Would You Support a Debt Jubilee?

Debt Jubilee

If you watch or read the news on a regular basis, you will probably see an occasional report on the staggering amounts of personal debt and government debt that will never be repaid by many. Is it time to revive the debt jubilee that was first implemented in the Days of Moses when debts were forgiven every 50 years?

Our Debt Problem

It’s no secret that we, as individuals and countries, have lots of debt. Here are some U.S. debt stats you might be unaware of:

  • Our national debt in 1984 was $1.5 trillion. That’s how much our national student loan debt is today!
  • Meanwhile, the national debt has ballooned to $20 trillion in 30 years.
  • Credit card debt is $1 trillion
  • Auto loan debt is $1.2 trillion

And these statistics do not include any debt numbers for corporations, local governments, and other countries.

Puerto Rico Debt–A Future Glimpse of American Debt?

What got my wheels turning about the debt jubilee has been the remarks of several key government leaders in the aftermath of Hurricane Maria.

You probably remember some of these headlines: 100% of Puerto Rico loses power, Hurricane Maria throws Puerto Rico back into the Stone Age, and How Will Puerto Rico Ever Rebuild With Their Massive Debt?

Meanwhile, Puerto Rico is $70 million in debt, 43% of the 3.4 million citizens live beneath the poverty line, and they can’t print more money like the U.S. Federal government to kick the can down the road. Puerto Rico is broke and it can be a sign of future economic times for the rest of the country and world.

A Brief History of Debt Jubilees

I’m not the first person to mention a debt jubilee for the 21st century.

A quick web search shows articles from Jubilee 2000 (18 years ago), pre and post-Great Recession, and present day as people either favor or dislike the idea of a debt jubilee. Many a leading financial publication, blog, and national thought leaders have proposed forgiving the debts of sovereign nations from developed countries like Japan or the numerous African nations ravaged by civil war, famine, and unrest.

The Biblical Debt Jubilee

My baseline is the biblical debt jubilee. Yes, times are a little different today but at the end of the day, debt is debt.

In Biblical times, the “Jubilee Year” signified three events:

  • Slaves were set free
  • Land was returned to the original landowner
  • No farmlands were worked for an entire year (even the land got to take a sabbatical!)

Could you imagine not growing any crops for an entire year or taking a review off of work?

Can you afford to take a year off work?

That means building an emergency fund and proactively saving to ensure you had enough food and money to live for the year of rest.

Personal Debts Were Forgiven Every Seven Years

In addition to the Year of Jubilee every half-century, there were also provisions for personal debt forgiveness every seven years:

At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel any loan they have made to a fellow Israelite. They shall not require payment from anyone among their own people, because the Lord’s time for canceling debts has been proclaimed. You may require payment from a foreigner, but you must cancel any debt your fellow Israelite owes you. –Deuteronomy 15:1-3

Source: Bible Gateway

Our current financial system is much different than the Israelite financial system. Our most expensive loans have borrowing terms longer than seven years:

  • Student loans have a 10-year repayment term
  • Home mortgages are usually for 15 or 30 years

Plus, banks lend money to you regardless of your race or creed. Israelites were only required to forgive the debts of fellow Israelites and could continue requiring payments from non-Israelites.

What Does a Debt Jubilee Look Like Today?

Our financial system is much different than ancient Isreal and we need a different approach as the “average Joe” can invest in P2P loans and we live in an easy credit society. The middle class didn’t exist in their society as we know it today.

If Wall Street begins forgiving debts, it’d be safe to assume there would be a strong negative impact on the market in the short term and long term. Investors are going to sell because they fear the companies migth go bankrupt. Uncertainty is one thing markets don’t like.

And if a government-mandated debt jubilee gets enforced, how do they decide who has their debts forgiven?:

  • Borrowers with a high debt-to-income ratio
  • Residents of particular states or territories
  • Taxpayers who live below the poverty line
  • Specific types of debt (i.e. Puerto Rican government debt, auto loans, student loans, etc.)

It could be all four of these groups, a combination, or only one.

Those are all decisions that the policy wonks, politicians, and lobbyists would have to make. While there would be some short term stock market volatility, I believe the markets would rebound.

Of course, the debt forgiveness would rapidly expand the government debt.

