How to Survive a Personal Economic Collapse

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By Daisy Luther

With all that is being written about the economic collapses of nations around the globe, people in America seem to be waiting for some huge event.

But what if it isn’t a huge event like a stock market crash or a currency collapse that you actually need to be concerned about? What if our disaster starts out looking nothing like the economic crises in ArgentinaVenezuela or Greece? What if the real financial disaster in the future is more personal?  What, if that financial disaster has already happened?

It’s here and it’s not what anyone expected.

Despite the lack of fanfare in the media, for many North Americans, the collapse is here. In homes across the country, the struggle to survive has already begun. And it isn’t what you think. This isn’t relegated to only lower income neighborhoods.  As an article from a Cincinnati new station stated, “Hunger doesn’t know a zip code.”

For many people who were formerly financially comfortable, the economic collapse has already happened, in the form of a job loss, hours that have been cut back due to Obamacare requirements for employers, an exorbitant medical bill or other crushing debt, or simply an inflation rate that has outstripped your pay increases.  Despite all of the warnings, many people are still going to be absolutely blindsided.

For many families, personal finances have reached a catastrophic level – they are left to make terrible choices:

  • Which utility can I live without?
  • Should I walk away from my mortgage?
  • Should I eat something so I can work harder or should I skip meals so my kids have food?
  • Should I use the grocery money to take my child to the doctor or should I wait and hope he/she improves without medical intervention?
  • Do I risk the IRS-enforced penalties by forgoing enrollment in Obamacare or should I skip that whole grocery shopping thing so I can pay the monthly premiums and enormous deductibles in order to stay in the government’s good graces?

These are the kind of decisions that people across the nation are grappling with every day. And it’s not the people who you’d expect that are having these problems.

I’m talking about good people, hardworking men and women who have always been employed and paid their bills. A personal financial crisis does not just strike those stereotypical “welfare queens” with the long manicured nails, Gucci knock-off purse, and a grocery cart full of EBT-funded lobster.

I’m talking about the person next door, who seems to have it all together. I’m talking about that quiet family that sits two rows in front of you at church. I’m talking about that two-income family with two children and a car in the driveway that takes them to work and school 5 days a week. I’m talking about people just like you and me.

Here are the signs of a personal economic collapse.

A personal economic collapse is a little different than the major crises you see all over Europe right now, where huge segments of the population can’t feed their children or stay employed. It is a crisis that just hits your family due to a given set of circumstances.  (In actuality North Americans are on the brink of the kind of collapse that is occurring in Europe, but because of easy access to credit and a buy-now, pay-later society, many of us still have the appearance of prosperity.)

Here are some signs that you may be in the midst of a personal economic collapse:

  • You can only afford to pay the minimum payment on most of your bills.
  • The same dollar amount you used to spend on groceries doesn’t buy enough food to feed your family for the week.
  • You can’t afford to go to the doctor when you’re sick.
  • You are taking dangerous steps to “stretch” needed medications because you can’t afford the prescriptions.
  • Your utility bills are past due and your power is in danger of being cut off.
  • You skip meals in order to save money or to have enough food for your kids.
  • You’ve lost your job or had your hours cut.
  • You have lost property due to foreclosure or repossession (such as your home or your vehicle).

Surviving the crisis

Times are tough but you can survive this.  This article is written for people who can still hang on and maintain a modicum of their current lifestyle. If your situation is worse than this, here’s an article for those times when no matter how hard you try, you simply can’t pay your bills.

1.) First you have to see exactly where you are.

It’s time for a brutally honest assessment of your finances.  If you use your debit card or credit card for most expenditures, you’ll easily be able to see what you’re spending and bringing in.

Print off your bank account statements for the past 2 months.  On a piece of paper, track where your money is going.  List the following

  • Rent/Mortgage
  • Utilities
  • Car payments
  • Vehicle operating expenses (fuel, repairs)
  • Insurances
  • Credit card and other debt payments
  • Telephone/Cell phone
  • Cable/Satellite
  • Internet
  • Extracurricular activities for the kids
  • Extracurricular activities for the adults
  • Dining out
  • Groceries
  • School expenses
  • Clothing
  • Recreational spending
  • Gifts
  • Miscellaneous (anything that doesn’t fall into the above categories gets it’s own category or goes here)

Don’t say to yourself, “Well, I usually don’t spend $400 on clothing so that isn’t realistic.”  If you spent it, then it’s realistic.  You are averaging together two months, which should account for those less common expenses.  Brutal honesty isn’t fun, but it’s vital for this exercise.

