Another Financial Crisis on the Horizon?

According to Bill Gates, he is certain that another financial crisis is on the horizon (although he doesn't know when it will happen).  Two things struck me about this, the first that, duh, our economy is cyclical and there are always ups and downs so it shouldn't surprise anyone that in 2008 there were bad financial times then things got better and then things could conceivably get worse.  The second thing he said is "fortunately we got through that one reasonably well."  Uh, he might have got through it reasonably well but there were a lot of people who lost jobs, lost houses, and it totally turned their lives upside down.

No matter when a financial crisis is set to happen, EVERYONE needs to prepare like it will hit tomorrow.  And everyone needs to prepare like it will be ten times worse than 2008.  It seems like the people worst off during the last recession were middle to high income folks whose jobs were extraneous, whose companies were extraneous, and who were in debt (lots of credit card debt, house mortgaged to the hilt, car debt, etc).  In other words, these people were living on the financial edge and it took very little to push them over the edge into bankruptcy and poverty. 

Here's where to start:

• Get out of debt ASAP.  Dave Ramsey is very good for this.  I listened to his radio show practically until my ears bled and I could hear his answers to people's financial questions in my sleep and that finally gave me the incentive to get out of debt.
• Make paying off your house a goal.  Can you image how financially set you would be if you had NO mortgage payment, no car payment, no debt payments at all?  It is definitely easier to weather a financial storm when you only have to earn enough to pay utilities, property tax, food, and gas.
• On the flip side, don't take money out of your house even if you are receiving enough refi offers to wallpaper a room.  We have a lot of equity in our house and every day when I check the mail I am getting flyers to refinance my house.  These companies think I want to put my home in jeopardy and risk being homeless so I can go on a vacation or use the equity to buy a new car???
• Have multiple streams of income.  If you have all of your eggs in one (job) basket, then when that job goes away so does all of your income.  If you have money coming in from a half dozen sources, it makes it much easier to weather a financial storm if one job or source of income goes away.
• Always keep improving your skills.  Watch what is happening on the horizon and match your skill set with what will be needed in 10 years, not what was needed 10 years in the past.  There are some skills that are kind of future proof (like nurses and plumbers) and there are some skills that really aren't needed anymore (secretarial pool skills).  Then there are the jobs that are on the fast track to elimination (like store cashiers, commercial drivers, etc).
• Have good interpersonal skills and social relationships.  It's always easier to weather a financial disaster when you have other people to lean on and help you out.  Of course, offer to help out others when they are in need as well.
• Stockpile!  You don't need 10 years worth of food and supplies but having enough on hand so you aren't like one of the people on the news grabbing the last loaf of bread in a store when a storm is set to hit is a good idea.  Likewise, if you have enough of the necessities stockpiled (food, water, toilet paper, medicine, household supplies etc) you can weather anything from a lengthy illness to a job layoff, with little financial effort.
• Control your spending and live below your means.  During the last recession I saw plenty of people go from high earners to can't find a job.  Some continued to buy their Coach purses and Jimmy Choo shoes until their credit cards were declined even though they KNEW they didn't have any income coming in.  If you can control your spending and live below your means now when times are good, you will be well set to weather another financial disaster.
• Don't be afraid to take big, decisive actions.  In 2010 my biggest client was involved in a huge financial mess.  Rather than try to replace that client or hang around and try to get some scraps from what was left of the organization I had worked for for 10 years, I told hubby we should sell the house and everything in it and travel for a while with only what we could carry in our backpacks.  At the same time our house was losing value daily and the recession was in full swing so the financial future didn't look good for anyone at that point.  Surprisingly (really really surprisingly) hubby said yes.  He NEVER likes change so I have no idea what inspired him to agree with me.  We sold our house when it still had some equity in it, got completely out of debt, put a few things in storage, and hit the road to travel for a while.  That plan turned out really well for us.  Eventually we resettled in a new city and were able to remain debt free (until I bought a car and used my credit cards and now...I'm working on paying off debt again).
• Be proactive.  It's easy to stick with the status quo and hope for the best but that doesn't help you when you know a major financial crisis is looming (like a new baby coming in eight months, a possible divorce on the horizon, an employer that looks like they will be bankrupt sooner rather than later).  Many people freeze in these circumstances and hope things will blow over or that things will somehow work out but when you know something bad is coming, take proactive action--polish up your resume, start networking, find a better job, sell stuff you don't need and bank the money, etc.

Hopefully the next financial crisis won't be so bad but one never knows so prepare now for whatever may happen.