Who Hijacked Our Country

Tuesday, January 27, 2009

How To Survive Great Depression II

If you’re a failed banking executive who wants another trillion-dollar handout, all you have to do is look longingly at Congress and bat your eyelashes.

For the rest of us, it’s time to batten down the hatches, tighten your belt and do some serious prioritizing. Here are two articles that have helpful financial advice. There aren’t any brilliant new insights here; no magic wand. Just good old common sense. If everybody was following these guidelines, we wouldn’t be in this mess we’re in. And we won’t pull ourselves out of this Depression until millions of people start making the necessary changes.

This first article was written by an ex-convict. Prison teaches a person other things besides how to pick a lock, hotwire a car, and ninety-nine ways to kill somebody with your bare hands. You also learn — out of necessity! — how to stay out of debt. As the author says, in prison your creditor might settle things with a shiv.

Nothing new here, but too many people have forgotten (or never learned) that:

“The best way to get yourself in serious trouble is to take on things you can’t handle. Know your limits and accept what you can and can’t do. If you can’t handle credit cards, cut them up.”

“Your assets are only worth what someone is willing to pay…Too many people get caught up on artificial values on their house…and even their investments. Just because you think your house is worth $300,000 doesn’t mean it is— it’s worth what a willing buyer is going to pay.”

Yeah I know — “Duuhh!” But again, if everybody was using these common sense guidelines, we wouldn’t be in the fix we’re in.

Most of the comments at the end of this article are sympathetic, all except for one dickwipe who rakes the author over the coals for being an ex-convict.

3 Steps Back to the Sanity of Cash by MP Dunleavy also has some good common sense advice.

“If every ounce of credit now available to you, in the form of cards or home equity or whatever, if all of it dried up, what would your life be like? The fact that that's hard to imagine is a sign of how deeply entrenched credit-think has become.”

When you go shopping with a credit card, you’re apt to have just a vague idea of how much you spent. When you pay with cash, you probably know the damages right down to the penny.

She says “Credit creates a fog. Cash will snap you out of it.”

Both of these articles have useful advice. Again, nothing you haven’t heard before. The steps they describe are simple but painful.

Maybe the economy will start picking up soon; maybe not. There’s an awful lot of doom and gloom in the financial news every day. Best to be prepared for the worst possible scenario.

cross-posted at Bring It On!

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17 Comments:

Anonymous Screamin' Mimi said...

Wouldn't it be great if this current crisis, or shake-up or whatever you want to call it, actually taught us these lessons? I mean, it would have been nice if we could have learned these things BEFORE we got into trouble, but better late than never. I personally think that when we emerge from this mess we'll be better prepared for the future than we were before. Hope springs eternal, anyway. :)

January 27, 2009 at 7:22 PM  
Blogger Tom Harper said...

SM: It's too bad we can only learn these lessons the hard way. I just hope we'll finally learn it this time, before everything collapses.

January 27, 2009 at 8:16 PM  
Blogger DB said...

I agree completely with the post, but it is good to be mindful of the many good people who were, are, and will be stuck in a vicious financial cycle that they are incapable of escaping, especially now. Hopefully the people who learn these valuable lessons and survive the storm are able to help the less fortunate out by putting the money back into the community, offering employment opportunities, and volunteering where needed.

January 28, 2009 at 4:46 AM  
Blogger Tom Harper said...

DB: Yes, absolutely we need more help for people; preferably at the community level like you were saying. I don't think either of those articles were lecturing people; just a blunt assessment of what changes we need to make. This economic house of cards has been getting bigger and more fragile ever since the 1970s.

January 28, 2009 at 12:46 PM  
Anonymous kate said...

Don't spend money you don't have. Just the way our parents and grandparents lived. Too bad government doesn't take a lesson from them.

January 28, 2009 at 1:19 PM  
Blogger Tom Harper said...

Kate: That's true; if everybody practiced "don't spend what you don't have," we wouldn't be in this jam.

January 28, 2009 at 4:32 PM  
Blogger J. Marquis said...

