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A Failing Economy Is Not a Get Out Of Jail Free Card for Personal Debt

jail card

Today we will be discussing a very popular misconception about the growing economic collapse and how it relates to personal debt. After seeing numerous debates on this topic, many preppers seem to believe that one day the economy is somehow going to just implode, apparently overnight, and that a widespread economic collapse will be upon us. It will be anarchy in the streets, money of any kind will be completely worthless and best of all, all personal debts will simply vanish amidst the turmoil of economic doomsday.

 

Today we’re going to disappoint some people and give a little dash of reality into this scenario and give you a good idea of what to expect in the coming years when it comes to personal debt and the continued degrading of the national and global economies.

 

Empires don’t crumble overnight

 

First and foremost, the idea that somehow the economy will literally crumble overnight is ridiculous. Even with all its faults, the American economic system cannot simply implode overnight. My only assumption is that most of these people don’t understand what an economic collapse actually is.

 

There will be no overnight collapse of the economy. The truth of the matter is actually scarier than some far off, “it could happen” overnight disaster scenario. The truth of the matter is that the economic collapse is happening right now and has been for over a generation.

 

This means that there will be no cataclysmic event that somehow makes our currency worthless. At some point something will have to be done about the alarming rise in inflation and our out of control government spending, but that’s not a process that can succeed or fail overnight any conceivable way.

 

What this means is that there will never be a time when the economy simply “goes away” and all your personal debt will simply vanish. Are there potential disaster events out there that could do this? Absolutely. A global pandemic, EMP or any number of the big Hollywood disaster scenarios could blast us back to the trading and bartering days, but inflation isn’t going to do that.

 

The proof is in the past

 

The market collapse of 2008 was probably the closet we’ve come to all-out economic collapse in the U.S. since the days of the great depression. Anyone that paid attention to the markets and the housing bubble saw this coming well over a year in advance. It wasn’t overnight and it wasn’t without warning despite what a lot of media outlets and scam investment managers wanted you to believe.

 

It did however; force a heck of a lot of changes in the financial industries. Banks were consolidated or closed, hundreds of thousands of houses all over the country were foreclosed on due to irresponsible adjustable rate mortgages and millions of people took a substantial hit to their retirement funds. Many families faced extreme financial hardship when it came time to pay the piper for our indulgences in overspending and irresponsible lending practices.

 

And yet despite being slammed into the worst economic recession of our lifetime, personal debt was still an everyday part of life. Credit card bills didn’t disappear, repossessions were at an all-time high and more people filed for personal bankruptcy protection than any time in history.

 

Why then, are so many preppers still under the assumption that their personal debts will simply vanish one day due to the continued economic collapse? Could it be that it’s simply wishful thinking?

 

The truth of the matter is that there’s a large section of the preparedness community that don’t understand what the economic collapse really means and are failing to prepare for the implications of rising inflation and the ramifications of personal debt.

 

The truth about personal debt

 

Debt is cancer. It has seeped into our culture because of a fundamental change in the perception of most modern countries that we can have whatever we want, whenever we want and that we can pay for it later. The real problem is that people are taking on personal debt and basing it on their financial abilities now and the assumption of what their financial abilities will be years in the future without thinking about the critical changes to our economy that are happening right now.

 

If you take out a credit card or a loan today, with an expected monthly payment of a XX dollars, it’s easy to say “No problem, I can totally afford that”. However, growing inflation will guarantee that the money you are already spending on everyday living expenses isn’t going to buy as much as it does now a few years from now. The price of everything is going up substantially, and will continue to do so in coming years at an even greater pace.

 

Sure, you might be able to afford that monthly payment now, but when inflation raises the cost of living by 25-50% in the coming years, that monthly payment is going to be a lot harder to deal with, especially when a couple years of interest and financing fees has been tacked on. Are you counting on a new job or a raise in pay to offset this? Think again. Most companies are drastically cutting back raises and are finding ways to eliminate costly positions within their ranks. Even if you are one of the lucky ones to get a raise this year, it’s likely not going to even be enough to offset the rising cost of living, let alone be enough to take on even more debt.

 

The ugly truth of the matter is that the only way to truly prepare for the collapse of the economy is to alienate yourself from the economy itself as much as realistically possible. This is what truly embracing a self-reliant lifestyle is all about. Our economy is simply a system of support just like grocery stores and the electric company. We stockpile or learn how to produce our own food because grocery stores may not always be open. We learn about alternative energy resources because grid utility is fragile and prone to failure. We do these things because we would rather rely on ourselves than leave our survival in the hands of these systems of support. We have to start taking the same sort of responsibility for our financial survival as we do with food and energy.

 

Daydreaming about cutting up your visa bill while the rest of the country is in economic turmoil is silly and irresponsible. It’s time that we as a country reclaim the idea of working and saving for the things we want. It’s time to take debt by the horns, tackle it to the ground and never pick up another credit card application again. This is the way you weather the storm of economic collapse and is the only way to give yourself a fighting chance to thrive during economic turmoil.

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