Coffee heat rising

Here’s Why I’m Paying off a 2% Car Loan…

...right now, without waiting.

And that is without taking into account any assessment of the clowns who have taken over the White House.

It’s easy enough to see that what goes up must come down. Capitalist economies have always been cyclical. That’s normal. But I think we’re looking at stupidity and foolhardiness that exceed normal, compounded by seditious collaboration with foreign parties who are not our friends, outright corruption, and the takeover of a national political party by ideologues who are so passionate they have taken leave of what little common sense and ethics they might once have had. Compounded, too, by a natural disaster from which this country will not soon recover.

The next economic crash is going to make the Great Recession look like…heh! A tea party. It may make the Great Depression look like a walk in the proverbial park, too. Many, many more of us are going to lose our jobs, and quite a few will never replace them — just as quite a few of us never replaced decently paying jobs and decent benefits after the Fall of the Bush Economy. You think we have a gig economy now? Wait’ll you see what’s coming up the road.

Most of what brought us the Great Recession is already back in place: and then some.

I believe we will see another major economic crash within the next three and a half years, if Trump stays in the White House through his first term. If he is impeached or if he resigns and is replaced with Mike Pence, that may slow things down a bit: then we can expect a major economic crash within the next seven and a half years.

This time, we can see it coming.

Anyone who lived through the Bush Recession would be a fool not to line things up and get prepared ASAP.

What to do to line things up?

Number 1: Pay off debt, as fast as you can and to the extent that you can. Pay off the car loan, pay off the credit cards, pay off the mortgage if you can.

Number 2: Do not assume any new debt! Do not buy a new car. Do not buy a new house. Certainly do not buy real estate at the present price point, which in many parts of the country is back in the “bubble” range. Do not charge anything on a credit card. If you can’t afford to pay for it in cash, don’t buy it.

Number 3: Build a cash emergency fund. Build it as fast as you can. Pay yourself first by putting a set amount aside out of every paycheck. You should have enough in savings to cover at least six months’ worth of living expenses; preferably a year. Even better: two years’ worth.

Number 4: Take care of routine health and dental care now, while you can afford it. If you are laid off your job, you’ll have about a snowball’s chance of getting health coverage that you can pay for.

Number 5: Stock up on nonperishable food items. And while you’re at it…

Number 6: Plant a vegetable garden.

Number 7: Enhance your networking strategies. Join business groups and make yourself known to potential employers in your field. And while you’re at it, update your resume and keep it updated.

Number 8: Start a side gig. Ideally, it should be one that could morph into a business that, combined with unemployment and a spouse’s income, can support you. Use the income from a side job to pay off debt and build cash savings.

Be prepared. If you’re not already prepared, better get that way soon…

Banner Image of the Day: Unemployed men outside a soup kitchen opened by Al Capone in Depression-era Chicago, Illinois, 1931. Public domain

4 thoughts on “Here’s Why I’m Paying off a 2% Car Loan…”

  1. Sure hope you’re wrong….My thought is after taking a step back….Harvey was a terrible natural disaster BUT the rebuilding of Houston and the surrounding area may just be a HUGE economic boost. The Trump Administration is already making noise about $5 Billion in aid. And Houston has the ability to pay it back with all the chemical and oil processing infrastructure that the Country depends on. Gonna be a lot of economic activity in rebuilding for years to come. Just think of it … the “talking heads” are already talking about the loss of 1 MILLION cars…Toyota, Ford, GM should be just a few who should benefit….Just my 2 cents

    • Sorry but I can’t get excited about the positive impact here. Yes money will be spent to rebuild, but at what cost? Lives have been lost. Irreplaceable items that can’t be rebuilt are gone. Millions don’t have insurance to cover all their losses and even with the government stepping in, you know many people won’t come anywhere close to even. You know the scammers will come out of the woodwork now. Plus the mental stress that every person affected has to go through.

      Sorry, but I’ll never EVER talk about a natural disaster like this being some sort of positive. Because it’s not.

    • I hope that’s true — about the economic boost, I mean. But Harvey is going to jack up the cost of fuel, big-time. And the cost of fuel may be elevated for a long time, maybe even permanently. As you’ll recall, consumers reacted to the last spate of high costs by cutting way back on driving, and in large cities like Phoenix many businesses would not send service men if it entailed much driving, or else they tacked on an extra fee. During last period of inflated gasoline prices, Leslie’s Pools started adding a “trip charge” ON TOP OF the service call fee — and they’ve never removed it.

      While sure…people may have to buy a million cars, the car makers’ gain is the insurance companies’ loss. Imagine what this thing is costing insurors! And just imagine how much they’re going to jack up our rates to pay for it!!!

      As for the Trump Administration making noise: so far we’ve seen that he makes a lot of noise but rarely follows through.

  2. Of course there are subprime mortgages. The average credit score in the US is at an all time high, and yet it is still below that “720” prime threshold. Subprime mortgages are not inherently a problem. The problem comes when underwriting standards are lowered to increase loan volume.

    The Houston Ship Channel/Port of Houston reopened today. It will take a week or two for the refineries to get back running. After that gas prices should return to normal levels as there’s nothing supporting a long term price increase.

    Asset backed securities are nothing new, and they weren’t new in the ’07 crash. They are not inherently bad or a problem. When demand for them influences credit underwriting quality that’s when there can be a problem.

    The items mentioned above may not cause the sky to fall, but that also does not mean the US will not see a downturn. Shiller’s CAPE ratio also indicates the market may be overvalued signaling a potential downturn coming. The Fed has struggled to get the economy to hit target growth rates, and Harvey’s estimated $190bn in damages (approx. 1% of gdp) will put downward pressure on that growth. I am not ready to talk about the positive impact of Harvey while my city is still trying to figure out where we’re going to lay our heads at night or get a meal or make sense of what remains of our wet tattered homes.

Comments are closed.