An economic meltdown is arguably the most devastating man-made disaster.
It affects so many people’s lives in so many damaging ways.
But here are some strategies you can employ to survive a financial collapse.
The probability of a stock market correction or crash is relatively high.
Several economic indicators show that we’re long overdue.
Due in large part to government intervention and Federal Reserve monetary policy, the U.S. economy tends to have a recession approximately every 7-10 years.
Donald Trump’s presidency has beaten back the impending crash because the less the government meddles in the economy, the better.
Trump has cut taxes and rolled back burdensome regulations.
But just as important, he gives investors a sense of stability because they know he isn’t going to randomly kneecap businesses out of nowhere with bad policy.
A recession means that the economy contracts for two consecutive quarters, and we haven’t even had one quarter, so we’re not there yet, despite eager anticipation from liberal elites who seem determined to make a recession happen by scaring consumers.
All that said, a crash is still likely coming in the next couple of years.
Here are some strategies to weather an economic storm.
First, you need to have a healthy emergency fund to tide you over.
Most Americans have been conditioned to spend and borrow, which has made them vulnerable to economic hardship.
Many can’t afford a $1,000 emergency.
Build up an emergency cash fund to protect yourself.
Start with $1,000, then eventually build up to six months.
Also, it’s best to have your emergency fund specifically in cash because it’s too easy and tempting to spend money when you can quickly access it with your debit card.
Next, be more diligent about budgeting.
It’s easy for people to look at their bank statements and wonder where all their money went.
Track all of your expenses and break them down into categories.
Based on your habits, create a manageable budget that includes saving.
Once your budget is established, stick to it so there aren’t any surprises at the end of the month.
Next, try to eliminate all bad debt.
Most Americans are like the federal government, i.e. they have a spending problem.
Politicians spend money faster than it comes in.
That’s why entitlement programs are insolvent and we’re $22 trillion in debt.
Everyday Americans are doing the same thing.
Debt is a killer.
It makes it impossible to build wealth, and eventually, the bill will come due.
Balloon payments and interest rate hikes on adjustable-rate mortgages were absolute crushers during the 2008 collapse.
It caused many high-risk homeowners to simply walk away from their mortgages.
Not only did it wreck their credit and damage the economy as a whole, it also decreased the value of homes for responsible homeowners.
Make sure you’re consistently taking steps to become debt-free.
Finally, don’t react in knee-jerk fashion if you have money invested in the market.
It might hurt to see your retirement fund slashed in half during a market tumble.
But pulling funds out could only make it worse.
If you’re further away from retirement, your best bet is to leave money in because the market yields approximately 8% over the course of 20 years.
Positioning yourself well during economic good times will give you a leg up when times get hard.