend or family member wants to start a business, offer to invest in it. I'm not talking about a "go fund me" type of investment, where you are just giving them money, but rather buying into their business, so that you own a piece of it. Do it right, creating a contract showing your ownership percentage.
We've got to realize that this is how wealthy people make their money. They either start businesses and then hire people to work for them or they invest in businesses that others are starting. Some wealthy businessmen are constantly on the lookout for small businesses and startups that they can invest in. Why? Because when that business grows, they own a part of it. That means that they get a piece of the profits; and all they've done to get it is invest money. If it works for them, it can work for us too.
However, avoid investing, in the standard understanding of the word. Money invested in the stock market will mostly disappear during a financial crisis. That also means money in mutual funds, commodities and any other "paper" investment scheme.
If you're going to invest, invest in something physical, like gold and silver. That way, you have something in your hand; not just a piece of paper that says you own so many shares of a now defunct company. Besides, precious metals always surge in price during any financial downturn. They are one of the most secure investments on the planet.
Businesses that Will Grow in an Economic Collapse
Surprisingly, there are some types of businesses which will actually grow during a financial collapse. While people will be cutting their spending considerably, their needs will continue. One of the strategies that they will use to save money is to get the most out of what they have, rather than buying things all the time.
We are a largely disposable society, buying things and then throwing them away when they've lost their luster. Rarely do we repair things anymore, unless they are big enough and expensive enough to warrant saving them. So while we might repair a car to keep using it, we aren't likely to repair a blender.
That will change. Even people who are pretty well off and are accustomed to trading their cars in when the new car smell is gone, will be keeping their cars longer. Many of these people trade in their cars yearly, so that they don't have to deal with repairs. But the financial situation will cause even these people to repair, rather than replace.
That means that one of the best businesses to be in, during a financial collapse, is some sort of repair business. I don't care if you're talking about repairing big appliances, little appliances, cars, computers, iPhones, or toasters, people will be looking for you. Since they won't be able to afford replacing things that they have, they'll instead look to repairing them. That opens up an incredible opportunity.
It also opens up an opportunity for supplying the parts for those repairs. So, if you're not any good with a screwdriver, you might still be able to get in on the repair boon by becoming a supplier. You'll have to learn about the parts in your specialty, as well as developing sources for those parts, but your business will be fairly secure.
If you do something like that, don't forget about stocking used parts as well. Junkyards do a booming business, simply because of the high cost of auto parts. Ok, so why not apply that to other products as well. One of the reasons that most people don't repair things, but replace them instead, is that parts are too expensive. But salvaged parts don't have to be that expensive. That makes them a very viable option for people who need those repairs.
In the area where I live, there's a booming business in used appliances. These businesses buy or scavenge non-working used appliances and refurbish them, making them work again. Then they sell them as used.
The parts they use in most of these repairs are parts that they've scavenged from other non-working appliances. They may be able to gut one washing machine and use the parts to repair three or four others. Then they sell the case as scrap metal, making money on it too. So really what people pay for, when they buy those appliances, is the repair work that has been done on them.
Surprisingly, one of the things hit worse by a financial collapse is the food supply. When Argentina had their financial collapse in 1999, food became scarce in the city. That's not because the farmers weren't growing anything in the country or that there was a drought, the breakdown was in the distribution system to get that food from the country to the stores.
The other thing that worked hand-in-hand with that, to cause food shortages, was the high inflation. Retailers didn't want to put merchandise on the shelf today, which could be sold for more tomorrow. So, even if they did have food, they might not make it available for customers to buy.
This led to a large number of barter co-op groups starting up, mostly focused on trading food items. While different co-ops operated under different rules, one thing they had in common was that they avoiding using the national currency, as it was devaluing constantly. So instead, they'd develop a system of "credits" with a standard value for common food items. That gave everyone a basis for trading their excess food items for things they needed.
But as I said, there was ample food in the country. It would have been easy for someone with a truck to go out to the country and buy a truckload of food, assuming they had the gasoline and money to do so. Upon returning back to the city, that food would have been like gold.
Restaurants did well in the Argentinean collapse as well. Once again, that's surprising, as paying someone else to cook your food is more expensive than cooking it yourself. But I guess people have to eat, and not everyone cooks. So, while other businesses suffered, restaurants did well, as long as they had a steady source of food.
With so many people out of work and desperate in Argentina, a fair number of people turned to crime. One of the top "cottage industries" in Argentina became kidnapping the children of wealthy families, for ransom. It became dangerous to be on the streets, unless you were armed. People stopped allowing their children to play outside and drivers stopped stopping at stop signs and traffic signals, unless they had to in order to avoid an accident.
One of the best jobs available to many people was security. If you had a gun and were fairly proficient in the use of it, that became a fairly easy way to find a job. At a time when many people were out of work, working as a security guard, even for the low wages that such a position offered, was at least work.
