How to Survive a Debt Crisis

“The DOW is down by more than 400 points in one day?”…”You mean our country’s credit went down?”…”Hey, what’s going on here?”…”Is this is the beginning of another Great Depression?”

These are questions you hope you never have to see….especially if you are involved in the stock market. For some people, things like this could make them feel as if the end of the world is here, but it’s not. Many people that aren’t involved in the market may not know exactly how this affects them. This information with help you sustain through an economic debt crisis.

Pay Attention
Watch, read and listen to the news. There are many forms of media to receive information from about current events online. Television is just one source, but is not always the most reliable. The internet is filled with not only news websites, but also forums, blogs and video websites that often times give first hand information that may not be publicly announced or displayed in the mainstream media yet. Always cross reference information with sources that generally have a good reliable rating.

Prepare for Change
Usually when there is a national debt crisis, noticeable changes are to be expected. For example, if it costs a small family owned business $1,000 a month to maintain, but then inflation hits the cost of the materials they use to maintain their business, the easiest way to compensate for the extra money needed is to pass the expense on to the customer. This may put the business owner in a situation where the consumer becomes outraged with the pricing and stops buying all together. The only thing that may save the business is to cut prices back down and give up a good portion of profits. That would mean less money to cover unexpected expenses, less money for employees and a big question to be answered…Is it worth it anymore? Well, as you can see in the case of many businesses closing from 2009 to the present, they don’t feel there are enough benefits for their efforts. So they close up shop. This means many things that you may be used to being easily available may not be anymore. Things cannot stay the same in a critical financial bind. Changes must be made to reset the balance of spending vs. consumption.

When it is realized that prices have gone up or services are no longer readily available on demand, it’s time to separate necessity from luxury. If your annual household income is $50,000 or below, you probably understand how important it is to budget with very little room for error. When you don’t have the funds or means to pay for something, you don’t get it. Plain and simple. If you use a credit card and don’t have the funds to back up your spending, you are placing yourself in a dangerous debt situation. Know what you need and what you don’t need. Pay for your necessities FIRST, save SOMETHING and then see about leisure spending. Always take into account that things happen. When prices go up and incomes stay the same or decrease, you can’t take things for granted.

Explore Bartering
Before we started buying and selling, bartering was the way to go. Bartering is exchanging one service for another or one good for another. Money is not needed. It’s pretty much a good faith business system. For example, if you have a friend that is a barber and you have a lawn care company, just exchange each other’s services. Free haircuts for you and you sons (if you have children) if you cut their lawn every month. That’s how it works. The value of a services and time can be negotiated, but usually an agreement can be reached without any exchange of money. Now, just imagine if you barter with other people in the same manner. You can have your needs met while helping others at no cash cost. The main things we end up NEEDING to have actual cash for are mortgages, electricity, phone services, internet, fuel, vehicles and medical expenses. See if you can cut some costs by bartering with friends and family to help cut down on spending.

Condense and Share
Many times we want to have too much too quickly. We want our own phone, our own car, our own house and so much more. Well, it’s important to make sure it can be afforded before it is pursued. Sometimes it’s good to share for a while before you get your own. You can save better that way. Here’s something that a lot of children don’t think about before they move out. If they get a job that pays at least about $20,000 a year and stay with their parents for about 4 more years and actually save the money they make, they could probably have enough to pay for a house in cash by the time they move out. It seems to be a big inconvenience to them, but in the long run, it can help them avoid debt hoovering over their heads. If they contribute to the parent’s expenses, it’s a big help to the parents as well.

Live Your Life
It’s very important to not let a crisis have you worried day in and day out. You need to make sure you keep yourself in a good mental state. Stand on your moral beliefs and make sure you continue to spend time with friends and family and enjoy the pleasures in life that don’t require money. A strong and happy home will always overcome any debt crisis.

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