Friday, September 26, 2008

Living Under Bridges

Another major bank went down the tubes today.

So, to answer a question a friend of mine asked his pals earlier today, what would you do if you knew you were shortly going to be destitute?

If you had just lost your job and/or investments, knew you were going to lose your house/apartment in a couple months, what would you do? How would you prepare?



10 Comments:

Anonymous Grace said...

I'd steal money from Republican Senators.

10:38 PM  
Blogger Hildo said...

I'd put my precious books in safe storage; mail my European friends backups of my computer disks; and make sure I'd plenty of cash stashed with several friends. Phase II of the plan is to move back to Europe and use the safety net over there :-)

6:30 AM  
Blogger Ken Houghton said...

If you have "plenty of cash," you're not destitute.

I'm not Larry Niven, or even Beowulf Shaeffer, but the advice is correct—maintain your current lifestyle as long as possible. But that assume P(destitute) = 1.00 (100%).

If I'm modeling it up, I do the same things I'm doing now: cancel the premium cable shows, shift away from paid Internet (given libraries, etc. nearby), shift telephone service to mobile only (exception for those areas where mobile doesn't work well).

Shift the food diet closer to "starchy vegetarian"—there's a reason college students live on Ramen noodles, and Ramen noodle makers can still make a profit—and move away from prepared foods. (Buying prepared foods is based on the idea that my time is more valuably spent on other things; not working 60 hours/week or so frees up a lot of time, and cuts its "market" value accordingly.)

Sell everything you can: several months warning means that some of those books mentioned by hildo can be sold or swapped. But you're still talking fire sale prices which, as Hank Paulson declares, are not good things. (Paulson's wrong, btw; if you want the market to start again, you buy at the fire sale prices. Otherwise, there are no sellers at a clearing price $700B later.)

Turn off lights. Cut back on heat/AC (not out, but 68 is better than 72, and 65 with a sweater has a real effect on your heating bill).

Walk/bike/public transport. Sell a car, maybe (see books discussion above), but keep in mind you'll need to move things somewhere.

Scout storage spaces for price, with basic amenities. (No temperature control may be fine in some areas, but don't try it in FL or Buffalo.)

Keep cash handy as much as possible. Investigate support programs (CHIP eligibility if you have kids; food stamps, etc. under any condition—they're there to get you back on your feet, but you can't walk in Wednesday and start receiving benefits Thursday).

Above all, pay down any small debts you can. The last thing you want to be is nickel and dimed for twenty or thirty dollars when you're trying to organize and find something else.

That's the short list, but you set a fairly tight time frame.

5:50 PM  
Blogger Ralf the Dog said...

If I knew that in 4 to 8 weeks I will have no income and no chance to have income for an undefined time I would get an RV if I could or a tent if I could not. I would stock up on canned and dried food. I would get out early and save as much cash as I could.

The next thing I would do is make a sign,

"Will work for cash.

Molecular Biology,
Nuclear Physics,
System/Operating System Design (Low level and UI),
New Product Marketing,
I also walk dogs."

10:01 AM  
Blogger Maureen McHugh said...

I'd start where most people who find themselves destitute turn--I'd call my family. Living in my sister's guest bedroom would suck. But it beats under a bridge.

1:31 PM  
Blogger S.M. Stirling said...

Two major European banks went belly-up over the weekend.

House prices in Britain have fallen 25% in the last four months.

European governments have pumped $280 billion into the credit market with no discernable result.

Don't plan on moving to Europe. They're already strapped for cash to pay for what their governments do, and they're mostly much more highly leveraged than the US gov't.

It's not an accident that the dollar has been going up against the Euro, the Yen, and the Chinese currency too.

We catch cold, the rest of the world gets pneumonia.

10:16 PM  
Blogger S.M. Stirling said...

Me, I've been poor. Really, really poor as in can't-buy-food poor. It sucks.

Fortunately, I'm now debt-free and have wads of cash.

What worries me is what generally happens with a severe world-wide financial crash.

War.

And I'm not talking about piddling little Queen-Victoria's-little-Wars colonial police actions like we're fighting now.

10:17 PM  
Blogger Ralf the Dog said...

I don't see war. Russia has been playing well with it's neighbors lately. They even payed a peacekeeping visit to Georgia. That sounds so nice. Peacekeeping.

North Korea has been begging to help advance humanity's knowledge of nuclear power. The people of Iran and Iraq are finally coming to peace so they can face a common foe.

8:34 AM  
Blogger Ralf the Dog said...

How about a better bailout? If the bailout is about freeing up credit tied up by bad debt, why don't we let the bad debt die and spend the money insuring new debt, but only if the loan meets tight criteria and only for banks that can prove solvency?

Yes, some banks will fold. The assets of these banks will be sold. Good banks will grow to fill the ecological niches when people move their money. the economy will expand. Butterflies and kitty cats will dance among the flowers.

8:50 AM  
Anonymous TomB said...

Throw a big party for my friends. I'm going to need them. And bone up on those red beans & rice recipes.

8:17 PM  

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