How to Survive an Economic Depression

An economic recession or depression is the outcome of inflation and deflation of commodity prices. The ripple down effect of this phenomena has far reaching and severe effects. The world has witnessed one major upheaval in 1929-1930, The Great Depression. The exact cause is always difficult to pin point at, yet the effect can be felt across the continents. The very science of economics is interwoven with every aspect of our existence, on the home as well as the business front. The implications may differ from one phase to another, as will the extent of inflation or deflation in commodity prices; however, the effect in related and even remotely associated goods is inevitable. For example, during the Gulf War, the inflation witnessed in the oil prices not only affected the automobile industry, but also that of commodity transportation and travel and tourism.

How to Survive an Economic Depression:

Business:

It is important for any entrepreneurship to have a plan of action in place for a sudden economic depression. The plan should comprise vital components such as finance, training and a discussion forum for the employees to develop basic survivalist skills, options to remain buoyant in the debt-driven economy and detailed listings of debt and assets. There is no guarantee about when the desired economic stability may return. It is important to be educated on the signs of onset and tips for survival. The business perspective and analysis of the situation would also have to be worked upon and for this an in-house crisis management team needs to be developed. Some of the essentials that should ideally be addressed at the very beginning include:

• Quick repayment of debt
• Purchase of necessary supplies
• Storage of important assets and asset management
• Preference of cash payments instead of credit cards
• Identifying and clearing high-interest loans, if any
• Quick shift over to adjustable rates of interest, if the repayment tenures are long and cannot be shortened
• Clearance of unsecured debt and adherence to a debt management plan
• Cheaper replacements for expensive office commodities that weigh heavy on fuel
• Strict adherence to a Budget Plan and risk management strategies
• Negotiations with suppliers and clientèle, in tandem with the new budget in place

Home:

On the home front, the budgeting will have to be aggressive, the moment you sense the downturn. In order to survive a total economic collapse, you need stack assets and get rid of liabilities, just like the businessman. The efficient storage of food and resources should be a priority. You could also consider:

• Converting liquid savings into gold or silver, alternatively
• Evaluating the current and possible future prices of secured stocks and mutual funds
• Purchase of goods and basic food supplies, which are easy and convenient to store
• Keeping a record of expenditures and income
• Pushing negotiations with regards to mortgage payment and utilities
• Serious identification of necessities and luxuries
• Shopping for discounts and buying in bulk
• Adoption of the three R's - Reduce, Recycle and Reuse
• Shifting over from a vehicle that eats into fuel, to a cheaper car
• Dealing in cash only; refrain from the use of plastic

During an economic depression, it is very essential to save, anything and everything. This does not only relate to money, but can be applied to investment in commodities and food grains as well. It is very essential to keep a track of prices and identify the quantum of inflation. It is wise to use what is available at hand sparingly during this phase. It will pass, but not without scarring the business or home front, in some way or the other. The best way to survive an economic downturn is to plan and adhere to a budget via dedicated change management techniques.