Different Debt Jubilee Options

We don’t know how a debt jubilee will look like because we’re not there yet. There are too many variables.

However, we do have an idea of what arrows are in the central banks’ quivers:

  • Call a bank holiday and take 25% of 401k assets
  • Print more money…a la quantitative easing
  • Mandatory debt forgiveness (unpaid loans and bonds are written off with no further payment required)

Once again, the powers that be can decide to pursue one, two, or all three of these options. Obviously, savers and the wealthy would be punished the most as their bank account are smaller, worth less if the currency devalues, or the stock market tumbles because investors lose confidence because they don’t know if more assets will be seized or lending companies can remain solvent now that they are receiving far fewer interest payments.

There will be lots of short term financial volatility in the investment markets and even the employment sector as business models change and private citizens adjust to new amount of disposable income.

Image Credit: Pexels.com

My Opinion on the Debt Jubilee

While I don’t think the global economy can go on as it has long-term since the Great Recession where world governments can print more money to put a band-aid on their own federal debt situation, there are steps you need to take as an individual.

Don’t Put Your Faith In Princes…Be Self-Sufficient

Psalm 146:3 (NLT) says, “Don’t put your confidence in powerful people; there is no help for you there.” While I think many of our government leaders have good intentions, they are humans just like us and we mess up more often than we hit home runs.

After all, how many politicians fulfill most of their campaign promises?

With that in mind, I’m not going to wait for Washington, Wall Street, or the United Nations to decide how debt forgiveness takes place. Yes, their decisions can greatly affect many areas of our economy from lending rates, stock prices, and employment, but we have to make decisions based on the current reality; there are too many variables and a 2018 debt jubilee can look vastly different than a debt jubilee in 2020.

Make Your Own Plan To Get Out of Debt

A personal goal that my wife and I share is to live on $35,000 a year or less.

One way we do this is by borrowing as little money as possible. Currently, our only loan is for a mortgage which we are making extra payments on so we can become debt-free even sooner. When our house is paid for, we no longer have to write a $600 check each month to our lender. That’s also an additional $7,200 we can spend (or save) on something we want to.

If you don’t know where to start with making a debt-payoff plan, I recommend Dave Ramsey’s Total Money Makeover. I have a copy of my own and periodically reread certain sections for personal motivation.

Build an Emergency Fund

When I quit my full-time job in 2015, I wasn’t expecting to not work full-time for a year. Could you afford not working for an entire year? We lived on a shoestring budget, but we made it and you can too with proper planning.

During the 2009 Great Recession, if you needed to find a new job, it took three months on average to find one. For that reason, you need at least three months of living expenses in an emergency fund.

We personally keep our emergency savings in an FDIC-insured online Capital One 360 high-yield savings account.

We never pay bills from this account and we have our paychecks deposited into a different bank account so we don’t confuse our emergency fund with our spending money. This also helps guarantee that we will have the money for a rainy day.

Invest

While the stock market is cyclical between bull markets and bear markets, the stock market is one reason why America is one of the most prosperous nations in the history of the world. The stock market is one of the few ways your money can outpace inflation. Even if you begin investing with little money, you can build a large nest egg with consistent investing and patience.

How would a debt jubilee affect the broad market?

I’m not an expert, but I think the impact on the market depends on how the debt jubilee pays out. If lenders are required to write off the balances of delinquent loans, those stock prices will tumble in the short term. That decline can spread into the broad market as investors lose confidence because they don’t know which sectors will see their balance sheets diminish next.

It’s almost impossible to predict the day-to-day movements of the market even in normal market conditions, so I’m not going to spend too much time guessing. But, I don’t think you should have all of your money tied up in the market in case a market crash occurs or the government captures 25% of your total 401k balance.

Besides solely investing in stocks, you might also consider investing in income-producing tangible assets like:

Diversification is always the keystone to a sound income strategy.

Get a Side Hustle

I’m a big fan of income diversification and “making hay when the sun’s shining.” My wife and I have several different income streams besides our regular 9-5 job. One reason why we like side hustles is that the extra money can be used to pay off debt, invest, or put into savings for future use.

