Protect yourself from the current recession and coming depression

If you haven’t noticed the current economy has become dramatically worse. A year ago, most of the experts said this was not a recession. I said it was and knew it at that time. So a month ago, the experts decided to make it official and say we have been in a recession since December 2007. Most of the experts were idiots. You don’t have to be an economist to know what you are experiencing in your daily life.

Now the “experts” have teamed up with the current administration and with the politicians and have decided that they have theories on how to fix the economy. If you have read some of my previous posts, I think the politicians and their “experts” will muck it up even more.

President Bush, Bernanke and Paulson all agreed they knew how to fix the economy after they finally admitted the US economy was in a “contraction”. So Obama and his experts have decided that the stimulus package will be the solution to the fixing the US economy. WRONG!

How can I be so sure? I knew there would be a US recession and a global recession and blogged about them numerous times over a year ago when people called me a pessimistic doom and gloom guy. No one can predict the future and I do hope I am wrong. As the saying goes “hope for the best, but prepare for the worst” will apply to our economy for more than another year.

This US recession started from the housing bubble and pummeled all of us into this ugly economic mess we are living in now. That is the source of the problem and the stimulus package and previous bailouts will continue to make it worse. As a matter of opinion, when these actions don’t have the desired effect on our economy, many of these experts will claim that it wasn’t big enough and we need to do it again but even bigger and the politicians will agree to dig us deeper into a deficit abyss.

I believe this severe recession is already on its way to becoming a depression. The housing market will get worse and until that bottoms out we will not see a recovery. Read or listen to any recent Ron Paul or Peter Schiff video and they will explain it better.

Everyone’s home equity, stocks portfolios, and retirement accounts have declined in value. Many credit card companies are raising interest rates, cutting credit lines, and canceling cards. In the future, you might be forced to depend only on cash.

Financially protect your family by making your family and yourself a priority over your creditors. Put your ego or pride aside. Generally, everyone is living from paycheck to paycheck, so you don’t want to wind up homeless if you lose your job. Layoffs are happening in every industry. Make sure you hang on to all your cash. Start living beneath your means if you haven’t already. Start saving as much as you can until you have 6-12 months house payments in your savings account. Make only the minimum payments on your cards.

If you do lose your job, file for unemployment asap and stop making payments on all your credit cards and personal loans. Many experts will say pay down all your bills. Generally that is a good idea, but only if you have a minimum 12 months worth of house payments in the bank after you were to pay off those bills. In a recession and depression, credit will disappear and cash will be king. Also, you don’t know how long it will take to get another job.

Trust me and not the experts on this one. You can have perfect credit, a high FICO score, and a long term job, but the credit card company will eventually reduce your credit because they need to manage their portfolio and reduce their risk which means cutting credit lines even with their perfect “customers”. It is no longer just Amex doing this, but Visa, MC and Discover are all doing the same thing. Remember once your credit is gone, you will wish you had put that money in the bank.

Once you are either laid off or your hours are cut, pay only the necessities like rent/mortgage, car note, utilities and food. Everything else needs to be put off because you want that cash to last as long as possible. This is putting your family and yourself as a priority.

If you read about the hardships people are experiencing in this recession, you will notice a pattern. They either had been laid off or hours have been cut. They use their money and drain all their retirement accounts to try to keep all their bills current which includes credit cards and personal loans. This will burn your reserves fast if you have no other source of income coming in.

Yes, you will get collection calls and letters, and your credit score will take a temporary hit, but that is still better than becoming homeless or not having enough food to feed your family after the basic necessities are paid. Not only that, credit profiles in this environment seem to have become worthless. The banks and credit card companies themselves are struggling to stay afloat. We are bailing them out with taxpayer money.

Read other blogs or sites that tell you how to survive in this economy. Knowledge is power. Do not depend on the government to bail you out, because you will be disappointed.

Blogs and sites that have great ideas you might be able to use: