Financial Back-up Plan

  • MikemikeMike

    Posts: 6932

    Jan 30, 2009 6:30 AM GMT
    With the state of our current economy, do you have a back-up plan?

    Ie: $$$$$ funds put aside to carry you over for 3-6 months in case you lose your job???

    The economy is most likely to get alot worse before it gets better. I'm not negative, just the opposite, but I am a realist.icon_cool.gif

    Is anyone else saving?? Your thoughts:
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    Jan 30, 2009 6:39 AM GMT
    Lost my job at the end of November. Money runs out next month and just in time for my apartment lease to expire. Very worse case scenario and I mean the absolute worse case would be moving in with my parents. Ugh!!!

    and they have dial-up internet service... icon_cry.gif
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    Jan 30, 2009 7:06 AM GMT
    don't hold paper assets or stocks.
    save money, yes, but convert it into real wealth.

    try not to keep much money in the bank beyond what is necessary, remove money in paper form and buy gold and silver.. not stocks, not bonds, actual physical gold and silver. you can go to a bullion exchange.

    do not buy large quantities at one time, because then your purchase will be registered, and the point is to preserve your finances, not have them confiscated after a financial collapse (as was done in 1933).

    do not hold money in banks and paper assets (Federal Reserve notes - paper money), why?

    - because if (when) the system crashes, banks will close their doors and hold everything, you will not have access (see: Argentina, 2001)
    - further, the main financial crisis in the US is NOT the housing market, its the debt crisis... which has yet to unfold. this is why the bank bailouts, especially Obama's latest one, will do much more damage than good, because the US debt burden is drastically increased (so far around 45 trillion). the US won't be able to pay this back, it will default on loans (see: Mexico in 1982), and the worth of the US dollar will plummet
    - many say to expect Weimar Germany hyperinflation, which is when the currency is so worthless that it literally isnt worth the paper its printed on, and when a wheel barrell full of money would buy some fruit
    - in this situation, paper currency does no good, because its value is depreciated
    - holding gold and silver, will mean that if this occurs: say you buy gold at $800 for one ounce... and hyperinflation sets in... that gold could then become worth $10,000
    - now in a hyperinflation economy, 10,000 isnt much and wont get too much, but its better than 800

    Other than solid metals, I wouldn't recommend anything in particular.
    stay away from stocks of any kind, and i would be hesitant to convert into Euros as well. currency markets are too volatile.

    buy what you can hold... and save
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    Jan 30, 2009 7:25 AM GMT
    Hell no, I spent it hahahaha but it was sure as hell was fun! icon_biggrin.gif
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    Jan 30, 2009 7:41 AM GMT
    'Splaining again... icon_smile.gif

    It's not odd to me that every time energy prices spike, a recession is not far behind. There is a cause and effect. Why do they spike? Growth, greed, arrogance, perhaps. Nonetheless, until policy changes, more of the same. i.e. if you have investments, protect them future forward.

    I cite both energy spikes in the early 70's and early 80's - oil embargoes and IRAN hostage crisis among others, again in the early 90's... remember IRAQ 1?, and again in the early 2000's. Recession followed. Every time. Regardless of their cause or other events. Again, in 2008, prices spiked really bad! Other circumstances are involved. BUT the result is still the same. RECESSION!

    I won't even pretend to discuss why, it's not important to the average investor... I'm not an economist or politician. But my observation is valid - energy spikes... recession follows. That's real value for everyone. Economics are far more complex, but I am suggesting that better energy management and policy will help smooth things out. But that alone won't stop future trouble. I have no solution to that.

    I'm affected by this economy, but not nearly to the degree as some. I don't own a home, so I am not faced with declining equity or value. I have tiny debt. Only my retirement account took a small hit. -3.16% for last year. No money lost on CD's or regular savings of course. I ended up moving 80% of my balances into fixed value/income accounts one year ago at the height of the energy spike. Pay attention!

