Help me weather the economic storm
November 23, 2011 12:56 PM   Subscribe

While nothing is certain, both the left and the right are noting the growing chances of a serious and devastating eurozone crisis, one which will not spare the US. What can people on the lower end of the income scale do to protect ourselves from what may become a terrible economic situation?

I read this AskMe, but like many of us I am in no position to invest in anything and am extremely worried about the short-term (in my case, I'm not sure how that Roth IRA is going to help if retirement is decades away). I have many, many tens of thousands of dollars in student loans outstanding. I am classified as a private contractor and my employer will not extend to me "employee" status which means I don't/won't receive any benefits. Under those circumstances, I am slowly building up resources to start my own little company using what I have learned (retailing)...but maybe that's a bad idea right now.

I live in an area with particularly high unemployment, but moving to another place (eg North Dakota) is a bit unrealistic (to be completely honest, I'd also worry that this ND-boom narrative is not as believable as it seems). I live pretty frugally (no cable tv, minimum phone plan with no internet, budgeted food/utility/everything). Scrimping very hard, I can get to $500 saved in some months. My total savings aren't enough to get me out of debt, not enough to start my business, and not enough to protect me from an extended period of economic turmoil.

tl;dr what practical things can someone in the bottom half do in the face of the eurocrisis?
posted by Hypnotic Chick to Work & Money (8 answers total) 13 users marked this as a favorite
 
What did you major in? If I were in your situation, as counter-intuitive as this may seem, I would consider going to graduate school -- but only enrolling in a program that gave me a free ride plus a stipend. Depending on what your qualified to apply for, this may be hard or easy to get. I don't know.

Enrolling in a graduate program when your current job situation isn't good can help you ride out the economic turbulence in a productive way. Among other things, it will:
* buy you some time to figure out what you want to do
* expand your networks
* augment your resume
* provide you with access to benefits and inexpensive student housing

If you really want to maximize your advantage, enroll in a program where the living is cheap.

It's possible this doesn't address your question. Maybe you're more interested in some kind of investment advice or tips about getting loans to start a small business. I can't help you there, but maybe others can.
posted by Philemon at 1:11 PM on November 23, 2011


Probably nothing that will give you any sense of comfort and certainty. Those two things are in short supply the world around, and the reason the market is aflutter and the talking heads are blaming the current Eurozone Crisis. The best thing-Firm up your social net and learn useful skills in a vareity of areas that are not related. LIke contruction, car repair, programming, cleaning houses, childcare, etc. That way you are not as limited and a social safety net may be all we have in the future,and a vareity of skills will make you more valuable to your social net as well. Our country is getting close to the point of having to do something drastic about our debt, and the European countries at risk are well past this point, that is the cause of the crisis. Ultimately the only two resources that have any lasting value and give any security in all societies since the end of the Ice Age are productive farmland (which appears to be in a bubble right now in the USA) and the skills/know-how of individual humans.

I don't think we are staring down the barrel of another great depression (anymore-2009 looked a lot worse worldwide). If they default and/or the eurozone breaks up (worst case) some banks are going under and the world is going to have a tough few months as the dust clears. However their is a school of thought that says the dust has to clear anyway, might as well get it over with and take our medicine and, to borrow a phrase I saw here on metafilter, take the non scenic route to where we are going anyway. Do the best you can, hedge your bets if possible and just live your life.

TL;DR-Against the Vagaries of Fate, even the Gods struggle in Vain.
posted by bartonlong at 1:50 PM on November 23, 2011


Keep on keepin' on. Continue saving and living frugally. Avoid volatile investments with your savings. Keep those savings liquid: you may need to use the cash. Always have a plan B for everything.
posted by falameufilho at 2:47 PM on November 23, 2011


Adding to bartonlong's suggestion to level up useful skills, if you are dependent on using a car (for commute, groceries, etc), it might be prudent to start working on developing independence from that now.

The ongoing costs of gas, insurance, maintenance, depreciation, payments, etc adds up to a lot more than we typically think, and if push comes to shove in touch economic times, you don't want to end up one of the people who has to buy less food because you can't buy less gas.

This doesn't help you swim better, sorry, but it could potentially keep you from drowning.
posted by -harlequin- at 3:58 PM on November 23, 2011 [1 favorite]


This is firmly in the "past results don't predict future results" zone, but it seems to me that the most damaging crises are the ones nobody sees coming. The eurozone crisis is well known and is being ameliorated (or at least passified) as we speak. I heard someone on the radio talking about this, and they had hard numbers that implied that European banks aren't very exposed to the toxic debt, and the US banks even less so. It is looking like a controlled failure like GM and not a "pop" like Lehman.

It reminds me of a theme from the Jim Cramer book that has proven out in my (limited) experience: when the crescendo of voices all start pointing in the same direction, you've hit a peak (or trough). When everyone is rending their garments and flailing and screaming "fuck it, sell everything and go into cash, we're doomed", you are seeing a bottom and it is going to get better.

Now all of that said, it never hurts to reevaluate your spending and income and make positive changes. If something bad happens, you are better prepared. If nothing happens, even better.
posted by gjc at 5:02 PM on November 23, 2011


You're worrying way too much about this. Greece and Italy having some debt problems will have no bearing at all on your personal prospects in the USA. European countries are basically strong and rich and the rocky ride of the Euro isn't suddenly going to reduce them to the stone age. The things you should do to make a living in the face of this are exactly the same as you should be doing anyway - keep a job, buy a house, be sensible with your money. Economic disaster is constantly hyped up - usually by people with no background in economics - but steady economic growth continues regardless. You'll be fine.
posted by joannemullen at 5:25 PM on November 23, 2011


Philemon - In another situation, this would be interesting, but part of my problem comes from an unsuccessful attempt at grad school.

bartonlong - I hear you. Developing those skills makes a lot of sense.

falameufilho - I know. I guess I was after a more proactive Plan A than what I have.

-harlequin- - Car dependency is a tough one to avoid here. Having said that, I can see the value of pushing my friends on car pooling to work, thanks.

gjc - I've noticed that too...thee world "likes" to zig when you expect it to zag. As far as your sense, I hope you are right.

joannemullen - I hope you are right, too. The thing is, Scott Summer, Tyler Cowen, Paul Krugman, Brad Delong all seem to be saying that the fuse has been lit and those guys span across the ideological divide and are respected economists. You may be correct about this passing over those of us off Wall St., but my sense is that this sort of situation hits those on the bottom the hardest. I haven't been this worried since the fall of '08.

Thanks to everyone!
posted by Hypnotic Chick at 7:04 PM on November 23, 2011


I live pretty frugally (no cable tv, minimum phone plan with no internet, budgeted food/utility/everything). Scrimping very hard, I can get to $500 saved in some months. My total savings aren't enough to get me out of debt, not enough to start my business, and not enough to protect me from an extended period of economic turmoil.

You are worrying about the clouds in the sky rather than the earth underneath your feet.

Your prime objective should be to save enough money for six months of living expenses. Everything else should be secondary to that (except perhaps high interest credit card debt that will balloon if unchecked). Once you have the money saved, that is your insurance policy against economic turmoil or a car accident. Do not spend the money in your float unless you are completely broke and there is no other option. Park the money in CDs or an internet bank where it won't be easily accessible (e.g. not your regular checking account).

Once you have a float maintained, then you can start saving up to start a business or invest.
posted by benzenedream at 9:59 PM on November 23, 2011 [2 favorites]


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