How to Survive a Depression

When it comes to the term ‘depression’, there is still argument going on about whether the term applies to our current economic situation. While semantics are a fun way to debate away the time, the fact is that whatever you call it, the economy is in crisis and if this is not a depression, one is certainly a possibility.

Millions of Americans are worried about their lives and wondering how to survive a depression. We see generations of the past, how strong they were and how hard they worked, but how unlike us they were. Many of that generation worked on the land and in factories, not behind desks and on computers. Can we use that generation’s experience to help us survive today?

Certainly the world is a very different place than it was almost exactly eighty years ago. In October of 1929 the stock market crashed and the world as that generation knew it changed forever. Many surviving members of that generation tell tales of survival that few can fathom as reality, yet we know they happened. Much like today’s crisis, the stock market crash of 1929 in the United States triggered a global financial crisis. As history appears to repeat itself, we hear the echo of the past and realize that those people too must have had no idea how to survive a depression. There is hope in the past, however, when we stop to realize that they did indeed survive and that they have left us much to learn from.

Much like in the past, one of the keys to surviving the depression is living like there is a depression. In modern terms, this means a few things. It means letting go of the unnecessary. Second cars and second homes are luxuries. For people in a dire economic condition, cable television is a luxury. Decide what you can truly survive without and then survive without it. Take money saved or money from selling extravagant luxuries like second homes, and put it away. Store it in a safe or store it in a Swiss bank account, but keep it as cash. When wondering how to survive a depression, take a sign from the past and understand that cash is king and credit carries very little value.

We all share the hope that the situation will not be as dire as it was for earlier generations, but we must prepare ourselves. This means paying off debts whenever possible so that you own no money should it become scarce. Saving money as cash means being able to afford necessities should credit become less valuable. While these sound like tips for handling an apocalypse rather than a financial crisis, but the reality is that the current economy is unpredictable and nobody knows how to survive a depression that we aren’t sure is here or coming.

We all share the hope that the financial crisis will be resolved quickly. What we can’t do, however, is to hold on to extravagant lifestyles with a wait and see attitude. While nobody knows how to survive a depression fully intact, the past is an excellent indicator of how to survive without losing everything you have.