I really don’t like to make predictions.
I’m not Zoltan, the fortune-telling dude in the machine – you know, the one with the turban who waves his mechanical hands dramatically over a crystal ball and tells you of your future in a heavily accented voice.
But, I think there is something coming in 2015 that we all need to be concerned about, and I wouldn’t be doing my job, writing these posts, if I didn’t warn you.
Some people are going to roll their eyes and call me a doomer. Some people are going to say, “You warned us about stuff all the time, and it hardly ever happens.” Some people are going to revert to cognitive dissonance and say, “Life is too short to worry all the time.”
But there is something very troubling on the horizon, and it’s going to affect us all. From most reports, the outlook for 2015 is not particularly bright.
Economically speaking, the bottom is falling out.
Sometimes to see the future clearly, we need to look at the past.
The most recent economic disaster that the US has suffered was in 2008. In just a few weeks, trillions of dollars of American wealth was simply vaporized in what was classified as “The Great Recession.” Over the next 3 years, American financial well-being was diminished by 40%.
Despite what the White House would have you believe, there’s been no significant recovery. And the signs that portended the 2008 crisis are all there, warning us, if we’d only pay attention.
Michael Snyder of The Economic Collapse Blog wrote a post with a grim warning last week. Although we’re all being told to spend, spend, spend, because everything is wonderful, the same thing happened in 2007, right before it all hit the fan for many Americans.
Sadly, what we are experiencing right now is so similar to what we witnessed in 2007 and early 2008. The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.
But then it did end – very painfully.
The signs of trouble were there, but most people chose to ignore them.
Sadly, the exact same thing is happening again. (source)
The biggest indicator of impending financial catastrophe can be seen at the gas pumps. While it seems like a great thing to be spending fewer of our hard earned dollars getting from A to B, it is a deceptive sign that all hell is about to break loose in the financial world. An article on SHTFplan warns:
On the surface the recent drop in the price of oil has been a huge boost to America’s pocket books. But according to some analysts we shouldn’t be to quick to celebrate. The U.S. Oil and Gas industry has seen incredible job growth during the recession, with nearly 800,000 new jobs being attributed to domestic fracking and drilling expansion. At over $100 barrel, there was plenty of money to go around.
But with a sub-sixty dollar price point, it’s quite possible that all economic hell is about to break loose.
Thousands of recently highly paid workers have been laid off after the oil price plummeted 50 percent in 2014. At least four American oil-producing states are already facing budget problems due to decreasing oil revenues.
In a study published last year, the Council on Foreign Relations warned the largest job losses caused by sharp decline in oil prices are going to take place in North Dakota, Oklahoma and Wyoming, where the number of drilling rigs is decreasing.
According to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs.
These workers can earn more than $1,700 a week, much higher than the average $848 a week payment for other workers, the WSJ reported. When experienced workers lose their highly paid jobs, they stop paying their bills.
Those are the conservative estimates and they are based on a $56 price point, which is almost exactly where we are today. But Saudi Arabia and other OPEC nations have suggested the price could drop to $40 or even as low as $20.
In such a scenario we could easily see widespread layoffs in an industry that currently employs over 10 million Americans.
Unfortunately, that isn’t the worst of it. It’s only the most noticeable first domino in the row. Snyder points out that these low prices could have even more brutal ramifications than massive job losses:
The big banks are holding trillions in commodity derivatives that could blow up if the price of oil does not rebound. Overall, there are five U.S. banks that each have more than 40 trillion dollars of exposure to derivatives of all types, and the total global derivatives bubble is at least 700 trillion dollars at this point. (source)
That’s not all. According to an analysis by Tess Pennington of Ready Nutrition, job security is ephemeral.
It appears that the confidence in the economy may be another over-inflated attempt at masking the true state of affairs. In fact, some of the largest U.S. corporate conglomerates are planning for massive layoffs in the coming year.
CEO of the Coca-Cola company, Muhtar Kent dubbed 2015 as a transition year and notes that 2015 will most notably be “the most important year for us to make the changes in terms of a leaner, better-operating model.” He adds, “The consumer is challenged everywhere around the world,” Kent said in a conference call. “There is a lot of volatility in the world, in currencies, in interest rates, in growth rates and in geopolitical issues.”
In order to cut losses due to a disappointing quarter, the popular soda company plans to cut at least 1,000-2,000 jobs in coming weeks to try and rein in costs. As well, other major companies have also felt the buoyancy of the world economic markets. Halliburton, USPS and even IBM are also hinting at layoffs in 2015.
