What do you do when the folks in charge can’t “git’er done”?
I’ve restrained from commenting on the mess on Wall Street and the constipation of the “credit market”. I can no longer remain silent on this blog.
For the record, I don’t believe we should “bail out” the credit markets. That is called throwing good money after bad money. It is only staving off the inevitable failure of the free market.
So, with the free market about to go into a free fall, how is that going to affect those of us who may or may not have much involvement in these markets?
For us, where I live, we rely on a pension plan and two social security checks each month as well as a couple of part-time jobs. Our bills include a mortgage, a car payment, and then the ususal pot full of regular monthly obligations like the utility bills, and payment on some “unsecured debt” which is no longer accruing.
We long ago cut up our credit cards. If we can’t afford what we want, we wait until we can. Our income covers our needs, but not always all our “wants”. So, we exercise patience and restraint.
I personally believe we have to prepare for some very hard times in the not-to-distant future. Unless we have a total, unprecedent failure, I don’t see a Depression in the same frame as the Great Depression.
Here are my reasons as to why it will look much different.
First, there was no Social Security System during the Great Depression. Social Security is a result of that time. Pensions were something that no one had established. Who knows if they will still be honored, but I’d bet there will be a support for them.
This business of not being able to get credit, from bank-to-bank, or to business, or business-to-business is more about “faith in the system” than how much money is actually available. In the Great Depression, the market failed because of “excessive leverage”, when you could buy stocks on a margin of 90/10. Put up 10% and you owned the stock. This time, it’s the repackaging and reselling of mortgage-backed securities leveraged at 30 or 40 to one… just plain stupid!
What do you do to protect yourself? Here’s what I’m recommending to our little band of aging boomers.
We’re working to pay off all our debt, even the mortgage. By being prudent, and making multiple partial payments each month (as in either semi-monthly or bi-weekly), we will be able to pay off the remaining 27 years in just over 10 years. Our last vehicle payment comes in just 8 months and we’ll roll that money over to pay off the mortgage.
We’ve established a “pantry” so, if necessary, we can eat for at least 6 months, maybe even a year before shopping again. We’re raising our own meat, and some of our own vegetables, and we get more than enough eggs for our own use.
No one in our little group is above picking up odd jobs. We even learned how to milk goats this past week when a neighbor needed to be out of town for a week.
When we have to “go to town”, a drive of at least 34 miles round trip to the nearest little village with one grocery store, one hardware store, the bank, and the post office we make sure the trip is “worth it”. Is it for work? Is it because we forgot to get something when we were in town?
If we have to go to the bigger towns call neighbors to see if they need anything delivered or brought back for them, and they do the same for us. We do our shopping on the day we’re also selling things at the Farmers’ Market, so it becomes a two-way trip for us.
We long ago quit spending unnecessary money. Everything thing we spend points us towards as much self-sufficiency as possible. And I’d recommend you do the same.
Work for yourself first. Pay yourself first. Ensure your own survival along with that of your community and you’ll be better off for it.
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