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Preppers
Original poster

Financial Prepardness

29 replies

YesterdayOnceMore · 09/11/2015 12:56

I am very new to all this, so please help me out! Below sounds very over paranoid, tin-foil hat-ish. I am not!! I am just wondering...

I have read about being prepared for an economic collapse, but nothing I have read has been very helpful/reasonable. I therefore have the following questions that I would be grateful if people could help me with:

What would happen if there was an economic collapse?

What is reasonable to do to prepare for this- stockpiling years worth of food and water isn't really something I could do. I will keep some cash at home (more in case of shopping in power cuts than financial collapse though) but not enough for very long. Are there other financial things that help- paying off mortgage and credit cards and if so why?

Once mortgage is paid off though, we might as well save though. If there was an economic collapse, we'd loose it. If there wasn't, we'll have a nice retirement. I was reading one site about cutting down on all no-essential spending, which makes sense if you are paying off debts or are living beyond your means or saving. But If you have paid off your debts are aren't overspending, your choice of what to do with your money is spend it on non-essentials or save it. Neither of which would help you in an economic collapse.

Basically, I'm confused!!

OP posts:
howtorebuild · 09/11/2015 12:59

Look to Greece and the IT failures of banks, just make sure you have a bit of cash on you to tide you over for a week.

HubertsBirthdayStick · 09/11/2015 13:07

Last year I had a bit of a turbulant time job wise and I paid off my credit card, DH has none anyway and I am alot more frugal than I was. Ideally I would like a years worth of bill money in my account at all times, and this is what I am working towards.

That said, I am not really buying lots of long life food on purpose but looking in the cupboard bar fruit, veg and milk I probably have a months worth for 2.

So actually, about 8 months ago without realising I started prepping.
And happy about the debt free etc.

ISpidersmanYouMeanPirate · 09/11/2015 14:18

Spreading out your money between banks is always a good idea (though that means that individually they might not treat you as such a high potential customer) - I need to double check the rules but in the event of one bank crashing, the government will cover up to XXK pounds (in France it's 80 000 euros per person - I'm not sure about the UK).

Agree that having cash in your home is always a good idea - I've only started doing that this year and have already had to dip into it for unforeseen circumstances (I always get more money out afterwards).

As for an entire economical crash...I don't know really, will have to have a think!

howtorebuild · 09/11/2015 14:26

I would avoid the chip coin, gold coin nonsense too. It's likely a financial crisis will not last beyond a few weeks, at worst you will need to barter if cash is no good.

Zetetic · 09/11/2015 14:37

A good tip if you can save is to spread savings around different asset classes so that all your eggs are not in one basket if something crashes eg. share prices.

winchester1 · 09/11/2015 18:51

A third choice for spare cash is to use it to lower your living costs, eg, by going partially/toally off grid, buying cars out right, hobby farming, living rurally - all this obv depends where you live and work.

I think financial preparedness to two diff routes, your personal preparedness in case of long term illness, job loss etc - clear mortgage and debts, save for your pension, split money over diff assesst and banks (remember some banks with diff names are affiliated) etc

And the seperate preparng for a banks being shut, or a power cut to atms - for that we have enough cash in the house to get us through a month or so (we already have food in so its not that much really).

Stratter5 · 09/11/2015 19:23

That is what we do, winchester, neither of us like debt, and I am doing my best to get rid of the overdraft. I hate 'owing' anything. And I always have a decent amount of cash in the house; there's one cash point here, it always runs out over the weekend, and it's 15 miles to the next nearest.

Original poster
YesterdayOnceMore · 09/11/2015 20:47

How much money is a reasonable amount to keep in the house (roughly)? £100?

OP posts:
FreeWorker1 · 09/11/2015 20:53

Keep enough cash in the house in small denomination notes and coins to pay for 2 months of food in case the cash machines close.

Me and DW foresaw the financial crisis and put £1000 in our safe. The country was one day away from closing the banks when Northern Rock went down. We knew what was happening and were prepared.

warmastoast · 09/11/2015 22:39

Not an expert but would say that if you're in a country with an unstable currency keep a good stash of a hard currency in cash to exchange as needed.. A couple of years ago the kwacha lost half it's value overnight- though it was an anticipated change few would have had the means to prep for the shock.

I guess keeping an eye on the market in case there is going to be a sudden price hike in certain commodities could also be helpful. I remember the cost of rice in uk skyrocketing a few years back so we switched to the cheaper stuff for a while.

lighteningirl · 10/11/2015 06:56

My dh preps for this. As weol as some stickpiling we have cleared our mortgage installed solar panels, planted a small orchard, grow vegetables. Having a cash stash is ok but will only last so long being just that bit more self sufficient will help. We are/were both self employedish and have seen a sizeable drop in income (I didn't get a pay rise for 9 years) in this recession, inflation alone has hurt us.