Having a side hustle is also another form of income security. If your employer suddenly goes out of business, you could be out of a job for three months before somebody else hires you. Because you already hustle on the side, you aren’t forced to flip burgers at McDonald’s until you receive a job offer to begin earning a real paycheck again. Not only can you earn more than minimum wage, your side hustle might also turn into a replacement income.

Take me for example. In three years, I’ve gone from working five days a week outside the home to only having to commute one day a week because I switched to a new career field.

Can We Prepare for a Debt Jubilee?

What to do if or when a debt jubilee happens is a “million dollar question.” There are way too many variables to make an accurate plan, but that doesn’t mean we should sit on our hands doing nothing.

Personally, I’m taking my time and money to hedge our wealth into investments and tangible assets. One of the most level-headed resources I follow is the Global Changes and Opportunities Report by Jim Powell. He doesn’t focus exclusively on a debt jubilee but he provides advice for investing in today’s market and how to prepare for the future. As full disclosure, I subscribe to this newsletter but I receive no kickbacks if you join; Mr. Powell is one of the few trustworthy sources without an ulterior motive.

Beyond keeping an ear to the ground, I recommend paying off your high-interest debt as much as possible. Start with your variable interest rates first as they can increase at any time, then concentrate on your fixed interest rates starting with the highest rate first. Paying off your loans and eliminating a monthly payment means more disposable income you can spend if we experience a sharp rise in inflation or to invest in assets that will help you accumulate wealth as the years pass by.

Summary

I’m not going to wait on a national or international debt jubilee to solve our current debt problems. Instead, the one way we can all make a large immediate impact on the debt figures is to not be in debt ourselves. If you’re currently in debt, find a way to get out of debt and stay out of debt so you are not another “statistic.” Think of it as your own personal debt jubilee.

Do you think a debt jubilee will happen in the near future? If so, what be debts forgiven? Is a debt jubilee good?

Additional Reading

42 Comments on "Would You Support a Debt Jubilee?"

  1. I think a debt jubilee would be a big mistake. I think we (Americans) would rack up debt quickly. For example if you have a starter home and are paying the mortgage along with $1k in student loans a month, and all of a sudden those student loans are gone, why wouldn’t you upgrade to a new home almost immediately? You’d for sure get approved for it. Anyway I don’t think it would happen.

    • I don’t think a debt jubilee would be good either, personally. There are several different ways it could impact the overall economy, but, one way I could foresee is the loans would be forgiven by the federal government which means printing, even more, money than usual to repay the banks. Then, wash, rinse, and repeat every 50 years.

  2. I don’t think one will or should happen. There would just be too much moral hazard to eliminate debts like that. It would incentivize people to live beyond their means which would have serious negative long-term impacts.

    I like that you tell us to take care of eliminating our own debt instead of waiting around hoping that someone else to do it. Great article in those regards!

    I notice that you say you put $100/month in your emergency fund. This seems like an unintentional way to use your money. Wouldn’t you be better off by determining how much you need in an emergency fund and putting that amount in it and investing the rest in productive assets that won’t lose to inflation?

    • I appreciate your insights Zack. A debt jubilee would only encourage more spending in our culture I’m afraid.

      As for the emergency fund comment, with the $100 a month, we are right around the 6-month range (as of this post) and will be looking at dialing our contributions back very soon. We will either invest that money or (more than likely) make extra mortgage payments until our house is paid for. Then, our mortgage payment will become a 12-month emergency fund, literally overnight when we no longer make the $1200 monthly payment!

      Thank you for the reminder, one downside of the “set and forget” is sometimes you have to remember to turn the automation off when your goals have been reached so you can make new ones.

  3. If we did have a debt jubilee, I believe lending practices would change drastically. Banks would not be so eager to hand out loans – especially ones that would come due after a jubilee year. Perhaps short-term loans would become the norm. If that were the case, I think we’d be better off. There would be a much smaller debt-marketing-machine at work. We couldn’t establish a jubilee now with so many impossibly long-term debts in existence. But if we did say, “In 50 years, we’re going to re-establish a debt-jubilee – including one every 7 years for personal debts,” things would change for the better as people, businesses, and governments prepared for it.

