How do you think losing the AAA rating will effect you on a personal level?

[fakereadhed]

Just had a discussion w/DH tonight about when to act, and what we would do if the dollar tanks and you need a barrel of money to buy a loaf of bread. We talked about finishing paying off the house and cars with our savings. He said that would be silly because if money was worth less, outstanding debts would remain the same and therefore could be paid off easily. Didn't think of that! We are making a list of items we want to purchase instead that we could use anyway- even if there is some miracle economic recovery!

 

[Frannie115]

The downgrade is way beyond my control so I can not worry about that.
Just remember one thing, your health (and family) are the most important
thing, so just be concerned about the things you can control and be happy
with what you have.

Awsome post. Just finished telling my mom the same thing. She needs to stop watching the news

 

[Princesca]

Gold is a floating price commodity. The only way to establish a credible link between money supply and gold is to stabilize both. And if you can stabilize money supply, you don't need to link it to a gold standard.

I'm not arguing for a gold standard. Rather, I think a far more effective valuation would be a basket of commodities. Sort of like what countries are suggesting they will move to with regard to their reserve currency. That way, the valuation would be far less volatile because it wouldn't hinge on the usefulness of only one commodity.

I have been known to change my mind on a variety of occasions, but I don't think that anyone will ever be able to convince me that our currency is okay as is, without being tied to something of real worth. Though I guess people in the Weimar Republic proved that paper currency is worth something - you can always burn it for heat.

 

[Princesca]

Just had a discussion w/DH tonight about when to act, and what we would do if the dollar tanks and you need a barrel of money to buy a loaf of bread. We talked about finishing paying off the house and cars with our savings. He said that would be silly because if money was worth less, outstanding debts would remain the same and therefore could be paid off easily. Didn't think of that! We are making a list of items we want to purchase instead that we could use anyway- even if there is some miracle economic recovery!

I think he's right. It's good to have a savings safety net - I wouldn't ever be without one by choice. But if we do have inflation, money in savings now will have less buying power then than it does today, so making a shopping list (within reason) does make sense to me, as long as it's stuff you'll use.

 

[australiankaren]

hey

we aussies & new zealanders are trying to help your economy by coming over for holidays in droves.....

i dont think there will be anyone left here in Australia in september, we'll all be @ Mickeys house

hang in there, things will get better.

 

[padawans]

I think its a very good idea for people to have at least 2 weeks worth of emergency supplies even in good times. I live in a place that has 0 natural disasters and I still do this. Most of my inlaws live in Ca (earthquake country) and are so unprepared. I just don't get it. "There motto is don't worry be happy". You never now what can happen anywhere, and with any financial collapse there is a risk of civil unrest and its just good sense to be prepared at all times.

 

[crusoe2]

If they are out there I haven't found them. I mostly lurk at Freedom Gardens and IDigMyGardens.com because I'm still fairly new to heirloom gardening and seed saving and have a lot to learn, and both forums have a homesteading/prepper/self-sufficiency element but any forum that is for preppers tends to be too extreme for me. I'm not looking to fight my way through the zombie apocalypse after all.

I don't consider myself a "prepper" because I feel like the term evokes a far more radical set of views than I personally hold. I'm just someone who is used to dealing with variable income (for 5 years now our sole income has been DH's home improvement company, and before that he was working for someone else in the same variable/seasonal industry). When times are good we stock up on things we know we'll need, because bad times - even if only the winter slow season - are just part of what we do. The same habits that work for seasonal ups and downs have worked equally well against economic ups and downs.

Thanks for the website suggestions. I'll be sure to check those out. I agree about some of those prepping sites - they can be pretty hardcore. I suppose maybe it depends on the individual's personal circumstances but I just don't think it's going to get THAT bad. Then again, we live in an area that some of those hardcore preppers might consider a good place to bug out to - small town where lots of people still hunt, fish, keep a garden, and can their own veggies. I could see where if I were living in a big city, I might feel differently about it.