FreeWorker1 · 10/11/2015 08:03

'....in this recession, inflation alone has hurt us.'.

Essentially a financial crisis hurts people the most by reducing their spending power. That means the price of goods rises as the value of money falls. In a hyper inflation environment or one where money is seized by Government (e.g. after a banking crisis) the holding of cash in a bank for all but a very short period is foolish and the objective is to convert it into real goods you can use such as food, clothing, shelter, fuel as quickly as possible.

Also watch out for negative interest rates. The ECB, Federal Reserve and Bank of England are actively discussing negative interest rates which means you pay the bank for it to hold your money.

Another real risk is a 'bail-in' where your deposit account gets converted to equity to bail out your bank. Indeed, today the Greek Government is being pressured by the EU/ECB to bring bail-in clauses into law to allow Greek citizens money in banks to be seized to allow it to be used by Government should its banks get into trouble.

Don't think it won't happen. The seizure of deposits in Cyprus has already happened remember.

ThroughThickAndThin01 · 10/11/2015 08:27

I am certain there will be a financial crash, far greater than 2008, mainly because nothing has been fixed from that, and we no longer have the tools to fix another one ie lowering interest rates.

I'm slowly sorting out our debt and paying down mortgage which I think is key to surviving another one. And keeping cash in the house, around £1000.

Other than that I'll read through this thread to pick up more tips,

ThroughThickAndThin01 · 10/11/2015 08:37

FreeWorker do you know what made you predict the last one? Dh and I didn't see it coming at all. What are the signs? I read,for instance, that oil falling below $40 is not a good sign and think that's already happened? Things to look out for to indicate a crash would be very handy!

ThroughThickAndThin01 · 10/11/2015 08:40

I keep reading of mass redundancies too, which seemed to precede the last crisis.

winchester1 · 10/11/2015 08:45

I prefer actual stuff and less cash so have food etc in already and cash for extra bits, if needed and available. I'm more power cuts than banking crash though.

howtorebuild · 10/11/2015 09:12

I could see the crash coming too. Have you ever studied economics? If you have and watch the news you will see the signs. We should have dealt with bankers as Iceland did. China is not looking good atm. I think there is another banking crisis coming, I agree nothing was fixed, we have the same psychopath in charge, the NHS, LA's and FE are on the brink, it's not looking good.

ThroughThickAndThin01 · 10/11/2015 09:46

I haven't studied economics howtorebuild, but I watch the news or have it on in the background every morning. China, yes, China taking a downturn was another sign of recession to follow here. I keep thinking maybe a crash won't happen but reread Money Weeks's The End Of Britain, and think that article is spot on, and it is inevitable.

I don't reallt prep for anything else in a major way, but this I try to. DH and I were really caught out last time, with huge outgoings and virtually no income. Dh was so stressed for a year or so. I now own my car outright, and we've reduced our mortgage significantly, although not enough if it were to hit tomorrow. I dont think it will hit quite that soon. We can grow our own vegetables, keep cash at home, and I have no credit cards, although Dh does.

cozietoesie · 10/11/2015 10:33

...The country was one day away from closing the banks when Northern Rock went down...

Blimey - I didn't realize it came that close.

howtorebuild · 10/11/2015 10:35

Gordon Brown self proclaimed he was superman, the other countries went for his bank buyout plan. I am glad I wasn't a LP member then.

FreeWorker1 · 10/11/2015 13:50

ThroughThickandThin - our prediction was based on observing the insane lending on housing and property more generally. We knew people in Newcastle who has 125% mortgages on former council houses in grim estates being serviced by people with no job security.

We both worked in financial markets and the exponential derivative losses that would occur.

The smount of debt built on more debt funded by ever more stretched valuations of the underlying assets is still rampant and has got worse since the financial crisis. Lending on commercial property is at insane levels.

Huge losses on loans to commodity and oil companies are about to be revealed and even bigger defaults by countries that produce commodities are being predicted and meanwhile Greece and Portugal are in the news again.

Yet our politicians would have us beleve the situation has improved.

It really is at breaking point and it will not end well.

howtorebuild · 10/11/2015 14:08

There are apparently a huge glut of unsold London flats and groups of foreign investors selling in London too. When the money goes you follow.

ThroughThickAndThin01 · 10/11/2015 14:26

Thanks FreeWorker, no i don't think it will end well either. Debt levels now are greater than pre 2008. Madness.

howtorebuild · 11/11/2015 09:25

On radio 4 earlier they were discussing finances and I thought of this thread. It's not a good sign that today the Bank of England is entering public consultation on how to move forward. It looks to me like they have run out of iseas.

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