    The collapse or significant correction of energy pricing would normally signal a recovery is on the way as in each of the examples I cited above... but with so many other problems... I doubt anytime soon. I stand pat. From an investment view. The thing is, when things start to recover, move investments around into stocks and commodities... and if energy spikes, move it back into fixed value. It's been working good for me. I ain't rich, but retirement isn't something I'm worried about.

    ADDED: Move everything into savings or fixed value - retirement accounts included. It will save your money and keep value. If you are in a position to create wealth, start a business, now is really a good time. Housing market will bottom out by late this year.
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    Jan 30, 2009 7:44 AM GMT
    My plan is to harvest organs from the hot guys at the gym to sell on the black market. After having hours of non-consensual sex with them of course.
  • metta

    Posts: 39134

    Jan 30, 2009 8:06 AM GMT
    All that we can responsibly do is do is the best we can.

    While I saw so many people taking equity out of their homes to buy vacations, building pools in the backyard, and new cars, I was doing the opposite by overpaying my mortgage payments to cut down what I owe. Being self employed, I don't expect to be laid off. I have done things to minimize my expenses and debt as well as try to increase my savings. Overall, I have lost a lot in assets (especially the value of my home). I have to live somewhere and I love where I live. Awesome neighbors and I love living close to nature and the city at the same time.

    I think that I will be fine. I'm still working on growing my business...slowly...which is all I have ever done even when the economy was so called booming. My friends that own businesses told me that I was wrong to not get more debt to grow my business but my goal has never been to have large businesses or make tons of money. I just love what I do because it fits my values of what is important to me.

    I think that the worst thing for me has been the decrease in the value of my assets over the long term. It makes it even more unlikely that I will ever be able to retire. It is expensive taking care of a household on my own. Most of my neighbors have at least 2 incomes coming in. I'm thankful that I'm able to do that. And in regards to saving for retirement, I'm just going to do my best to save as much as I can. I realize that I will probably not be able to save what I really need to feel like I could comfortably retire (probably around $10 million).

    I do wonder if the same thing that happened at the end of the mess of the economy in the 70's will happen during the end of this. Interest rates went way up and there was a short period of time where you could get a cd with an interest rate of over 20%.
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    Jan 30, 2009 9:34 AM GMT
    GuerrillaSodomite saidMy plan is to harvest organs from the hot guys at the gym to sell on the black market. After having hours of non-consensual sex with them of course.
    icon_eek.gif OMG I wanna be first!
  • zakariahzol

    Posts: 2241

    Jan 30, 2009 11:03 AM GMT
    I still have my job, eventhough a few friend and people I know have lost and some work hour cut. I am more careful about spending money . I still having fun but in a more responsible manner. I hardly use my credit card anymore and for my travelling (something I cant live without) I go to a nearer neighbouring country taking busses and boat rather than flying. I have a healthy saving if thing get worse. Now I am living alone with a few empty room that I can always rent out for additional income if the need arises.
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    Jan 30, 2009 11:11 AM GMT

    Okay, I'm 85% convinced I should stay-in again for the nth weekend in a row...
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    Jan 30, 2009 12:14 PM GMT
    I'm working two full time jobs. One in sales and one bartending. I'm safe no matter which way it goes.
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    Jan 30, 2009 12:53 PM GMT
    I had a back up. But when i got laid off last year and was unemployed for 3 months I used it all up. Now i have nothing saved. Im starting all over again.
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    Jan 30, 2009 2:00 PM GMT
    I have a couple of investments that I can roll over and cash in that are so far safe have not lost much.

    Savings very little. I have two of my sister's kids that I'm helping put through college and private school. They are my priority.

  • styrgan

    Posts: 2017

    Jan 30, 2009 2:43 PM GMT
    I took a second job bartending and have cut back off large expenses - no vacationing and no eating out for the time being. I have a decent savings and escaped the first round of layoffs so I should be okay no matter what.