So….what do you see when you look at your piece of paper with your average monthly expenditures for the past two months?  Are there any surprises?  Did you actually realize how much you’ve been spending?   Most of us will immediately see places that we can trim the budget.  Those $1-$5 purchases can really add up.  Reining them in may just allow you to take care of an important need that you thought you could not meet.

It can’t continue like this.  The economy will not withstand it.  Step one is to see where you can cut things out right now from the above expenditures.  Can you reduce your grocery bill?  Slash meals out?  Budget more carefully for gift-giving and school clothes?

2.) Rethink necessities.

If your finances are out of control, the best possible reality check is a stark look at what necessities really are.  It is not necessary to life to have an iPhone, a vehicle in both stalls of your two-car garage, or for your children to all have separate bedrooms.  People in parts of Europe and South America right now will tell you, as they scramble for food, basic over the counter medications like aspirin, and shelter, that necessities are those things essential to life:

  • Water
  • Food (and the ability to cook it)
  • Medicine and medical supplies
  • Basic hygiene supplies
  • Shelter (including sanitation, lights, heat)
  • Simple tools
  • Seeds
  • Defense Items

Absolutely everything above those basic necessities is a luxury.

So, by this definition, what luxuries do you have?

3.) Reduce your monthly output

Reduce your monthly payments by cutting frivolous expenses. Look at every single monthly payment that comes out of your bank account and slash relentlessly.  Consider cutting the following:

  • Cable
  • Cell phones
  • Home phones
  • Gym memberships
  • Restaurant meals
  • Unnecessary driving
  • Entertainment such as trips to the movies, the skating rink, or the mall

4.) Waste not, want not.

We live in a disposable society.  Food comes in throw-away containers.  People replace things instead of repairing them.  If you throw out more than a couple of bags of garbage each week, that’s a very good sign that you may be wasting resources.

Before throwing anything away, pause and think about how it might be able to be reused.

  • Food: Many times small amounts of leftovers can be recycled into a brand new meal. Meat bones can be used to make broth or stock.  Small amounts of veggies or grains can be frozen and added to a future soup or casserole. Leftovers can be frozen in meal-sized portions to take to work for a brown-bag lunch. (Learn more about repurposing leftovers HERE.)
  • Clothing: Clothing that is torn or damaged can often be repaired with only rudimentary sewing skills. If it has been outgrown or cannot be repaired, often the fabric or yarn can be reused for other purposes, from cleaning rags to fashionable accessories like scarves and headbands, or home items like throw pillows, potholders or rag rugs.  When all else fails, the fabric can be used for cleaning rags or patches to repair other items. Keep jars full of buttons, elastic, and other notions that can easily be removed before you throw  a clothing item away or relegate it to the rag bag.
  • Electronics: Obviously, initially you should attempt to repair (or have repaired) electronic items that are not working. If this is not feasible, are there components of the item that can be reused, either now or in the future? What about hardware such as screws or fasteners?
  • Containers:  Most food comes in a container of some sort.  Before throwing the container away, consider whether or not it might be useful. Glass jars, plastic tubs, and plastic bags can often be reused to store food in your refrigerator or to contain food in brown bag lunches.  Clean aluminum cans can hold all manner of items, from hardware and tools in a workshop to sewing and craft supplies. Use your imagination.

5.) Take control of your food budget.

The price of food is skyrocketing.  Who hasn’t been to the grocery store recently and been shocked at the high price of that cart full of groceries or at the mysterious shrinking food packages that are the same price as yesterday’s larger ones?

