If several million people do this together, this would be one of the most peaceful revolutions in modern history. Than perhaps we could reverse the results of the governments’ actions and save the nation from a depression or worse hyperinflation.
This is not a joke. Create a budget and run the numbers. Then start reducing expensed until you get to a point where you are saving 50% of your income and living on the other 50%. That’s what it’s going to take to survive the lengthy recession that we are facing.
In a few years everyone will be saying they should have done this, but if you start it now you will be much better off. If you don’t hear this anywhere else, it only shows how clueless the nation has become.
If 50% seems impossible, than start with 10% and set a time period like 6-months for yourself to reach that goal. Then set a goal to reach 20% and so on until you get to 50%. It is estimated that 30% of the average US family budget is spend on entertainment and extras. The average family can cut 30% before making major life changes. This also means that getting to 50% will demand a major lifestyle change.
US is Drunk With Credit
The US is drunk with years of expanded credit and when the world takes the whisky away, we are going to have to sober up and come to grips with the hangover – and the fact that we spend all our money when we were drunk is going to be a hell of a headache.
The US tab is growing by trillions and soon the bartender is going to cut us off. Then, we are going to have to pay back the money we pissed away only at higher interest rates. The political leadership is literally selling the nation into financial slavery. They have committed the next decade of work and the work of our children to our debtors.
We will soon be facing four recessions stacked on top of each other, with real estate, the stock market, the dollar and bond market all declining at the same time. Our debts are too high for interest rates to stay low and increasing rates will result in a much larger crisis because the Federal Reserve has painted themselves into a corner and they will not be able to stop the dollar from losing a lot of its value.
What Should I Do?
If you are convinced that the economy is headed towards a cliff, this is what to do. Itemize your expenses and calculate how much of your income you are spending. Then, start cutting back on everything you can until you get to 50%.
Here are several reasons why you will probably need to live on 50% of your current income as the recession lingers on for many years to come.
- Inflation will significantly reduce the value of your income
- Increasing interest rates will increase the cost of purchasing and paying existing debts
- A layoff will reduce your income to unemployment or a lower paying job
- Wage reduction in your existing job
I realize this is going to be very difficult, but starting now while you have yet to be effected by the above reasons will be much easier then after the fact.
It may take a few years to get to 50%. The key is to figure out where you are now and start tracking your expenses each month and charting your progress. Don’t worry about feeling like everyone else is still living it up because in the next few years everyone will join you and will be scrambling to downsize and minimize their lifestyle.
If you still owe a lot of money on your house without the cash to pay if off in the next few years and your payments are higher than 20% of your income, then I would sell it even in this environment. Sell it as fast as you can and rent a smaller house or purchase a smaller house that you could completely payoff within a few years.
Another option that millions will do is to move several families under one roof. Large homes are everywhere and it is going to take several incomes to pay for the cost and maintenance of these large homes. So, if you don’t like the idea of downsizing your home, consider getting renders.
Sell everything you can and cancel as many services as you can to get to 50%. Here is an article with some ideas of what to start cutting back on.
25 Things to Consider Cutting Back On
What About the Economy?
If you are worried about the effects on the economy by reducing your spending, realize that it is going down anyway. That idea is based on the bogus economic ideas that got us into the massive debts that we are in. No matter what you do, the service economy and much of the production economy is going to collapse because it was built on a phony economy based on over-consumption fueled by credit expansion.
New businesses will be created to fill needs of real demand. It will take many years to recover from the reckless expansion of credit that has fueled the economy for the past decade.
What the economy really needs more than anything else is to get out of debt. Consumer, nationals and municipal debts are and will remain the biggest burden to turn around the economy and find a bottom to the recession. Until we are free from our debtors, the economy will never be free to grow.
Get out of debt and get your spending under control.