Are You Preparing For A Worst Case Debt Ceiling Crisis?

In My Humble Opinion
1

We have many, many threads in several forums debating, discussing, arguing, explaining, denying, questioning about the US debt crisis. Who will cave in? Who will stand firm? There is no crisis. It will be nothing much. All hell is gonna break loose. Not my problem. Everyone’s problem. Yes, I contacted my elected official. No, I couldn’t be bothered. We can fix the crisis this way. No, my way is better. He said, she said.

Lather, rinse, repeat.

Let’s get practical for once. Down to earth stuff. You know, you took an advanced first aid course to be prepared a few years back. Just in case. And if just in case never happens, no harm no foul. But if by some weird happening it does happen. You’re prepared.

So are you considering a worst case scenario for this debt crisis? Worst case as in the computers trigger and the markets stop trading. Down 1,000 points. First day. Down another 1,000 the next two days.

The Fed steps in stabilize the financial system. because the problem shifts to daily financial events. Your credit card doesn’t work. Your debit card doesn’t work. A quick trip to an ATM for cash and that isn’t working, either. A run on basic food items at the local market. Cash only please, because the EFT is on the fritz.

The current FAA shutdown (over union participation) now expands to affect commercial flights. Your phone calls/emails to your Member of Congress don’t go through. Your neighbor, a government contractor, is home early. Contract was canceled. No work. Federal contracting web sites report static home pages.

Incremental daily living thingies start to slow, even stop.

Are you prepared? Do you have enough cash on hand? Did you stock up on basic foods before Monday? Vehicle(s) gassed up ahead of time? All your 30-day bills paid up by 31 July - utilities (especially!), credit cards, etc? Only your mortgage and car payments left to pay, but still caught up by the end of the month?

If it all does not come to pass, no harm no foul. But if, by chance, we have a real bleeder here, are you prepared?

Poll to follow.

2

Voted hell yes, as in I’m worried, but what sort of preparation can we mere mortals make that will help us?

3

I’m always prepared for disaster anyway, so this won’t even be a thing to worry about. I am a little worried that this could be a Very Bad Thing, but I think it’s all political posturing.

4

Exactly. Sure I’m worried, but there’s nothing I can do about it. To make preparations, you have to have money.

5

Yep, I’m worried. That said, the household has almost no credit card debt (I use the credit card to pay for everything all month and then pay it off in full to get the rewards points, so one paycheck covers it), current utilities have been paid, the rent for August will be paid, cars will be gassed, and we’ve got six months or more worth of living expenses in the bank in straight cash plus a bit more in equities. May pull a couple grand in cash, since I can always redeposit it. Can’t do anything about the IRA or the 401k, but I can’t use them for another 30+ years anyway.

But the uncertainty is a killer for any large purchases. Typical Republicans: They’re right that uncertainty hurts the economy, but they only look at the supply side.

I’d feel better if I could do everything on Lazarus Long’s list.

6

As always, the house has a large reserve of food and a modest reserve of bottled water. Some cash on hand, lots more in the bank. Not moving my long-term investments, despite the possiblity of a short term plunge in the market.

Not anticipating widespread social breakdown; the most I’m envisioning is a significant drop in the stock market, which will recover in the long run.

7

Actually, you would be better off if you had a ton of debt.
And why would people stock up on canned goods and such? What do you think will happen? The entire country will permenantly shut down overnight?

8

I already have a couple years of expenses in the bank so I am not altering the rest of my investment strategy. If it gets worse than just a securities shock, then I’m hosed anyway so no amount of gold would save me.

9

My job is pretty recession-resistant, so I’m not particularly worried for myself. I’m terrified for my sister, though - she’s graduating from grad school in nine months. Not a great time for it.

10

I am a bit annoyed as we have made an offer on a house and are now concerned we might have some difficulty getting a mortgage, but that’s really what we get for offering before getting an AIP.

11

A run on the banks? Not being able to use my debit card? These words make no sense to me.

I have nothing invested in stocks so this won’t affect me in the slightest. I live on cash.

12

The experts I trust seem to think that even if we do God forbid go into default, that it won’t have that extreme of an immediate effect on our lifestyles. I don’t anticipate banks or grocers closing or anything so drastic. The worst thing you could do right now is to start moving your investments, especially retirement, out of the market. We don’t have any debt that would be affected, nothing in variable rates. My job should be recession proof and we’ve always been savers.

The most drastic action I can personally envision is voting every sumbitch out of office that allowed partisan rancor to take precedence over reasoned, prudent action.

13

If there’s a total financial meltdown like the OP hypothesizes, then you’d be an idiot to have paid off your bills, because how are your creditors going to collect? And when they do collect, they’ll collect in worthless dollars, which are worth a fraction of what they were worth on July 27, 2011. As msmith says, if you really expect a total financial meltdown, the thing to do is rack up as much debt as humanly possible in the next few days, and pay it off later in hyperinflated dollars.

14

Well, no. (I realize the argument about the debt; instead I’d hope that some student loans would hyperinflate away.) But: People are weird and easily panicked. Better to be mildly prepared now just in case. I’m not talking much, just a few more things that can be used later.

15

Hope for the best, prepare for the worst. It amazes me how many people are quick to use the word “scaremonger”. I think they’re truly the frightened ones. Being sensible and not behaving as if you’re indestructible is the way to go.

We have been preparing by storing food, water, necessities, and continuing to pay off any debt we have. I’m not only preparing for economic disaster and high food prices, but also for natural disasters. We’re in a hotbed of activity right now.

16

I don’t really see any of THAT happening, OP. We did pay off most of our credit balance just in case interest rates go batty though. Life will go on.

17

We have nothing to prepare. We just bought a house that we plan to be living in for the next 30+ years. with a fixed rate mortgage. We have a very small credit card balance. We have decades to go until retirement, so I’m not that worried about fluctuations in the stock market. I don’t think the scenario of no cash in the ATM, shutdown of the infrastructure, etc. are realistic. If we default, I think it’s likely only going to be for a short period of time until they pull their heads out of their collective asses and then we’ll be stuck with an even crappier economy than we have now, for a longer period of time. There isn’t going to be a total collapse of civilization.

18

Those of us on food stamps may well have those funds cut off come August 3, leaving us with little means of purchasing food. Thus, stocking up on canned goods makes some sense, assuming you have the funds to do so.

Me, I have a garden and two weeks worth of canned food in the house. We’ll be able to eat, even if it won’t be exciting food.

19

Huh. One side says “pay off credit balance in case interest rates go batty” and the other side says “rack up as much debt as humanly possible.” No wonder Jo(sephine) Schmos like me have no clue what to do.

Not that I can do much about my current debt anyway, and it’s pretty hefty, so at least on a selfish level I hope the latter camp wins out! :slight_smile:

20

I don’t know, should I keep working, paying my bills, keeping debt to a minimum? If so I don’t know what else I should be doing exactly. I don’t think it will exactly be apocalypse, maybe some services will be cut or national parks will be closed.

As far as being prepared for disaster in general, I’m somewhat prepared but could always do better. Lack of time, space, and money are all factors.