    • Credit is extremely cheap in our society and that would have to change. Easy credit can be a blessing when used effectively to get business loans, home loans, and student loans to improve your income and quality of life. Unfortunately, too many people borrow for the wrong reasons. And, our nations do too. If anybody was to ever actually implement a modern debt jubilee, it would definitely be a rocky few years as the financial markets adjusted to the new business models and lending practices.

  4. Wouldn’t a debt jubilee cause devaluation of the dollar but increase the value of gold and oil? I remember Trump talking about setting a gold standard

    • If you’re an investor, prices of tangible items will increase (I think), but for the average citizen life will get worse long-term. A devaluation of the dollar will spur inflation which increases the prices of items even though incomes won’t increase. In a worst case scenario, debts will be forgiven but disposable income won’t necessarily increase because the price for gas, food, etc. will be higher.

      That’s just my theory after listening to several economic experts on this subject.

  5. I am against any debt jubilee.

    • Me too. The topic is increasing in buzz so we’ll see what happens as the newscasters and politicians start giving it more attention. Especially, when the credit cycle begins to change.

  6. People are irresponsible and many Americans need this, our government did this for this corporations (that were too big to fail) but the American people get hit with hire taxes and lower paying jobs,with easy credit terms. I am more concerned if this happens what do you think will happen to our savings and 401k accounts? Would they be left alone in a jubilee or would they be sized and repurposed? There are many Americans that are responsible and do not need this what about those individuals? This is just questions I’m asking as an American who is concerned for the savings I accumulated over the years.

    • All very good points. I don’t know exactly what will happen, but I do think all Americans would see a “financial haircut” in their financial accounts in terms of valuation. In the short-term, the bigger impact would be the potential loss of confidence in the stock market and the U.S. dollar and cause a panic as investors from all over try to leave the market and take what they can.

      Would we turn into a Weimar Republic in short time? That’s a question I’ve been thinking about lately.

      Although anything can happen, James Rickards has several books that can help answer your question and make us all a little smarter.

  7. Thanks Josh. And as Shawn stated, what is the likelihood of our 401k’s and stocks being used; how would it effect state pensions; social security; gold and silver prices; and what would the medium of exchange be during this readjustment? I currently have no debt other than my mortgage, which is covered by my tenants. Will banks foreclose if mortgage isn’t paid? It seems so surreal – not sure of how to prepare, but I certainly want to be, scouts honor!

    • There are so many variables, that I don’t think any of us can answer with 100% certainty. My wife and I are working as hard as possible to be debt-free so we not beholden to the bank and we have our assets spread out: 401ks, stocks, tangible assets.

      Right now, underfunded pensions are serviced by the Pension Benefit Guaranty Corporation that continues to make payments for pensions that go “belly-up.” If they were to do a debt jubilee today, it would just be printing more money…but if they wait until there’s economic calamity, my prediction is a percentage of pension plan balances and any stock investments (401k, IRA, taxable investments) would be withheld like what happened in Cyprus.

  8. Like a National Bankruptcy.Trump Has Some Practice In That,Maybe Its Why They Put Him In Office.20trillion In Debt. Big As The Government Is,It Wont Run Any Better Than Any Other Business That Is Twenty Trillion In Debt.

    • He definitely doesn’t have a proven track record with his business past. Our lawmakers from both sides of the aisle need to start spending less because the deficit has grown under Republican and Democratic leadership. Let’s just hope it isn’t too late.

  9. A surprise Debt Jubilee, in my opinion, fixes nothing but does reinforce poor decision-making through incentification of irresponsible spending over responsible money management. A formalized periodic debt jubilee that follows a prescribed formula can be productive, but only because its effects have already been factored into the transaction process. For example, in Israel, a person seeking to “sell” his family’s land would receive payment based not only upon the value of the land, but also upon the length of time before the next jubilee when the land would revert to the original owner.

    What everyone needs to understand is that this is not a question about the top 1% or 10% against the rest of society. It is a question of mature decision making and responsibility. No one was forced to take on debt. If you want to get a higher education, there are several ways to do so with little to no debt. Furthermore, if you choose to pursue a higher education, you should choose a field that translates into real income potential (most votech schools do this very well and efficiently; where as colleges and universities appear to have a very poor track record at a high cost to there students). This creates wealth rather than insurmountable useless debt.