  • Stockpile:  Create a stockpile of nutritious, healthy staples at today’s prices to enjoy when the cost goes even higher tomorrow.  (Learn how to create a frugal food stockpile HERE.  Find high-quality emergency food for long-term storage HERE.)
  • Preserve: Learn to preserve food yourself when you come across a windfall.  Pressure canning, water bath canning, freezing, and dehydrating can allow you to take advantage of great sales or end-of-season scores.
  • Eat less:  This suggestion isn’t for everyone, but many of us could stand to shed a few pounds.  Perhaps now would be a good time to cut back a little and shrink both your waistline and your weekly food bill.  Lots of people eat for the sheer entertainment of it or out of habit.  Next time you’re watching TV, grab some mending or a crossword puzzle instead of a bag of potato chips. Dish out slightly smaller servings at dinnertime to leave enough to stretch the leftovers for a brown bag meal the next day.
  • Drink water:  Skip the beverages and drink water instead. At less than $1 per gallon for purchased water you simply can’t beat the price.  It’s better for you than sugary drinks.  If you are lucky enough to have well water or access to spring water, your drinks don’t have to cost you a penny.
  • Focus on nutrition instead of convenience:  Buy the best quality of food you can,  and skip the processed, nutritionless convenience foods.
  • Grow your own.  In the summer, grow the biggest garden you can. In the winter, or if you are an apartment dweller, put some sprouts and greens in a sunny windowsill to add some fresh produce for pennies.

6.) Reduce your dependence on utilities.

Energy rates are skyrocketing. As the prices begin to rise, more and more people will be unable to pay their bills and eventually their power will be shut off.  Check your bill each month and as prices increase, use less power. Try some of these ideas to reduce your reliance and drop your bills.

  • Hand wash your clothing
  • Hang clothes to dry
  • Cook on a woodstove or outdoor grill
  • Can foods to preserve them instead of relying on a large chest freezer
  • Turn the heat down a few degrees and use non-grid methods to keep warm
  • Use rain barrels to collect water
  • Direct the gray water from your washing machines to reservoirs
  • Turn off the lights and open the blinds
  • Use solar lighting whenever possible

How do you intend to weather the storm?

There are bleak days ahead.  Have you planned for this?  What strategies do you intend to use to weather the financial crisis that is coming for all of us?  What suggestions do you have for families who are undergoing their own economic collapses? Please post questions and ideas in the comments section below.

Daisy Luther

Daisy Luther

Daisy Luther is a coffee-swigging, globe-trotting blogger. She is the founder and publisher of three websites.  1) The Organic Prepper, which is about current events, preparedness, self-reliance, and the pursuit of liberty on her website, 2)  The Frugalite, a website with thrifty tips and solutions to help people get a handle on their personal finances without feeling deprived, and 3), an aggregate site where you can find links to all the most important news for those who wish to be prepared. She is widely republished across alternative media and  Daisy is the best-selling author of 5 traditionally published books and runs a small digital publishing company with PDF guides, printables, and courses. You can find her on FacebookPinterest, Gab, MeWe, Parler, Instagram, and Twitter.

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  • I was laughing when I read this articular. That is because it made me remember how I grew up. I have 5 sisters & 1 dad who was self employed.So food at our house was not to be taken lightly. If at the table you started to say ” I don’t want this”!! Faster than a bunny pulled out of a hat 1 of us would snatch it up & have it gone. Didn’t take long to learn not to say that. My dad worked hard to provide for us & we never had much but we did have food. Now grown up I use the lessons I have learned. My family & friends have even call me “cheap” because I refuse to get in to dept & wont spend money on “just stuff”. Now that my hubby is retired & for now, we live off his pay,under $2000.00 per mot,thing are tight but we are doing it with out worrying about if we can pay the bills or eat, all the prepps are paying off. I would encourage anyone who has a question on if they think that preppin is worth it I will tell them a big YES!!!
    This is why we can live on so little. God has been good to us in so many ways.
    You might want to ck out the web sight or The last 1 is really helpful as I think she has 9 kids & is growing all her own food on 1/3 acre.. She is teaching others how to do the same & she even has a story where they lived for a yr with money to buy food. Thanks for all you do .