There’s concern that the coming year will also be the beginning of the energy sector layoffs. Crude oil has plunged to nearly $50, and energy companies have begun announcing cuts to their 2015 capital budgets of as much as 25 percent. As well, rig counts are falling in Texas as companies shut down drilling operations. Source
Since 2008, prices of products have continued to rise in order to adjust for the declining economy. As Mac Slavo of SHTF Plan points out, the Baltic Dry Index, a key indicator of economic health and stability, has collapsed to nearly the same levels. (source)
It certainly doesn’t sound like the outlook for 2015 is the rose petals and sunbeams that Washington is promising.
How will the financial collapse affect you?
Maybe you aren’t an investor. Maybe you don’t have real estate. Maybe you are absolutely certain, without a shadow of a doubt, that your job is secure. Perhaps you have money in the bank.
The trouble is, the money you are working overtime to make, the security you feel that you have by saving it…it’s imaginary. It’s nothing but a giant fraud that keeps you a slave to the system. Joshua Krause of The Daily Sheeple wrote about the dollar:
But what is it really worth?
Nothing. It’s worthless, and that’s the godawful truth. I’m not exaggerating to make a point either. It’s not just overrated, overinflated and backed by nothing but confidence. It is quite literally worthless. Less than worthless in fact! Our fractional reserve banking system spews out “money” that is nothing of the kind.
This thing that we spend our whole lives desperately trying to accumulate; that builds our roads, feeds our bellies, pays our mortgages and fuels our dreams. This glorified token that puts our kids through school so that they may spend their whole lives trying to accumulate it as well, is not really money. It’s debt! And it’s not even your debt. It’s somebody else’s liability. (source)
Not only is your money worthless, here a few more ways the current economic trends may still affect you.
- Prices will go up. We’ve seen an almost unprecedented increase in the price of food over the past couple of years, even as the quality of the food available plummets. This is due to massive droughts, early freezes, and basic cost-of-living increases.
- Unemployment will continue to ripple through the country. Those without jobs now are equal to the number of unemployed during The Great Depression. As the economy plummets, that number will almost certainly exceed the previous highs.
- Obamacare mandates will continue to impoverish the middle class. The most ill-conceived policy in history, Obamacare has increased monthly payments while decreasing coverage for nearly every person who is gainfully employed. And, if you refuse to procure coverage through Obamacare, expect attempts to penalize you into compliance. This is adding to the unemployment rate as employers struggle to keep their doors open and drop full time staff to avoid having to pay their portion of the O-care payments.
- Rents will increase. If you don’t own your home, prepare to pay higher rent as landlords try to cover their losses of income in other sectors. Foreclosures will be on the rise, which means there will be fewer homes available.
The bottom line is, income will remain the same, decrease, or even disappear entirely for many of us. Meanwhile, the price of darn near everything will go up. Expect to pay more for things like keeping your utilities on, feeding and clothing your family, keeping a roof over your heads. Aside from that, those dollars you are carefully saving? They are only providing you with the illusion of security.
How about another refresher on recent history? Remember the economic collapse in Greece? People were digging through garbage to find food. Suicides were rampant as people discovered that they literally could not afford to stay alive. Desperate parents gave up their children to orphanages, just in the hopes that those kids might be able to survive. This isn’t something that happened in the distant past. This occurred in a beautiful, apparently thriving country three short years ago.
If you ever prepped for anything that “might” happen, please understand that this current rate of spiral can only end one way: in financial collapse. There is a much greater statistical likelihood of your family suffering from the effects of this than being subject to a nuclear disaster, an EMP strike, or a devastating natural event. I’m not saying that these other things won’t happen, but the odds are much greater that you will be affected by the economy in 2015.
For many people the economic collapse has arrived. Their “end of the world” event has already occurred in the form of a job loss, the foreclosure of the family home, or an illness that has caused such massive personal debt that there is truly no way out of it. Less than 60% of Americans who are of age to be in the workforce have a full time job. When you tally that, it means that more than 100 million people are out of work. More than 100 million people in the United States have no jobs. For more than 100 million people, the economic collapse has arrived in full force.
