Things seem to be working well with the economy right now. Unemployment is at record lows. Consumer and business confidence is at record highs. And wages are rising. The economic times are good.
But, there are some blips on the screen. Although wages are rising more than in recent decades, they are not rising as much as we would like or expect given the current state of the economy. Government spending is still at insane levels, with the national debt continuing to expand. The middle class tax cuts still have not been made permanent. The stock market is very volatile, with large swings spooking ordinary (and professorial) investors. And the overall state of both international and domestic events is creating a lot of uncertainty, which makes companies, big and small, less likely to make major investments in property, plants, and equipment.
Regardless of when it happens, one thing is for sure: There will be another recession or economic crisis at some point. Maybe it happens in a couple of months or maybe it happens a few years from now. But it will happen. Here are three things you can do NOW to prepare for Next Great Recession.
1) Reduce Your Consumption of Everything - Adopt a much simpler lifestyle. Live well within your means. Be a Saver, not a Consumer. If you had to, could you survive on half your current income? You may have to one day, so start living that way now. This will take some will power and a willingness to put aside the need for instant gratification. But it can pay great dividends. Use the money you don't spend now to prepare for the future, such as building an emergency fund, paying off debt, paying off your mortgage, finally buying and starting that homestead you've always wanted, stocking up on food and other supplies, or maybe even buying some silver or gold.
2) Get Out of Debt and Stay Out - Use the savings generated by reducing your consumption of everything to pay off your car loans, credit cards, student loans, payday loans and other consumer debt. If at all possible, pay off your mortgage or at the very least refinance into a fixed rate. Being debt free will give you lots of breathing room and flexibility in dealing with future economic downturns.
"The rich rules over the poor, and the borrower is the slave of the lender." -- Proverbs 22:7 (ESV)
3) Secure Your Current Assets - There are a number of ways you can secure your current assets. Make sure the banks and insurance companies you use are sound (there are rating services you can use, but most importantly ask questions and pay attention to the news). Put a portion of your savings into silver, gold and/or other hard assets. Pay off your mortgage if at all possible, or at least refinance into a fixed rate. Pay off your vehicles, and anything else that you are making payments on that you don't want to loose. Guard against identity theft. Pay your taxes on time and in full (the government has extraordinary powers to seize your savings, paycheck, investments, and property to collect back taxes).
The Bottom Line: The economy works in cycles. The best time to prepare for the bad economic times that will come is during the good economic times. Start today, and secure a good future for yourself and your family.
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