    People need to learn about the virtues of saving and investing. The government are horrible instructors and normally promote just the opposite. The government is actually a prime example of what not to do as they have become largely insolvent. Consider what would happen if interest rates returned to just 7%. We would not have enough income to service our debts and keep the government functioning.

    So what would happen with a Jubilee? I envision chaos and anarchy. What is wealth whether in tangible assets or intangible assets. In a global economy, we would be an economic pariah for years. The best assets will be weapons and ammunition. What is gold in the midst of riots when people are told all their life’s work is for not. Some will undoubtedly commit suicide, others will fortify they position and the rest will plunder or be plundered. Look at New Orleans following Katrina where even law enforcement joined in the crime spree. The government and rich will protect their position with armed guarda and watch the ensuing chaos and once the dust settles, enact martial law and re-institute a functioning government have solved two problems. Insolvency and population burdened by too many non contributing members.

    The real solution is accountability and responsibility. It may initially be painful, but in the end, it will be far less chaotic than an unplanned Jubilee

    • Very deep insights and I’m glad you shared them. I share many of the fears you have and everything won’t be happy. Rising interest rates and growing deficits that still outpace record tax revenues are the most glaring.

  10. Who in the government would make the decision to have a Jubilee? Wouldn’t they then be kicked out of office by voters or business forces?

    • Good question. It depends on the economic and political climate at the time. I don’t think it’s a real possibility today, but if we were to have another 2008 Great Recession, I don’t know.

  11. I agree with TyHi’ comments… Alot of good posts on here. I think people in good financial standing will take the hit for alot of bad decisions by majority who think nothing od running the cards up or buying that new ford power stroke at 60 k but really cant afford the payment. Let them suffer and responsible alone.

    • Agreed. Unfortunately looking at the 2008 mortgage crisis, we know that bad decisions from a few impact the entire team. I didn’t have a mortgage at that time and my parents (who still have their mortgage from that time) never missed a payment either, but our stock investments dropped in value thanks to the banks that made the bad lending decisions that affected the entire stock market.

  12. Most of the comments are against the Jubilee and I too hope that it doesn’t happen. But one question is how can we prepare, if it were to happen? Are there any set of strategies that can help protect non-borrowers? Are there certain investments we can make to ensure that our financial health is not “diluted” from such debt-forgiveness?

    • We’re in the same boat as you Ana. I’ve been doing a lot of reading on this topic recently (specifically the 2001 Argentina peso crisis) and I don’t know if there’s a one size fits all solution except owning tangible assets that should hold value during an economic downturn. As you diversify in the stock market, you should diversify what you own.

      Things like income-producing tangible assets like real estate (rental properties or land), collectible items, foreign currencies, even silver or gold currency (I’m not trying to sound like a conspiracy theorist here) are viable options to hedge against the dollar.

      Personally, I’m avoiding investing in companies that make a business on lending money to borrowers…this includes student loan companies, mortgages, auto loans. To me, it seems like a currency devaluation is the most viable outcome, this is good for borrowers with fixed interest rates because their payments get cheaper overnight but bad for lenders that see their balance sheets instantly shrink because money isn’t as valuable. Of course, high default rates can be just as detrimental to these companies too.

  13. I enjoyed your article, and the comments as well. I’m left with a question though, since it hasn’t been addressed (unless I missed it). A large portion of our national debt is owned by foreign countries and investors. How would a debt jubilee work with this debt? I honestly don’t see another nation, which has invested in the stability of the US credit rating, just rolling over and accepting a statement by the US that “Oh, that debt just doesn’t exist anymore. Thanks for playing though.” Unless I’ve missed the point of the debt jubilee, it would not only devalue currency, but would also destroy American credit and credibility around the world. After all, who would invest in a country that says they’re going to renege on paying their debts every 7 or 50 years? That in itself is a bad investment.

    • The U.S. dollar is still the world’s primary reserve currency. This is a huge advantage working in our favor and one reason why we haven’t experienced the currency crises that smaller nations have faced.

      But, we are also the world’s largest debtor nation. If the yuan or another foreign currency becomes the world’s most favored currency, the entire landscape changes. We don’t know if a debt jubilee will happen, but the Fed can continue to print money for now and other countries will buy it up at the moment. The market doesn’t want a jubilee because there’s too much to lose.