Meanwhile, as people all over the globe (think Greece, Italy, Spain, Argentina, the UK) struggle with high rates of unemployment, the prices of everything have gone up. People are struggling to keep such simple necessities as running water and electricity. Grocery costs have skyrocketed – the World Bank released a statement that global food prices increased by 10% in ONE MONTH – July 2012.
How can you prep to weather this economic disaster?
If you’re here, reading this, it’s probably because you are of a preparedness mindset. You are ready for all sorts of disasters: huge storms, earthquakes, civil unrest, small personal SHTF moments like a hiking trip gone bad.
But are you prepared for the one thing that is the most likely event to affect your family? Are you ready for an economic collapse on a grand scale?
Prepping for an economic disaster bears some similarity to prepping for other types of disasters. The main difference is
figuring out how to make ends meet while making less and spending more. It’s time for a crash course in “Preppernomics”.
The answer to weathering the economic collapse is to make some radical changes to your lifestyle.
If you are in a position where all is well right now, you are one step ahead. Heed the following and make adjustments to allow yourself to be prepared in the event that your personal finances take a hit.
If you are already suffering from the financial downturn, then look at the following suggestions and see what changes you can make.
The key to economic survival is requiring less of things that cost money.
First, you have to take a stark look at what necessities really are. It is not necessary to life to have an iPhone, a vehicle in both stalls of your two-car garage, or for your children to all have separate bedrooms. People in Southern and Eastern Europe right now will tell you, as they scramble for food, basic over the counter medications like aspirin, and shelter, that necessities are those things essential to life:
- Food (and the ability to cook it)
- Medicine and medical supplies
- Basic hygiene supplies
- Shelter (including sanitation, lights, heat)
- Simple tools
- Defense Items
Absolutely everything above those basic necessities is a luxury.
So, by this definition, what luxuries do you have?
Some are more important than others, based on your lifestyle and might be considered secondary necessities. You might require transportation, work clothing, a computer and an internet connection, electrical appliances, a cell phone – you are the only person who can define which are these are luxuries and which are secondary necessities. It’s essential to be truly honest with yourself and separate “wants” and “I really enjoy having this” and “the kids will complain without it” from “needs”.
You may have to make some brutal cuts.
What can you change about your life? Where can you reduce expenditures by several hundred dollars monthly? This is the point at which most people say, “I can’t.” Most people don’t want to move to a smaller house, get an old car, or go without premium cable. But this is where you can truly dig in and create a lifestyle to survive an economic mayhem scenario.
Everyone’s situation is different. You may be locked into a mortgage on a huge house in a market that won’t even cover the balance of what you owe. It could be the same with your vehicle. Explore all of your options, though, because paying a few thousand dollars to get out from under it could be worthwhile. Some people could have reached the point where they must begin to default on payments. That, too, is a personal choice. I’m not recommending that you blow off your obligations. (However, do consider the fact that large banks get bailed out by the government, and everyday people do not.) Before making decisions like that, be sure to discover all of the potential ramifications, such as repossessions, garnishing of bank accounts, and ruined credit.
Here are some cuts to consider:
- Move to a smaller house. Contrary to popular belief, no child ever died because he or she had to share a room with a sibling.
- Relocate to a small town. Is it worthwhile to commute to a job in the city from a smaller, less expensive location? This can give you the added opportunity of homesteading and providing for many of your own needs. Click HERE to read about what you need to know before making such a move.
- Get rid of your late model year vehicle. Look for a decent used vehicle that you can purchase with cash.
- Cut back to one vehicle or even no vehicles. Sometimes public transit and your own two feet can provide all of the transportation you really need at a fraction of the price of owning a vehicle. This varies by location.
- Stop using credit cards. This goes for any type of lending system that requires you to pay interest. Stop accumulating debt.
- Pay off debt. If you are already deep in debt, you need to try to pay it off. The fewer bills you have when things go sideways, the better off you will be. (Check out this book for great advice on straightening out your finances
– I found it life-changing.)
- Don’t eat out. Limit meals out to no more than once a month or special occasions. Even better, don’t eat out at all. Dining out, even at a fast food place, is at minimum 4 times more expensive than the same meal prepared from scratch at home. (And far less healthy!)
- Look for free or low-cost entertainment. Consider a family YMCA or community center membership instead of gymnastics clubs or private tennis lessons if you need to enroll your kids in some activities. Go hiking, have picnics, explore parks, go to the library, and find out what’s offered for free in your home town. Learn to enjoy productive hobbies like canning, carving and needlework. Switch from cable to Netflix.
