Article Image

IPFS News Link • Economy - Economics USA

Doug Casey on Surviving and Thriving in the Coming Crisis With Modest Means

•, by Doug Casey

Wealthier people have a leg up and will be better able to insulate themselves from the coming chaos.

For those without significant wealth, how would you recommend they allocate their limited resources in the coming chaos for both protection and profit?

Doug Casey: First, let me draw your attention to one of my favorite quotes from Ayn Rand. When asked what should be done about the poor, she answered: "Don't be one of them."

That's quite correct. But a better question might be: How do you leave the ranks of the struggling and become rich?

As I've said many times on this blog, it's by producing more than you consume and saving the difference.

That means doing whatever you can to increase your income while simultaneously cutting your expenses. It may mean taking a second job and abstaining from lattes at Starbucks. It means cutting out smoking if you smoke and cocktails if you drink. It means not following fashion. It means not keeping up with Joneses, and driving a functional used car, bought for cash, not glitzy new one that financed or leased.

You don't have to become a Benedictine monk, but it's important to cut back your standard of living now while you're still in control of the situation. Don't wait for necessity to do it for you. You might get a used copy of my book, Strategic Investing, which has several chapters on exactly this type of thing.

There's no way around it. If you want to be a capitalist, you have to build capital. You do that by producing more effectively and consuming less. It's not easy, but it's necessary. The Chinese became wealthy by saving 50% of their incomes in recent years. You should put aside at least 10% of everything that comes in the door—come hell or high water.

International Man: What advice do you have for the average person with significant debt?

Doug Casey: Going back to what we were just talking about, the best alternative is to pay it off. But that may not be entirely feasible for some people who are truly buried. You may have to consider bankruptcy.