  14. All for debt jubilee | March 15, 2018 at 6:02 pm | Reply

    A debt Jubilee would be great! Everyone in debt is not there because of bad or wasteful decisions. Some people never had debt until the crash of 2008 where they lost there job and couldn’t find one for more than 5 years and so eventually were forced to live off of credit just to survive. These were not lazy people either; they were people with doctorates and had high tech jobs. Additionally, these days wages do not keep up with gains of productivity like they use to; so a debt jubilee would level the playing field and repay the middle class what they have been cheated out of for at least the last 30 years.

    • I agree that lots of innocent people got hurt during the 2008 recession and various quantitative easing since then hasn’t helped the value of the dollar any either. But I think there has to be a serious cultural mindset change toward debt besides a jubilee or we’ll be in the same boat every few years.

      • All for debt jubilee | March 17, 2018 at 7:06 am | Reply

        I agree there has to be a change in cultural mindset, but towards integrity, paying people the true value of their worth, sharing with the very employees that are responsible for increase in productivity gains (then they would not require so much credit resulting in debt) and away from greed.

        • Yes. One reason why I left corporate to become self-employed was for these reasons. I took a cut in benefits and pay, but I’m my own boss (mostly) as I deal directly with the customers. I’m a “stakeholder” instead of a “shareholder.”

          Not to get off on a rabbit trail, but my former employer didn’t give raises to the employees but the executives still got their regular raises and bonuses. Life isn’t fair and they paid their dues to get those positions so they get to make the rules. I would never take a senior leadership position except to work for maybe a year or two and retire early to do something for me instead of the company. But, that mindset of “company first” is across almost all of society. To some extent, there are more chips set against the average worker than in recent decades, financially and professionally. The Average Joe has to be more resourceful than before, but it’s harder because of the various macroeconomic factors.

  15. Lori Checchi | March 26, 2018 at 8:19 am | Reply

    For people who are drowning in debt, (student loans, mortgages, car loans and credit cards), how can a debt jubilee be a bad thing? With their debt wiped clean, they now have the money to put away in savings. How is that bad?

    • Wiping away debt is a great thing for those in debt. And even better if the money is actually used for saving instead of turning around and buying more stuff because of easy credit.

      The problem is who pays for the debt:
      If the Federal Reserve prints more money to pay the lenders for the debt so they don’t take a loss, it’ll hurt us with a further devalued currency.

      If instead the lenders are told to wipe the debt off their books and not collect payment, it will cause short-term panic in the markets because business contracts are based on lending money and collecting it back with interest (profit). The investors can lose a ton of money and might be unwilling to invest in financial companies in the future which create potential long-term issues for responsible borrowers that can no longer get credit because the risk isn’t worth the opportunity.

      A jubilee also establishes the precedent that when people can’t afford their payments, somebody will forgive the loan with no consequences. There are too many variables and it’s hard to predict the true impact of a jubilee at this point in history.

  16. Montresor Herringbone | April 6, 2018 at 12:12 am | Reply

    The idea of a jubilee in today’s world is absolute nonsense. A sane person would never lend money again if his money could be wiped out in such a arbitrary manner. The current economy would collapse; if not immediately, but at some point in the not too distant future.

    • I think we saw some faint echoes of support for debt jubilee with Millennials in the 2016 election cycle with Bernie Sanders. I think the possibility of a debt jubilee will largely hinge on several macroeconomic factors if they’re on the same level or higher as the 2008 mortgage crisis that affected more than just the mortgage lenders.

  17. Remembering the 2008 debacle, I cringed at the “too big to fail” statement. I was appalled when mortgage debt was forgiven (no 1099s were issued to all who walked away from their over-inflated mortgages)-thus the mortgage crisis that all Americans helped fund. I felt the multiple extensions of unemployment benefits enabled society to linger on the handout rather than get creative to earn a living (which has always been the American way).
    The worst part is that most Americans did not learn a lesson. Eight years later we’re back where we were with much consumer debt, and insurmountable US debt. But, we have our parents to blame (the US Government) for 1) setting a very poor example, and 2) for not allowing us to learn from our mistakes. We must be held accountable for our decisions in all facets of life.
    I have worked very hard for everything I have (age 56 now), and made some bad/costly decisions but NEVER ran from my obligations. I’m proud to say, I owe no one. My very modest home is paid for, my vehicle is paid for and I pay my credit card each month. It’s refreshing. I wish I could convince the world to get back to basics. I lack nothing – especially freedom.

