I’m new to the prepping scene and have found the info on your site to be invaluable. I fear that we here in the US are in for a rude awakening sometime in the not so distant future. My question is about credit card debt. Most of the financial “sock puppets” in the media keep advising people to pay down debt as a way to avoid a personal financial crash landing when our country’s economy implodes. But my thought is why not run up as much debt as you can to get what you need now while the dollar is still worth something? When hyperinflation hits, you’ll be further ahead on the supplies, AND you’ll be paying back your debt with worthless money. When the SHTF, I doubt there will be any bill collectors knocking on your door anyway, as everyone would probably be more concerned with their own families and personal situations to bother. I’m not advising people to commit financial fraud, but it’s not only encouraged to into debt, it’s our only way of life in the modern world so why not just use the system to beat the system. Besides, in America, there’s no such thing as debtor’s prison. The worst that could happen is that your credit rating is destroyed, but I’d rather have a full supply of what I need than some “magic number” attached to my name. Anyway, thanks for all you do, It is very much appreciated. Kit
Your question is kind of tricky. The common sense approach would be that being in debt isn’t something you want, and it is correct to assume that during unstable financial times you don’t want the extra concern of having yet another expense. I also recommend as one of the first steps towards financial collapse preparation to reduce expenses as much as possible, sticking only to the basics. This works well on many levels: You have more disposable income each month, more room space for adjustment in case of inflation peaks or unexpected expenses, you can try saving some money and the peace of mind that comes with knowing you managed to cut down your fixed expenses some helps on so many other levels.
Yet at the same time what you are saying is also correct to some degree. I don’t agree with just destroying your credit history. In my opinion committing that sort of financial suicide is like playing all your assets to a number in the roulette. You are betting at a certain type of end of the world situation that is extremely unlikely to occur, even if the economy does collapse. We’re already in a crisis, this might go on for five or ten years more without anything ever really collapsing.
What we did see here was people buying import items or getting dollars right before the devaluation or the freezing of the accounts. If I know gold and silver are going to go “up” in price, maybe buying some with my credit card isnt a bad idea. In some of these cases timing is everything and it is like winning in the casino to some extent for people that aren’t in the know of the internal managements of a country’s economy.
A good example would be what happened just yesterday with the dollar in Argentina, what I explained in the previous post in this blog. Say, if you bought 10.000 USD with your credit card worth 4.26 pesos each, today you have those same dollars but worth 4.8 or 5 pesos each, maybe more. Same principle applies for devaluation and inflation.
What I would suggest considering would be a more moderate approach. I wouldn’t go that much into debt because it’s a risky bet, but if your finances are in good shape you may play your odds a bit, especially on some departments. Food for example. You’re going to be eating it anyway. Say you buy two years worth of food with credit and pay it throughout the following 12 months. Indeed, you’ll be saving 20% or 30%, maybe more on your food expenses. You’ll have to eat anyway, thus spend the money for it, and you already know food prices will keep going up. If you have the storage space for it that ‘s a no brainer unless your financial situation is delicate to begin with.
What you suggest is true to some extent but I suggest moderation.