    I don't think it's necessarily bad to be investing in the stock market if you have the courage (lack of sanity) to ride the rapids right now. It will likely go even lower, but you can never really predict when you'ver reached bottom since the markets trade at future expectations. There are some great companies out there that are trading at book value.

    MeOh's advice is rather far out. He seems to be preparing for a total and complete economic collapse. Actual hyperinflation hasn't even occured in this country since the Civil War. The government is not trying to get out of this by printing money. It's just borrowing stimulus packages from China.

    I think the more important point about the current stimulus plan is whether it will create long-term as well as short-term jobs.
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    Jan 30, 2009 5:52 PM GMT
    Been tilling the soil for spring planting and stockpiling the pantry. I figure if I can cover the basic necessities of life It will be easier to weather the storm. Mortgage is covered for a few months as well. I am also fixing up a couple of bicycles for emergency transportation in case gas spirals out of control.

    Thanks for the thread and the ideas
  • SeanTRNJ

    Posts: 46

    Jan 30, 2009 6:23 PM GMT
    blunt_ saidI'm working two full time jobs. One in sales and one bartending. I'm safe no matter which way it goes.


    I'm with you on this one.. I have one Job as management at a Family amusement center on the New Jersey Shore and another working security at a bar nearby.
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    Jan 30, 2009 6:59 PM GMT
    Well still working a very well paying job. Saving some in the bank and some in cash at the home.

    I put everything I had in my 401k into very secure holdings back in June. Then borrowed it all, and stored the cash. Like another on here. I saw gas sky rocket and knew where that would lead us. When the average american was facing a decission to buy gas to get to work or eat..it was time to liquidate. I did. I took almost no hit when the market fell.

    If ist gets a lot worse and I lose my job, I have enough for 6 months. If there is no unemployemnt available and the goverment crashes I have land and know how to make it produce enough to live on.
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    Jan 30, 2009 7:10 PM GMT
    Have as little debt as humanly possible (unless you get a great return on the borrowed funds). Have plenty of cash on hand in a Money Market fund (which are now backstopped by the Feds) or short-term US Treasury Bills (not Notes or Bonds). I've been shorting the heck out of the US stock market for over a year now (so don't be long any US equities....it's going down much more). I pretty much shorted all the banks, brokers, home builders, Starbucks, Abercrombie n Fitch, Nordstrom, buncha restaurant stocks, etc. This is a grim situation unfortunately and it's gonna get worse. I am not a pessimist, just a realist.
  • zakariahzol

    Posts: 2241

    Jan 30, 2009 7:13 PM GMT
    Cowboy,


    "If there is no unemployemnt available and the goverment crashes I have land and know how to make it produce enough to live on"


    Well, we have one thing in common. I have a land too. That is also my back up plan. Leave this high cost living in town, move to the village and live on my father land (I inheritance it when he past away) where cost of living are cheaper and less complicated. Eventhough I have not live a farming life ever since I am a kid, but I am sure I can learn ,survive and have fun while doing it.
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    Jan 31, 2009 11:36 AM GMT
    I got $30K sitting in easily liquid funds in case I need it. It gives me a modicum of a peace of mind in these troubled waters.
  • HndsmKansan

    Posts: 16311

    Jan 31, 2009 3:48 PM GMT
    ABSOLUTELY.....

    Everyone should have a minimum of 6 months income set aside in their savings accounts for unexpected issues, whether it is a loss of a job or a "rainy day" event. Even more than that is probably a wise idea.

    I've had no clients quit contributing to their retirement plans due to the economic situation and less reallocating among various sectors, they are staying on "plan" with long term goals in mind.

    For those clients that are needing income in the near term due to retirement needs or other... many had prepared or were preparing before this economic downturn. I just hope things pick up again before the end of 2009.
  • MikemikeMike

    Posts: 6932

    Feb 05, 2009 5:58 AM GMT
    lilTanker saidHell no, I spent it hahahaha but it was sure as hell was fun! icon_biggrin.gif


    Ha they couldn't continue to even pay to be online!!

    Well I warned em!!