- Use the envelope method to budget for shopping trips. For back-to-school shopping or Christmas shopping, decide how much you want to spend. Put that money in an envelope. As you shop, place each receipt in the envelope. When the money is gone, it’s gone. If there’s something else your child desperately wants, then they need to decide what item they’d like to take back to get it. Be firm and stick to your guns. This has the added benefit of teaching your children to budget.
- Reduce your monthly payments by cutting things like cable, cell phones, home phones, and/or gym memberships. Look at every single monthly payment that comes out of your bank account and slash relentlessly. (Click here to read more about cutting fixed expenses.)
- Shop using the stockpile method. Shop only the sales and simply replenish your stockpile. (Learn to build a one year food supply in 3 short months!)
- Eat leftovers. Have you ever stopped to think about how much food you throw out every month? You can often provide a few “freebies” every month by carefully repurposing your leftovers.
- Stay home. By spending more time at home, you will spend less money. You won’t be grabbing a bottle of water, going through drive-thru for lunch or putting fuel in the car. Learn to treasure you time at home with loved ones – it’s worth more than money.
- Learn to provide for many of your necessities alone. Grow food, join a co-op, raise chickens and rabbits. Even a small salad garden in a kitchen window can help you to offset high food prices. Learn to sew, mend, repair, preserve, and build. Decrease your dependence on consumer goods and services. Embrace your frugal side and opt to be cheap by choice.
- Reduce your dependence on the power grid. Use rain barrels to collect water, direct the gray water from your washing machines to reservoirs, hang your clothes to dry, and use solar lighting whenever possible. The less you depend on public utilities, the lower your bills will be, which could mean the difference between having some services or being totally without them.
- Find other ways to stay warm. This can be difficult if you rent but it can still be done. Consider making modifications to allow for the use of portable wood heaters, look into different types of camping heaters and make your plans and purchase your supplies well before you need them. Learn how to safely store fuel for these secondary devices. Invest in battery operated C0 monitors (and extra batteries). Get sleeping bags with a warmth rating for low temperatures, consider a small tent where you and family members can sleep in your living room to pool body heat, and stock up on cold weather clothing like hats, fingerless gloves, long underwear and heavy sweaters. Find ways to insulate and separate one main living area off from the rest of the house by closing doors, hanging curtains in doorways, etc.
- Watch the prices of your utilities. As the prices begin to rise, more and more people will be unable to pay their bills and eventually their power will be shut off. Check your bill each month and as prices increase, use less power. Redefine necessities. You can hand wash your clothing, cook on a woodstove or outdoor grill and can foods to preserve them instead of relying on a large chest freezer. None of these are the way things are commonly done these days, but if you can manage to keep power on for the most basic necessities, like running the pump for your well, running a refrigerator, and maybe powering up a laptop, you’ll be living in luxury in comparison to those who have no power, no heat and no running water.
- Prep, prep and then prep some more. The end of the American way of life is upon us. Stock up on beans, bullets and band-aids. If you’re new to the idea of prepping, check out some sites like Ready Nutrition (especially the 52 Weeks to Preparedness Series), Survival Blog, Graywolf Survival, Survival at Home, Survivehive, Prepper Website, Lew Rockwell, and SHTFplan. The clock is ticking, so buy as much as you can, while you can. Despite what many veteran preppers may tell you, it’s NOT too late!
- Build a preparedness library. While free information from websites is great, if there is a point in the future that you can’t access the internet (or your computer) hard copies of useful books will be vital. Here are some of my favorites:
- The Prepper’s Blueprint: The Step-By-Step Guide To Help You Through Any Disaster
- The Organic Canner
- The Pantry Primer: How to Build a One Year Food Supply in Three Months
- Tools for Survival: What You Need to Survive When Youre on Your Own
- Life without Refrigeration
- The Encyclopedia of Country Living, 40th Anniversary Edition: The Original Manual of Living Off the Land & Doing It Yourself
- The Forgotten Skills of Self-Sufficiency Used by the Mormon Pioneers
- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
Introducing the Preppernomics Series
Watch for more articles in upcoming weeks about how to position yourself to survive the upcoming collapse. We’ll take a closer look at the points recommended above, with practical solutions you can adapt to your family’s situation.
Have you had situations in which you had to dramatically reduce your expenses? Where did you slash your budget? Share your stories in the comments below. You just might inspire someone going through a difficult time.