  • Doug wrote, ‘If at the table you started to say ” I don’t want this”!!’…

    I try to convey this to my niece and nephew, but they act like they are The Ewings. (from the ‘Dallas’ TeeVee show – rich people.) They turn their noses up at anything the least bit healthy and, partially due to bad parents, seem to subsist on Cheetoes and chips. It blows my mind, esp because they are poor. They look so unhealthy. I wish I could have more effect on the zombie-like eating habits they learned in goobermint co-ed prison, er I mean, school.

    My best non-food advise: Keep plenty of Fast Orange hand cleaner on hand (or make your own) to deal with poison ivy; it’s pure evil: Like an anti-family, self-destructive, empire-loving, war-monger.

    RE: ‘Should I use the grocery money to take my child to the doctor or should I wait and hope he/she improves without medical intervention?’

    From what I’ve read, having to wait, or not go at all, might be a Big Plus in an otherwise terrible situation. Doctors and their drugs will kill ya. I mean, consider this Bit-O-Fact:

    ‘the FDA is completely aware their approved medical drugs are killing 100,000 Americans a year’ […]

    ‘“It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines. I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor of The New England Journal of Medicine.” — Marcia Angell, MD, “Drug Companies and Doctors: A story of Corruption.” NY Review of Books, Jan. 15, 2009.’ …

    Anyway, when you say, ‘On a piece of paper, track where your money is going.’ I have found that such a simple task is seemingly almost next to impossible for some people. To try and do so is like pulling hens teeth. I don’t understand why.
    I do hope it helps some people when you write, ‘Brutal honesty isn’t fun, but it’s vital for this exercise.’

    Sigh. ‘Frugality’ it isn’t just for your great grandmother anymore. … Embrace the frugalista within you.

    RE: ‘If you throw out more than a couple of bags of garbage each week, that’s a very good sign that you may be wasting resources.’

    In the city I live in we are given an option by our overlords: we can pay for a large, or a small city-provided dumpster-like trash can. I regret to say we have not managed to stop filling up a large one. I do pause and think about that every time I cut a check for the bill, or as I stuff the final bag in the box.

    RE: ‘Next time you’re watching TV, grab some mending or a crossword puzzle instead of a bag of potato chips.’

    Ha! I like that one. With a twist: The next time someone says, ‘I want some ice cream’ or, ‘chips’ – Instead of suggesting a tin of delicious sardines in olive oil, which is Always met with a scKrunced face – I’m going to suggest just that! I’m going to be punched, and will take some serious verbal Kung-Foo for doing that though. Wish me luck.
    Seriously,.. HA! I don’t understand you anti-sardine people.
    Family members included in that remark.

    RE: ‘There are bleak days ahead. Have you planned for this?’

    Yah. I’m trying. I don’t think it will be enough. How-Freaking-Ever; I think it will give us a fighting chance. And that, is better than nothing. My thought at this point is, it’s better to ‘bunch up’ and live, than it is to die alone. But, what do I know, I haven’t lived long enough to have outlived enthusiasm. Gawd forbid.

    By ‘bunch up’ I mean, extended families living together. Or, friends, living under one roof. There’s an American history for that: I’d post the link from LRC about that but I’ve run out of energy to track it down. You should look it up, it’s interesting how the State shut down the ability of people to live or to actually own their own property. Just like a bully with his boot on your neck does. That’s how he and his supporters roll. ‘Boot to the Head’.

    [Also, I can’t say enough good things about Dr. Oz’s advice given to me by a friend about using a child’s foam pool noodle cut down to the size of your spine from below your neck to just above your tailbone. Lay on that sucker for awhile and it might relieve back pain. That, and laying on a tennis ball. Gawd do I feel old offering that bit of advice to avoid the Chiro or a session with a sexy young massue chick. I mean, what happened!? It seems like only just yesterday I was a bit of a George Thorogood and The Destroyers, “walked forty-seven miles of barbed wire, I got a cobra snake for a necktie, [… and I was ] just twenty-two and I don’t mind dying”.
    Omg, I’m starting to get what you older people were telling me all these years!

    That said, I need to spend some time learning about: drip irrigation (Rain Bird is causing me headaches about flow rates to containers), and, rabbits maybe, quail maybe,… and … yeesh, ‘The Wheel in the Sky Keeps On Turning…’

  • Excellent article! Daisy!

