With all the recent news about a recession and the trade war with China, there are some economists who are reminding us about 2008 and even worse, the 1930s. However, no one can predict an economic crash or economic collapse. The signs on Wall Street are pointing toward a possible recession.
On August 14, 2019, we had our biggest loss in the stock market all year with a drop of 800 points. Investors are rattled by the growing trade war with the U.S. and China. The key is to get out of this situation in 3-6 months. The market is still up. The latest tariffs against China have been postponed.
There are economists who are predicting a severe downturn in our economy. So, what are the steps we can take now to survive an economic crash. We must start to prepare now.
What is an Economic Crash?
An economic crash is equal to the term financial collapse. This is a series of very severe economic conditions. This is one of the major disasters we prepare for because it includes a number of things that risk our basic needs such as food, water, power, and safety.
An economic crash does not follow a timeline. In fact, most last a minimum of a year and then require several years for the nation to recover. During an economic crash the death toll may rise from depression and suicide. Also, there may be a society collapse and an increase in crime. Bankruptcy, hyperinflation, and widespread unemployment also increase.
The Causes of an Economic Crash
The causes of an economic crash are as varied as the countries they are happening in. A crash can stem from trade wars, irresponsible banking practices, high inflation, a low value of currency, or high national debt.
The Warning Signs
Survivalists need to read the news, weather, and finance. These things affect our safety and security. If you aren’t already in the loop, it’s time to keep an eye on financial news. There are several things to watch for:
1. Rising national debt
2. Stock markets are trading at an all-time high
3. The unemployment rate rising
4. Unstable government
7 Steps to Prepare
If the signs are actually pointing to an economic crash, here’s what you need to do to prepare:
1. Save Your Cash
You don’t have to keep the bulk of your money in your home, but it’s good to keep a little stash on hand. Keep cash in your checking or savings where you can access quickly.
Cash is more important than having a great deal of credit when there is an economic downturn or a crash. Start saving as much cash as you can. If you can liquidate other investments in less than a week, those are ok, but if it takes more than a week, move those investments over to something more liquid.
2. Be Frugal
If less money is coming in, the worst thing is to have more money going out. Start cutting back on monthly expenses. Think of what you really don’t need. Make a list and cut out what you are able.
3. Practice some sustainable gardening
Did you know you can grow spinach in just 6 weeks? Spinach is considered to be one of the “superfoods.” If you live in a sunny climate, think about solar panels. This cuts the use of electricity and is another sustainable method to cool and heat your home. If you must move to an unpopulated area, start learning homesteading skills, just in case.
4. Get Out of Debt
Work on paying off every credit card now. Here’s how to start:
- Create a spreadsheet budget plan
- Use a column for incoming and another for outgoing money
- Create another column for your debt repayments and list their interest rates
- Identify and rank each debt by their interest rates from high to low
- Do not use savings to pay debt. Remember, keep your cash.
- As you pay off one debt, move to the next one.
You can also use the snowball method. Start with the smallest debt and pay that one off and then roll that amount onto the next debt until all your debt money is paying on the final amount.
5. Make Sure Your Passport is Current
That sounds bleak, but you may have to leave. Sometimes economic refugees have no choice. If chaos is ruling, this may be the safest choice for your family. Make sure your passport has plenty of time on it and research visa laws, so you can get a job with the country you plan to travel to if you plan to stay for a while.
6. Generate More Income
Get a part-time job or find something you can do out of your home to make extra income. This will help pay down debt and also give you more cash to save. Some possible jobs are printing T-shirts and other items, house cleaning, errand running, yard work, writing, graphic design, window washing, babysitting, tutoring, music lessons, photography lessons, restaurant or service work, and more.
7. Learn More about Economics
Economics are in the news constantly. Read and study the trends. Find out what the terms mean. Knowledge is power and you will be able to identify early warning signs of an economic crash if you take the time to do some self-education.
Now the prepping is up to you. There are signs to heed and steps to take if the signs begin to progress in the direction of an economic collapse. As a survivalist, we must pay attention to current events. Some of the news is extreme. Stick with the facts and numbers.
At the very least, begin to build that cash fund. If you have cash, you can buy anything. Some people asked, “How much cash should I have in my home?” If you have a safe place to keep your cash, you may want to aim for $500. This would get you on the road in an emergency. It might not buy a plane ticket, but it would buy you food and basic supplies.
Bottom line, there are ways to prepare for most economic downturns. It comes down to knowing how to identify the warning signs, taking steps to minimize the impact, and making sure we are ready to survive a crash.
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Editor’s Note: This post was originally published on April 19, 2019, and has been updated for quality and relevancy.