    • Besides our mortgage, we’re debt-free and we’re making extra payments to pay that off early so we don’t have a monthly payment anymore so we’re not beholden to any borrower. Plus, it’s nice to say you’re debt-free. I was for about two years and it was a great experience.

      The economic world has changed a great deal in the last decade. Personal debt is a tough pill to swallow, but I’m more fearful about when Social Security is projected to become insolvent in the next 20 years.

      Thanks for sharing, and let’s hope we can bring back a desire for personal responsibility again.

  18. This has been a topic that I have battled internally as to what is the “proper” or “best” course of action to prepare for a jubilee (or at least reduce negative impacts to myself or my family). So I’ve taken a diverse spread spectrum approach. It’s a little “slower” as it’s covering a much broader range.

    My approach is first and foremost increasing the size of my pantry to support my family. It was at first 3 months but has since grown to 9 months and I’m pushing for one year. This is food that is used/rotated so it’s not “put on a shelf and forgotten”, this helps both in times of disaster as well as economic strife. The second part of this would be water. Having potable water safe for drinking and other necessities is paramount. So we also store/rotate our water supplies.

    Second, is having on hand weapons and ammunition. Now do I stockpile enough to outfit a small army? No, that is just ridiculous and a waste of funds that could be allocated to other pressing areas. But it is important to have close quarter self defense weapons (i.e. hand gun or shotgun). Other weapons platforms could be used but unless you are engaging opposition at great distances (which kinda defeats purpose of “self defense”) you don’t need these types. My preferred would be 9mm hand gun for cheap and abundant ammo with low recoil so my wife can handle it and a 12ga shotgun with 00 Buckshot as ammo for this platform is readily available. My wife has a 20ga which can almost as effective with much less recoil. Again these will not be useful for anything at great distances but in a home invasion or “I’m getting plundered” type scenario they will do the job in protecting the family and well-being.

    Third, “investing” in tangible assets. I use the term investing loosely as it does apply to some of what I’m about to say but not all. Tangible assets are all those goodies that you can physically lay your hands on. Items such as commodities in precious metals (Gold, silver, even copper) can aid in hedging against inflation for preserving personal wealth. As other commentators have mentioned Jim Rickards has a lot of insight on this topic. Others would be Mike Maloney or David Morgan for additional insight as well. This is not to say there aren’t others out there as well. Other items that could be of use/value would be real estate as having land (developed or not) has many options. But here is something that many over look and was very clear during the aftermath in Puerto Rico…fuel (gasoline or diesel). Having fuel to power a car or a generator or to even use as a bartering item can have it’s uses. Now to “store” large amounts of fuel I do NOT recommend (and local laws may even prohibit it) which is why I only keep just enough extra on hand to fill my truck’s tank (if completely empty) should a need arise that we need to evacuate for any reason. This is my use case and our plan that the wife and I drew up and even after our 6-month reviews still holds to be the “best” for our plan.

    Lastly, individual improvement. This is broad but is the one that is never ending. The prime area for this would be to eliminate or do what you can to reduce your debts. Debts are chains…someone else “owns” you financially until those debts are cleared. Don wait for the hand out and take charge yourself. If you think the government will be there to help lets just think about it this way…how much “help” was received from agencies for Puerto Rico or even Katrina victims? Going to leave it at that an let you the individual come to your own consensus. But reducing/eliminating debt isn’t the only thing that my wife and I do for self improvement. Other things we are doing are taking medical/first aid classes, learning another language, learning food preservation methods such as canning or dehydration, etc. It doesn’t even need to be about “survival” type skills. I work in technology so I’m learning and expanding in that area or learning how to fix/repair my own truck/car. I started with changing my oil several years ago to now if I have what I need I could do an entire engine swap. Point is (my philosophy) if you are not moving forward/improving at something then you are going nowhere and are just “stuck” and things that are stagnant or stuck don’t last for very long. Think of it this way…Ford came out with the Model T and yet they are still in business today. Do you think they would still be around if they didn’t make improvements and were still selling the exact same vehicle today as back then?

