Wednesday, September 12, 2012
Many people realize that the financial situation in the U.S. is deteriorating, yet these same people continue on with their daily lives assuming things will get better or will not affect them. Those that still have a stream of income are in much better shape than many but they have not thought about the reality of losing that income and what will follow. Those that have lost their income but still have sufficient savings to live on have not thought about the day when that money runs out and what will follow.
When things don’t go as planned, many people refuse to think about the inevitable circumstances that will ultimately follow when they run out of money. This is just so far outside of their comfort zone they refuse to think about it and hope it goes away. You can ignore reality, but you cannot ignore the consequences of ignoring reality. If your financial situation continues to deteriorate, what will you do?
The problem a lot of Americans have is misplaced hope. They hope things will improve before they hit the financial wall. It is good to have hope for the future but it is also important to be realistic and honest with yourself. Those that take an honest look at their financial situation need to determine what financial resources they still have and how long those resources will last. They need to determine what expenses they should eliminate and which ones they cannot do without. They need to look at their current standard of living and determine if it should be reduced to make their resources last longer.
At what point will you cease to have a roof over your head? At what point will you no longer have food to eat? At what point will you no longer be able to afford your car? These are things a person with a diminishing pool of money needs to think about while they still have those resources.
Most people will not want to think about these things because it makes them unhappy. They will continue to live life as normal until the day the money runs out and only then will they begin to think about a plan to deal with their position. By then it is too late to do anything meaningful to improve your situation.
It is important for people in this type of situation to break through these psychological barriers and plan for their future making the best use of their dwindling resources. It is never easy to leave the life you have built and depend on and feel secure with but at some point you will have to cut your losses and move on.
You may have to sell the car you have and pay off the loan and use the remaining funds to buy an older car that you fully own. You may have to dump the home you love and worked hard for and get a smaller place to live that costs much less. You may have to stop buying the frozen foods you like and start cooking more from scratch to save some money.
Before you have to do these things you need to think through the situation and determine what resources you have, what they are worth and at what point you will need to make the decision to downsize and start living leaner. You need to determine what the breaking point will be and prepare yourself mentally for the change. You must do this before all of your resources are gone leaving you little or no ability to continue taking care of yourself. You must have a plan standing by even if it is nothing more than buying a camper trailer and tow vehicle and a supply of food to support you for several months. This becomes even more important if you have a family that depends on you for their everyday needs.
Many Americans like to stretch things out as long as they can hoping things get better. If things never get better, you still need to take care of yourself and your family and to have no plan for this is to fail to take responsibility for your position. As the financial situation in the U.S. becomes worse, it will be ever more important to know exactly where you stand financially and how you will use your resources for the maximum benefit of your family.
You also need to keep in mind that the only resources you can definitely count on in the future are those that you actually have in your own possession. You must also decide what form these financial resources will take. Will it be cash, precious metals, diamonds, food storage or some combination of these things? If you lose your job and rely on savings to take care of everyday needs, what would happen if there was a sudden banking holiday and you had no access to your funds for weeks or months. It could even be a cyber attack that takes the system down. What happens if they lose your banking records or the institution goes bankrupt like MF Global taking your funds with it? FDIC insurance may pay you back but it could take months or years to get your money. What will you do in the mean time?
You need to have a plan to deal with your worst case scenario and know what the breaking point is when you will put your plan into effect. You need to decide when it’s time to go from normal mode to survival mode while you still have the financial resources to make a difference and preserve your quality of life. Too many people waited too long to react to the changing financial situation and many of those people are now homeless or living in tent cities. Don’t let this happen to you.