    Having a well stocked pantry is common sense.

    An unexpected large bill (car or home repair, illness, etc.) can set back most budgets.

  • The basis of this article is to get a handle on spending not about how to survive a financial crisis. If you need to be making decisions on weather to cut spending on eating out, gifts, going to the movies or to the mall ( ie to spend money ) you are NOT in a financial crisis. If you were there would be no need to make that decision as there would be no money past rent and food. Everyone needs to decided for themselves what is a NEED and what is a WANT. This is were the rubber meets the road.

  • RE: ‘If you need to be making decisions on weather to cut spending on eating out, gifts, going to the movies or to the mall ( ie to spend money ) you are NOT in a financial crisis. If you were there would be no need to make that decision as there would be no money past rent and food.’

    That was true in past decades, and is still true in some circumstances, however; imho, with the availability of cheap and easy free money credit, that’s not the case anymore.

    A person who puts everything on credit and who cannot pay off the balance is in a financial crisis, if they know it or not.
    The use of home equity loans are similar, the underlying asset is greatly overvalued within a manipulated and false economic sphere, the person only finds out they were in a financial crisis the whole time when, ‘the tide goes out’.

    Also, I was under the impression ‘needs’ were not subjective, a person couldn’t ‘decide for themselves’ what a need is.

    Confusing a ‘want’ as a if it were a ‘need’, yah, that is were the rubber meets the road.

  • Believe it or believe it not , but the best thing you can do in a situation where you find yourself without money . Is to smile and be friendly , target your good nature at food markets and stores where you once shopped , this can often give great rewards . Such as free access to spoiled food or damaged cans .

  • We have found ourselves in this position more than once (we’re getting old now). A year ago my hubby unexpectedly lost his job – and that was a lessor job because he was too injured to keep working labor. We had built up a pantry, had chickens, and dairy goats, and didn’t have to go to the grocery store except for fresh things that we wanted. We heated with a wood stove and made do. His unemployment ran out in the winter, but we had no debt other than the house and one small loan from a car expense (only $200 left on that – yeah).

    He has started doing handy man work and his honesty and gentleness has the phone ringing off the hook. He says no to things too big or that he doesn’t feel he can do a good job on. I picked up an old ice fishing hut at a yard sale and turned it into a hot house and we’ve had veggies started very early on.

    We raise veggies in the front yard and milk and eggs and meat chickens in our back yard in town.

  • Several years ago, money was tight at Christmas. The only gift I gave my three children that year was their own copies of the book Your Money or Your Life by Joe Dominguez and Vicki Robin. I would encourage anyone to read this book. It will make you think not just about wants vs needs, but also about money in general.

    I also would encourage parents to sit down with your kids when you budget and pay bills. Your kids need to understand where money goes. We live in a world of immediate gratification but all need to learn some self discipline and control.

    Thank you, Daisy, for great articles to get your readers thinking.

  • I realize I’m in a position many are not as when I was in college getting my degree in Home Ec in the 60s it was during the Johnson era of War on Poverty. All my Home Ec classes in Food, Housing, Child Care, Personal Finance were based on getting a nickel’s worth out of every penny.

    Suffice it to say it has paid off. Twice during our 49 years of marriage we were on the brink of losing everything but by using all the tactics you listed, my education and then some we came thru just fine.

    One of the tactics we used was to inform our grown kids, when the housing bubble broke a few years ago and we were caught with 3 properties 2 of which we thought we could flip, of our financial position and what we were going to do about it. We spelled out everything including things like no snail mail except a birthday card to the 3 grandkids. No gifts except birthday & Christmas to the grandkids and the limit was $5 – amazing what you can find for $5 if you put you mind to it.

    We even bought most food on super sales or clearance plus growing as much as we could. Reading our electric meter daily at the same time made us very aware of what used the most. Even something as simple as limiting time on the computer and TV time saved money.

    Anyone can avoid most personal financial crises IF they plan, execute and have a mindset change.

    Oh yes, in all the years we’ve been married our income has never been over $35,000 so we’ve always had to be frugal but never really felt deprived.

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