I am Veritus, and this is my very first informal post, and I would like to share a suggestion should you wish to take it into consideration. It is entirely based on personal knowledge and experience about the global economic/financial system, and, most importantly, what is out there. coming to us all soon, yet again - another crisis. Whether you believe it or not, it is coming, and everyone must be ready and prepared. Because the only institution that will bail you out of debt is yourself.
As many of us know or remember, the last economic/financial crisis which started in 2007 and spread all over the world, lasted for some years, had a huge impact on many households and I believe it's not hard to picture those fathers and mothers when they looked at their sons and daughters, in anguish, after losing their job, home, and hard-earned savings during that period. I am sure many of us still remember it well, some probably lived it personally or seen it at very close range. The economy survived, but at a great cost - the people.
The government and economic systems need debt slaves so that the 1% keep getting richer, and the people are held hostage of debt, easily induced into manipulated minds since a young age, to buy what they don't need, with money they do not have.
They will then have to work longer hours, entertain themselves with rubbish reality shows in the small leisure times, distracted and unaware of what is going on, what they must really do, how to actually live, and how to get out of the vicious circle of debt and ill consumption of unneeded products that provide a false sense of satisfaction. That latest smartphone, that new car model, those fancy shoes, and the night out at the fancy restaurant. That false enslaving happiness that makes our women believe they are not beautiful enough, their breasts are not big enough, so more money is needed to "correct" that "imperfection".
Now, 2019 is just starting and after surviving the latest crisis, the confidence and spending are still up, the banks are again facilitating and incentivizing credit to buy pretty much anything you want. But bear in mind, for instance, the negative interest rate stimulus programme implemented by the European Central Bank is meeting its end this very year - 2019. We will start to see the interest rates going up rapidly. The Euribor which has been on negative rates for a while will go positive, and start to climb just as fast. This will affect house mortgage rates. Many households will see their mortgage monthly payment doubling.
We know, when interest rates go up, the cost of opportunity becomes higher, so there is less investment being made, job creation slows down, unemployment rises, small companies close, but there is one thing that remains and will need to be serviced - the DEBT!
With this in mind, the following should be taken into consideration, if you want to be able to better face the economic crisis that is heading our way:
For those with a mortgage at a variable interest rate, it would be better to change it to a fixed rate (swaps) for a period no less than 10 years or more (ideal would be the entire period length of the credit), at a rate between 2% and 2.5%, that will be a safe place to be. You will pay a bit more now (if you are currently paying less at a variable rate) but, your payment won't change in the future and your mortgage will be resistant to high inflation. Remember in 15 years time our salaries will most likely be higher, but the mortgage remains the same. So, if now represents 25% of the monthly income, in 15 years time may represent only 20% or less.
Buying some precious metal (gold or silver) if possible, at least, at the current price, to be equivalent to 6 months of household expenses. If it is possible to buy more than this volume, even better. Note, precious metals can also help in inflation periods as well, just like the next consideration.
This may not be for everyone, but, looking into cryptocurrency, may be a very valid option. Look at the economic state of Argentina. Cryptocurrencies are helping many families. Some have paid their house fully with crypto. Picture a family that owes 100 000,00 of the national currency in house mortgage, and this family as a 10% worth of that invested in crypto. If there is high inflation in the country and the national currency value drops by 90%, then, this family will be able to pay that mortgage fully with those crypto savings. If anyone reading this thinks that a 90% loss in currency value is unthinkable, I would invite this person to look closely at what happened in Argentina. In December 2008, 1,00USD was worth 3,425Pesos, in December 2018, 1,00USD was worth 38,840Pesos - that is 91,5% loss in value. There you go.
Controlling household everyday expenses and figure out where saving can be made, such as utilities for example. 50,00Euros/Dollars a month is 600,00 Euros/Dollar a year. Little monthly savings here and there, will lead to a considerable amount at the end of the year. More efficient lighting and electrical appliances would be a good start.
Leisure time is important and needed for our well being. A picnic by a riverside, or on the beach with the family is far wealthier than that trip to that fancy restaurant in the weekends. Wealthier and not as expensive, and also, very importantly favoring that priceless time spent together with family and friends.
Cars are a mean of transportation. We should buy if we really need it. And not only the car price is to be considered. Also the brand, reliability, and efficiency. Some brands maintenance fee and parts are more expensive then others. Some offer better warranty and service. We must look for that brand and car model that will suit all our needs and wallet while offering the best bang for the money.
Rent/Mortgage monthly payment, should not exceed 25% of the monthly net salary/income. If the decision to buy a car on credit or lease, it should not represent a monthly financial obligation higher than 10% (preferably is 5%). I would encourage everyone in a position with higher percentages, to do their very best to meet the criteria mentioned above. Basically, monthly income may change, financial responsibilities won't, unless liquidated, so everyone should be prepared for that.
Over the years, I have found out that buying Summer/Spring clothes in the Winter/Fall, and Winter/Fall clothes in the Summer/Spring seasons lead to huge savings. If one is not the type of person that changes their weight much (obviously), and dressing up the latest fashion clothes is not of the utmost importance, then this approach to clothes purchasing should not bother much.
Having liquidity (money) at home, saved in a safe. In a crisis, banks may limit the amount able to be withdrawn, or may even freeze clients capital. There is also a limit to the amount which is covered. In my country, the maximum amount of money insured per account is 100 000,00 euros. It is similar in most countries all over the world.
Now for those of with capital available, and haven't thought of it, consider buying property in a location which is easy and profitable to rent. Renting it on a yearly contract basis with rent price revision following inflation.
And of course, whenever possible reduce your debt.
Save 10% of your monthly income.
This is what I do, and what I suggest to everyone that is dear to me, it is in no way financial advice, do your own research, and choose what it is best suited for your case. Anyway, I trust, if one considers following or applying some of it to his/her life, he/she will be better equipped to handle an economic crisis.
I wish you a great year of 2019 and beyond and, by the way should you have any good suggestion to face and be prepared for an economical crisis just let me know.
Your humble steemian friend,