Note: This article does not constitute financial advice.
When we think of emergency preparedness, we usually are thinking in terms of gear and supplies, but in lieu of the uncertain financial outlook for the United States, and indeed Europe and the world, the question of financial preparedness should not be overlooked.
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In a degrading financial scenario, whether it's a slow motion degradation of resources taking years, or even a quicker burn that takes months or weeks, a financial collapse is not like an immediate disaster such as earthquake, tornado, an EMP, etc..
In direct contradiction to gear, which we may be able to go out and purchase in one fell swoop tomorrow, preparing ourselves for financial hardship is a little more involved.
I consider my assets.
If I am in the stock market with a market-tied retirement or money market-type fund, my "wealth" is subject to wild fluctuations, as seen in the market relatively recently. Changing my position in the stock market, if there are market freezes, or "bank holidays", assets could be frozen, unable to be moved or withdrawn for use as I sit and watch them drain away to nothing in a stock market crash, or in the case of banks closing to stop a run on the bank, I watch the dollar devalue day after day while I can't withdrawl anything significant to make purchases. I'm now in big trouble.
What is money, anyway?
In 1913 a dime would buy you a gallon of gas, but in 1913 (up to 1963) a dime was made of 90% silver. Real silver, the precious metal, a traded commodity. Fast forward to today and a current U.S. minted dime will buy you doodly squat. What happened?
I could buy a gallon of gas for just a dime in 1913, but today a dime would hardly get me a squirt from the pump. Why is that? Did the price of gas skyrocket? No. The value of our dimes has plummetted. Robbed of its value. Here's how I know: If I took that same 1913 dime and turned it over to a coin shop for cash, redeeming it for its silver value -- it would be worth about 2 dollars -- or still about the same cost of gallon of gas in today's money.
Whether this example speaks to the value of precious metals, the value of fuel, or to the current weakened state of our dollar I will leave to you, but one thing is for certain: metals seem to retain their value. In fact, if you make the calculations for inflation, an honest day's labor wage in today's money still works out to about the same -- in silver -- as it did in ancient Rome. I contend that the value of metals stays the same. It appears to be the value of "money" which fluctuates.
For the above reasons, I choose to diversify my investment portfolio. Metals are not a way to make money, in my opinion, but rather a way to preserve wealth. It's a "battery" (so to speak) in which I can safely store the money I've obtained through my labor, instead of keeping it in a speculative stock market or in fluctuating paper currencies.
Instead of keeping paper dollars (which ceased to be tied to metals in 1971 after Nixon took us off the gold standard), keeping some money in pre-1964 U.S. coinage may be a good way to hedge against financial ruin. Coins may be a better way to go than silver or gold "bars" (also called bullion) for a couple of reasons:
1. It's actual valid U.S. face value currency, so if a bullion "siezure" occurs as did during the Great Depression, you don't have pure metals; instead, you have coins.
2. It's in smaller denominations, making it easier to trade for everyday goods or services if the need arose; much easier than using a huge chunk of solid silver.
What kind of job do I have?
Is my skill set critical? That is, am I a welder? Do I have medical skills? Carpentry skills? Am I a realtor or marketer, or someone who's livlihood depends on sales to the public? If the economic sector takes a hit, service sector jobs, sales, or logistically non-essential type professions may take a big hit, perhaps leaving people who currently make a good living -- in a bad position.
Perhaps a job change or re-training is a good idea. Is my job in the city? For most of us, it is. If I have the ability to create a web-based income, that is the ideal scenario. Internet-based sales allow me to be far from population centers, while still making a living wage. These are not goals that are obtainable overnight, as mentioned at the beginning of this article -- which is why it's something to think about and work towards long before a financial crisis is on the horizon.
Cash on hand.
I have some at all times, outside of the bank, at least a couple of hundred dollars -- whatever I can manage to save. In a "bank holiday" situation, as seen in Greece, the banks will close or severely limit withdraws. If a cyber attack on our financial system is the cause of a crash, the electrical grid may also be targeted and credit cards, ATMs, and other devices may not work. Any way I look at it, having cash on hand will give me a big advantage over those who do not hold a little cabbage.
Own a good set of tools and know how to use them.
What work can I do to help someone else? Can I fix a porch step? Can I process firewood? Do I have the tools to do such work?
If I need to barter my labor for food it would be much easier to show up with a set of tools and say, "May I fix your porch step?" -- much easier than it would be to show up and say, "Do you have some tools I could fix your porch step with?" There is a big difference.
If we are talking about a serious collapse there will be a surplus of people who need work, so you'll need to differentiate yourself from the hordes of beggars. We can read stories about this from the Great Depression. Maintain your professionalism.
Traditional investment and financial decision making is OK for me, but just as I diversify my assets within the "traditional investment tools" I find it also a method of diversification to think in a preparedness mindest regarding fincances. I don't put all of my eggs into one basket. That basket, in this case, would be traditional investment models. I do not want to fall into that trap. I work hard for my money and I want to be ready to be financially secure and useful as a worker in the future. . .no matter what it may hold.