Btw, our situations are very similar. My DH sells building supplies for a living so I know about those seasonal ups and downs. Fortunately he is in management now but for years I was a SAHM and had to wait each month to see how much the commission check was going to be before I could really plan my budget. Of course, management has it's downside too - DH now has to be the one to tell people that they're being let go and he really hates that part of his job. And, of course, he's been laid off a few times himself over the years - twice just in the last 3 years due to businesses closing their doors.

 

[OceanAnnie]

hey

we aussies & new zealanders are trying to help your economy by coming over for holidays in droves.....

i dont think there will be anyone left here in Australia in september, we'll all be @ Mickeys house

hang in there, things will get better.

I think its a very good idea for people to have at least 2 weeks worth of emergency supplies even in good times. I live in a place that has 0 natural disasters and I still do this. Most of my inlaws live in Ca (earthquake country) and are so unprepared. I just don't get it. "There motto is don't worry be happy". You never now what can happen anywhere, and with any financial collapse there is a risk of civil unrest and its just good sense to be prepared at all times.

You're right. Look at what happened in a matter of days with Katrina. It was stunning, the amount of looting and violence. There were even police in on the evil mayhem. It's not a far cry to say that civil unrest could happen here with a financial collapse. It's happening around the world.

I have been reading a lot about thieving/violent "flash mobs" here in the states. This is a relatively new term and method. I wonder if it was brought about by our economic situation. I tend to think it is.

 

[fkj2]

Just had a discussion w/DH tonight about when to act, and what we would do if the dollar tanks and you need a barrel of money to buy a loaf of bread. We talked about finishing paying off the house and cars with our savings. He said that would be silly because if money was worth less, outstanding debts would remain the same and therefore could be paid off easily. Didn't think of that! We are making a list of items we want to purchase instead that we could use anyway- even if there is some miracle economic recovery!

I guess my question would be, where are you going to get a barrel of money to buy a loaf of bread?

Inflation is not increasing prices; it is a phenonmenon of too much money chasing too few goods. Essential goods/services may try to increase their prices but with the levels of unemployment USA currently has, not to mention underemployment, people will buy what they need, not what they want. We've witnessed that for years now.

The problem with a worthless dollar will be on the world markets; the world won't want them. We won't be able to import what we need and we no longer manufacturer very much of what we actually require.

Labor has NO pricing pressure. We're seeing that in the meager wage increases. And now several big companies have announced thousands of job cuts.

Count me in the debt deflation--selectively--camp. Essentials? Higher prices. Non-essentials will continue to drift downward in price. Home ownership is no longer an essential.

 

[OceanAnnie]

I worry that this will make other countries reconsider having the US dollar as the reserve currency for the world. If they ever change the reserve currency we will have crazy inflation (dollar will be worthless) and we will be totally screwed.

Recently, China has been talking about it.

 

[LoveBWVVBR]

Honestly, I have no idea how this will affect us on a personal level. I guess that time will tell.

 

[nunzia]

Or, finally, a credit rating agency is trying to re-establish its own credibility.

The problem, as I see it, is that despite the recent increase in the debt ceiling, no significant responsibility has been accepted that will improve our debt-to-income ratio in the USA that will improve our country's creditworthiness.

Look at this board: If people have excessive debt, they cut back on expenses and maybe get another job to improve their credit score. USA needs to do the same thing: cut back and get another job. Trouble is, we keep off-shoring them so that companies can take advantage of low-cost production, which boosts the value of their stock. We allowed the ever-increasing stock market prices to do our "retirement savings" for us. Now that's at risk if the market trends downward.

My biggest concern is what we, the public, don't know about the fundamental problems below the surface.

Agree...people should watch the HBO movie "Too Big to Fail" about the whole mess that started it all. Really well done, not political..everyone gets hammered..and pretty darn scary.
For those not saving cash..you will still need it..just more even though it's worth less, so you do need to stock up. Yes, you also need to spend now on things that you can, but include food and clothes in that. I try to have a really good supply of non perishables, and it doean't hurt to buy ahead with clothing as cotton prices are rising.

