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“I believe we live in a great country – a country great enough to help a man when he’s in trouble.” – Russell Crowe in Cinderella Man
Last week I posted on how to invest in volatile times and the markets this week have people even more nervous as the market has lost more than 10% in the past month. With people thinking they might be headed for a double-dip recession or even worse the “greater depression”. With how things have played out over the past 10 years I can’t help but think of the movie – Cinderella Man. The guy was once a prized fighter and had everything. A nice house. Healthy kids. Nice car and clothes. Most importantly food on the table for his wife and kids. Here is a small clip from the movie to give you a point of reference if you haven’t seen the movie.
In the roaring 20’s people went from living with plenty of bread lines and unemployment of 25% in just a few years. I can’t help but wonder if we are going to go through a greater depression. Like many in the 1920’s, people didn’t see a great depression coming and if they had you know they would have been prepared. Here are a few tips on how to prepare if we go through another Great Depression.
- Unemployment – in 1928 people thought that there would always be a steady stream of income and employment. Not many people thought our country could see 15 million people unemployed a few years later. Tip: Create a cushion of at least 3 months cash in a money market account – minimum. If you live in an area that has only one or two major employers then save at least 6 months cash because a recession or depression will hit these areas harder.
- Food shortages – today many people have only enough food for surviving a week. Who would have thought that there would be bread lines and that we’d go through a “dust bowl” in the 1930’s. Hardly any of us have ever seen a food shortage and it’s been forever since we’ve gone through a major drought. Tip: Buy in bulk and large quantities when products are on sale. Store food in hand made storage closets and freeze products that can last one month to twelve months. This will help you save money and not be forced to buy food when it’s at a price peak.
- Start a garden – related to food shortages, people during the depression had huge gardens. In the above video, my grandpa said he had over an acre plot of land just for gardening. People relied heavily on their gardens for providing their family year round food. Not only that, but they were heavily into canning their garden produce and really worked hard on preserving food.
- Diversify your skillsets – during the depression people were searching for any kind of work to put food on the table for their wife and kids. Often times they’d be forced to do jobs they had never done before and many people would be forced out if they couldn’t do the job. Tip: Learn new skills and diversify your knowledge. Find skills that are needed in times of plenty and in desperate times. This could include basic skills like lawn care, carpentry, masonry, painting, trucking, digging, or hard physical labor. (As simple the last suggestion is many people today have desk jobs and haven’t ever done physical labor. Be prepared.)
- Be a supportive spouse – my grandparents who have 69 years of marriage under their belts are the greatest example to me of always sticking behind your spouse. I’m sure by going through the depression together that it only made them stick together more and rely on each other. Tip: Stick behind your spouse in the good times and bad. Working as a team will make survival easier if you’re working together. What husband doesn’t want to hear their spouse say, “I’m always behind you.” – Renee Zellweger in Cinderella Man
- Payoff debt – the optimistic times we live in have a lot of people thinking that there won’t ever be another downturn. With interest rates now at about 3.75% for a 30-year mortgage and the stock market at an all-time high, consider shoring up your debts. This will help you not be as stretched for when hard times come. In addition, when the stock market tanks and interest rates rise, then you’ll be able to purchase more stock shares at a lower price and your ability to buy a house will increase.
- Diversify assets that are working for you – consider how you can be less reliant on your sole source of income. Even as I write about my passive income streams, my primary income source still makes up 90% of my overall income. During the depression, people were expecting their primary job to be there. Once the floor went out from under the economy, then it had everyone scrambling for jobs! As a result, then employers were able to pay really low wages because there was 25% unemployment. Do you know what percentage of income your primary job makes up of your family’s income? Consider Airbnb’ing your house. What about creating an eBook on some subject you are an expert in?
- Don’t be reliant on banks – my grandparents talked frequently about how they would hide money throughout the house. They never knew if their bank might get caught in a bank run, and wouldn’t have enough money to pay their bills or buy food. Check out my article from 2014 on money hiding spots from the Great Depression that my grandparents gave me.
We sure do live in a great country where we have lots of opportunities and blessing and so much to be thankful for. Hope these tips help remember the past so we don’t repeat it in the future.