Of course, not all of the security guards were honest, and some actually worked together with the bad guys, passing information about their protectees to the very people they were supposed to be protecting them from. But that was a guaranteed means of going to jail, as their employers verified their address and other important details, before hiring them.
Most people believe that the United States will be as bad as Argentina was, or even worse, when our financial collapse comes. If that's the case, there will probably be many well to do families who will be willing to pay, just for protection. Owning a security company will probably become a very profitable venture.
If Ever There Was a Time for Self-Sufficiency
The people who will do the best during the collapse will be those who are self-sufficient. While they will be affected by the collapse, they will be better able to roll with the punches, than anyone else. That's because they will be able to function without money, to a large degree. Basically, the more self-sufficient they are, the less need they will have for money.
Of course, this means having a lot of skills and putting a lot of things in place, before the bad times come. Most of us are not anywhere near self-sufficient, even if we think we are. But just as many people lost their homes in the 2008/2009 housing collapse, just because they couldn't make their payments, so will many lose their homes in the next collapse.
Some of the key things to consider are:
- Owning your home, free and clear - This is a difficult one for most people, as we don't have the money to pay off our mortgage. But if you can't make the payment, they can take your home away from you. For that matter, if you can't pay your property taxes, they can take your home away from you. So, do what you can to pay off your home. This could mean downsizing now, before the collapse comes.
- Producing your own energy - While producing enough electrical energy to power your home is difficult and often requires a heavy investment, producing enough to take care of your critical needs isn't anywhere near as bad. If you have to get by without television and air conditioning, but have the basics you need, you're at least getting by. That's better than not having anything.
- Having a water source - If you aren't fortunate enough to have a stream or river on your property, you need some other source of water. For most people, that means a well. In many parts of the country, a shallow well is enough, as it will provide water. It may not be the best water, but it will be usable, especially if you filter it. Another possibility is rainwater collection, especially if you live in an area with lots of rain.
- Producing your own food - Growing your own food is the ultimate in self-sufficiency. There have been a number of people who have turned their back yards into mini-farms, growing enough for their family to live on. Doing so ensures that you have enough to eat, even if you don't have anything else.
The thing is, doing all that is going to require a lot of investment, work and preparation. Few people can actually do it all; even if they spend a lifetime working towards that goal. But that doesn't mean you shouldn't try. Every bit of self-sufficiency you gain means one less thing you have to count on society for. Even better than that, it's something that you don't have to pay for.
The secret to becoming self-sufficient is starting where you are. What can you do for yourself, that you are currently paying someone else to do? Start doing that yourself and then use the money you save by doing it yourself to help make you self-sufficient in some other way. In this manner, you'll be able to fund your self-sufficiency drive, bit by bit.
At the same time, work on learning new skills that will help you become more self-sufficient. These can be skills that help you to grow your own food, skills that keep you from paying someone else to do repair work for you, or skills which will help you to save money. Some of these skills are:
- Gardening (grow your own food)
- Animal husbandry (grow more food)
- First-aid (so you don't always have to run to the doctor)
- Auto mechanics (save money)
- Appliance and equipment repairs (ditto)
- Plumbing (save more money)
- Carpentry (fix it yourself and save even more money)
- Building stuff (not only does it save money, it's fun)
- And of course, the skills to do the things I mentioned above
Then, of course, there are other skills, which while not necessary for survival, or even for helping you through a financial collapse, fit well with the homesteading lifestyle. Many of these are things that our forefathers did, which have become largely lost arts. But they are as useful today, as they ever were.
- Blacksmithing (you can make tools, things for the home and art)
- Gunsmithing (keep your guns in top form)
- Sewing (not only repair clothes that get damaged, but make your own as well)
- Weaving (ever made your own fabric?)
All in all, self-sufficiency is your greatest protection against a financial collapse. While investing in gold and silver might give you a level of financial security, it only helps you when you sell it. Then, the money it turns into immediately starts going down in value. So that gold and silver is only going to last so long. Then, when it's gone, it's gone.
While everyone else is suffering through the collapse, with some losing their jobs, losing their homes and perhaps losing everything they own, you can at least be eating and comfortable, even if you aren't wealthy. There's a lot to be said for having the ability to take care of yourself and your family, without having to depend on others for everything you need.
In addition, many of these skills are easily convertible into businesses during the collapse. As I mentioned earlier, the ability to repair things will become highly valuable, as the vast majority of people will turn to repairing, rather than replacing. Those with the necessary skills will have the advantage.Then, of course, any excess food that you grow on your homestead can be sold to those who don't have the ability to grow their own food. At that time, people won't be so fussy about what they eat. If it's edible, someone will be interested. Between the ability to sell your excess food and the ability to repair things that are broken, you would actually stand a fairly good chance of profiting from the situation, while most of the rest of the country is suffering.