How can we prepare ourselves for the next financial crisis?
The financial crisis of 2008 shook many Americans to the core. How could it be that the most advanced and powerful country in the world is so financially fragile? It seemed that the American economy was indestructible.
The "Great Recession" has taught us many lessons; lessons we can utilize to keep ourselves safe the next time a financial crisis hits. Here are 8 things you can do to protect yourself from another crisis.
1. Take an honest appraisal of where you stand financially. This important first step is also often the hardest. Here are some questions you should be asking yourself. Are you comfortable with your level of debt? If you lost your job tomorrow, could you survive without credit for at least six months? Are your investments safe? If there is another crash in the stock market, what will happen to your portfolio? Do you have ample food storage that would last for at least a year? Are you spending more than you earn? If you answered "no" to any of the previous questions, you have work to do.
2. Works towards paying off debt. The less debt you have, the more money you can save, the more secure you are if a job loss occurs, and the less you will worry. Start by paying off your high interest rate loans first. As you pay off debt, do not take out new loans. Make things last and purchase with cash instead of buying with credit
3. Lower your bills and start an emergency saving account so you never have to take a payday loan for some quick cash. Refinance to lower interest rates if you can, ask for discounts from cable, internet, and credit card companies. Changing your cell phone plan, downsizing you home or car, and taking the bus are other great ideas. Also, start to save enough money to cover all your living expenses for 6 to 8 months.
4. Accumulate food and other items in case of a worst care scenario. You never know how bad things could get if we have another financial crisis. Do you have food and other emergency supplies that would last for at least a year if society collapsed? This scenario is unlikely but possible.
5. Keep yourself healthy. Healthcare costs take a bid chunk out of every family's budget. The best way to improve this area is to focus on prevention. Losing weight, exercising, sleeping well, and having regular health screenings can save you hundreds of thousands of dollars in the long term. More than half of healthcare costs are associated with lifestyle choices.
6. Insulate yourself from inflation. Buy gold, silver, and other assets that are less likely to lose value due to inflation. Owning a home is another terrific way of protecting yourself from this silent killer of wealth and security.
7. Invest in your skills. Your ability to make money, adapt, and thrive is the best thing you can do to protect yourself from another crisis. The more diversified your skills, the better off you will be.
8. Stay positive. Optimism attracts abundance and opportunities into your life. This is true even during hard times. Believe in yourself.