I've always been big on cash. Not only can you only spend what you have, it's also completely safe in terms of identity theft.

January 28, 2009 at 4:55 PM  
Blogger Tom Harper said...

J: True, no ID theft. And I haven't yet bounced a $20 bill or had a cashier refuse to accept it.

January 28, 2009 at 6:55 PM  
Blogger Ricardo said...

I carry no credit cards. Went through a bankruptcy after working myself out of the hole of not having a place. So it's cash or nothing for me. I hate it when I go to stores and they try to push a store brand credit card on me. I tell them I don't do credit.

I live very simply so the unemployment checks do not really cause too much of a change in lifestyle. That was by design. I would ask myself, can I survive with this much if I was out of work and forced to collect? The strategy has paid off but a major car repair or health issue would still spell trouble.

We are in big trouble. the layoffs are staggering.

The stimulus bill is a hot topic. I don't know who to believe. I can't tell if the republicans really want more money to rebuild infrastructure or they just voted against it because Rush told them over the radio to disagree with Obama just because. If they so hard up that Rush now dictates their agenda we may have ZERO republicans in government soon.

Great finds on these articles Tom.

January 28, 2009 at 9:07 PM  
Anonymous JollyRoger said...

I destroyed my credit cards last April, and I'm within a couple of weeks of paying off what I owe on my cars. Just maybe, we can sweat this one out, since we've bought absolutely nothing on credit for a long time now.

January 28, 2009 at 10:46 PM  
Anonymous S.W. Anderson said...

On the societal aspect, we've all been brainwashed to buy now, on credit, instead of saving to buy anything. That's been going on for decades, but really took hold when most people who lived through the Great Depression reached an age where they no longer had much influence on younger family members.

We also have this incredible herd mentality about getting the latest thing, even when what we have meets our needs well enough. I wonder how many people who've lost their job wish they had made do with their paid-for 21-inch CRT-type TV, instead of borrowing $1,500 or more for a an LCD TV the size of a drive-in movie screen, with multiple surround-sound speakers for a few hundred more.

January 29, 2009 at 12:00 AM  
Blogger Tom Harper said...

Ricardo: Sounds like you've got it down to a science. If you're already budgeting for the worst thing that could happen, then it won't be so traumatic when the worst actually does happen.

Other than that, almost anybody could go into debt if there's a major illness, ID theft, major car repairs, or too many big expenses all happening at once.

JR: That's the way to go. We still have credit cards but we virtually never use them. When we do, we pay it in full the following month.

SW: Brainwashing is exactly what it is. The thundering herd has been brainwashed since the early 1970s. We're all bombarded with sales pitches 24/7, and too many people fall hook line and sinker for every ad, every gimmick.

January 29, 2009 at 12:19 PM  
Blogger DB said...

I wonder how much many of these credit card problems have to do with [the lack of] education regarding cards. As a former banker, I can tell you how easy it is to sell a card, how easy it is for someone to get a card, and how incredibly easy it is to get in trouble. I sold countless cards (yes, I'm ashamed-you should see the mortgages!) to anyone regardless of their ability to pay or their knowledge on how to stay out of trouble. Now that I mention this, mortgages fit into this category as well. How best to you educate the public?

January 29, 2009 at 3:53 PM  
Blogger Tom Harper said...

DB: I think too many vested interests don't want the public to be educated about buying/saving/credit, etc. I wouldn't quite call it a conspiracy (as Michael Moore does at the beginning of Sicko), but a lot of powerful people don't want to jeopardize this buy-now-pay-later mindset. And money talks.

January 29, 2009 at 4:11 PM  
Anonymous Anonymous said...

If you need help surviving a depression just say out loud now Jesus I believe and I receive you in my heart please help me. Remember God loves you and if you need more help please please go to leroyjenkins.com it will help you tremendously.

May 1, 2009 at 10:04 PM  
Blogger DB said...

wtf?

May 2, 2009 at 7:06 AM  
Blogger Tom Harper said...

DB: Oh, didn't I tell you? I've found Jesus, and He has turned my life around :)

May 2, 2009 at 11:13 AM  

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