 

[OceanAnnie]

Agree...people should watch the HBO movie "Too Big to Fail" about the whole mess that started it all. Really well done, not political..everyone gets hammered..and pretty darn scary.
For those not saving cash..you will still need it..just more even though it's worth less, so you do need to stock up. Yes, you also need to spend now on things that you can, but include food and clothes in that. I try to have a really good supply of non perishables, and it doean't hurt to buy ahead with clothing as cotton prices are rising.

I'd like to see that.

The government has applied this template, "too big to fail"; to itself, business, and banking.

No accountability.

If we ran our households in the same manner we'd be under the jail.

Doing the same things and expecting different results is the very definition of insanity. Yet that is what we as a country have been doing for years.

 

[nunzia]

I'd like to see that.

The government has applied this template, "too big to fail"; to itself, business, and banking.

No accountability.

If we ran our households in the same manner we'd be under the jail.

Doing the same things and expecting different results is the very definition of insanity. Yet that is what we as a country have been doing for years.

True, true..the movie came out awhile ago, so should be available to rent/stream, etc.

 

[mab2010]

Regardless of whether or not the downgrade was right or wrong, the elected people of this county now must address this debt problem - it can't be put off again and again. Our country is facing a hard truth, hopefully we'll pull together and get things moving in the right direction!

On a personal level, I think that people will start to take a closer look at how they are managing their personal finances - I think that will be one of the more significant areas of impact...

 

[punkin]

The opening bell (stock market) is in a few minutes. I have my anti-nausea pills ready.

 

[OceanAnnie]

Regardless of whether or not the downgrade was right or wrong, the elected people of this county now must address this debt problem - it can't be put off again and again. Our country is facing a hard truth, hopefully we'll pull together and get things moving in the right direction!

On a personal level, I think that people will start to take a closer look at how they are managing their personal finances - I think that will be one of the more significant areas of impact...

I think a great start would be to reduce their salaries, cut their premium health care, and their million dollar parachutes. They are making 10xs the salaries of those they "serve" (when you add up all of their benefits). They give a lot of lip service to shared sacrifices, but they leave themselves out of the equation. Everyone else has been hit hard by the economy. So should they.

 

[Colleen27]

I think a great start would be to reduce their salaries, cut their premium health care, and their million dollar parachutes. They are making 10xs the salaries of those they "serve" (when you add up all of their benefits). They give a lot of lip service to shared sacrifices, but they leave themselves out of the equation. Everyone else has been hit hard by the economy. So should they.

Yeah, but that's the problem with giving anyone the power to set their own salary - they're never very willing to consider cuts, no matter how necessary.

 

[OceanAnnie]

Yeah, but that's the problem with giving anyone the power to set their own salary - they're never very willing to consider cuts, no matter how necessary.

True.

 

[eliza61]

I think we have only just begun to see how bad our economy can get.

On a personal level, everything we purchase routinely will go up -- groceries, clothing, etc.. Less discretionary money. I think times are going to get a whole lot leaner. I hope I am wrong.

What do you think? Oh and are you going to prepare for these changes? If so, how?

I'm not ready to scream the sky is falling. I think the price of gas will have a greater impact on food and clothing prices than S & P rating.

The stock market will feel the immediate effect so folks who have thier pensions tied to the stock market may want to watch that. but even that isn't going to be armaggedon. I have 10 years until I retire so I plan on continuing in my 401K (maybe even bump it up a little to buy low) and make sure I well diversified.

Most of Europe is having the same economic issues so I really don't think there's going to be this big devaluation of the dollar.

Pretty much this is the same scenerio as in 2008 when the stock market tanked then and we're still here.

As for personally, I'm doing the same things I've been doing. Being an educated consumer, saving for retirement, paying off my debts and taking care of my family.