    As mentioned, there is no “right” way to prepare but there are so many things we can do “wrong”. The most important thing would be to first draw up a plan and make sure when that plan is being drafted that those impacted have a voice otherwise it’s not accurate or complete. Once you have your plan be flexible and don’t be discouraged when you find it needs to be modified. Name someone who nailed it perfectly at anything the very first time? Then even after you have it ironed out ensure that you review that plan periodically. My family reviews are every 6-months to account for any changes. An example was about 3 years ago we had a baby so we had to account for all the things that would need to be updated to account for him and as he gets older more revisions are made. These plans are like your family…living entities that are ever changing/evolving remember that. Plan your work, work your plan and you will be miles ahead of your peers.

    As some people have commented already about responsibility and accountability…I feel these are the true answers to solving or at least getting on the right path for a resolution. Wiping out one’s debt that is irresponsible will not solve anything as they will just put themselves back into the same position again. Prime example, “Person A” wracks up the credit card debt then come tax time (under a scenario in which they get a decent return) they get a “mini jubilee” where their credit cards are wiped out. Then repeats the exact same process all over again. I’ve personally seen this with some of my extended family over the years and every year I hear them complain about how “tough” (driving a new SUV every 2 years, latest iPhone, etc.) things are financially for them.

    Ultimately, I hope such drastic actions of a debt jubilee would ever need to be employed or any other economic disaster but in the end I’d rather have it (be prepared) and not need it than to need it and not have it.

    • Puerto Rico was an eye opener for us too. You have a very rational approach to personal prep (i.e. everything in moderation) and few names I’m not familiar with but will look into in my own free time!

      Thank you for taking the time to write this, I think it’s very beneficial for every reader.

  19. Mara T Jennings | September 28, 2018 at 2:58 pm | Reply

    I read 90% of the comments, so I may have missed someone bringing up medical debt. This is usually not a debt people choose to get into and the charges that can be run up in a short period of time (even with insurance) are often not a number that the average American can pay off in a reasonable amount of time. I have experienced this personally. But I am 100% for a debt jubilee for medical billing. I don’t think of it as being a set date where all debt is forgiven but a length of account held as long as good faith payments had been made on the account (without the creditor refusing “too small” payments”) I believe that guidelines would have to be set in place based on multiple factors: zip code specific cost of living, how many debts the person has, and a percent of income to be dedicated to total debt payments. Example:

    zip code 12345 annual average cost of living (housing, utilities, groceries) for household size of 4: 30,000

    Household income of individual in question: 49,000

    Debt Load of household (not including mortgage or consumer credit): 45,000

    (I know that the highest debt to income ratio usually allowed to get a mortgage is 45% of income including the mortgage payment so I am going to use that number to allocate this hypothetical persons “excess” money)

    If this person pays 45% of his households “excess” on that debt load:

    19,000
    45% = 8550
    Monthly debt Payments: 712.5

    now this is all hypothetical but:

    With an Interest rate of 15% (below average) and assuming this person was able to continue dedication of the $712 to just this 45k without adding additional medical bills to his load in the 7 years that have passed: He would still owe $21,845.74.
    Keep in mind he has now paid $35,036.45 IN INTEREST ALONE on this account!

    Without forgiveness: On a $45,000.00 debt with 15% interest you will spend $89,606.12.

    All because this poor family had a series of unfortunate events ( I racked this amount up in one week while insured with two items: acute ruptured appendix and abscessed mastitis with an anaphylactic reaction to the medications so it is easily possible)

    The cost of living and income for this family are totally made up.

    • You make a very good case and have a good example.
      Yes, there’s only so much we can do prevent medical emergencies (i.e. don’t eat junk food and stay active). But, some things are well beyond our control.

      Healthcare is a definite conundrum. I’m all for the free market, but it does feel like you’re going to pay at least $10,000 anytime you go for anything but a routine checkup.

  20. Thomas Beasley | December 26, 2018 at 1:30 am | Reply

    Well, I have been helping to provide military pilot training by keeping a jet engine repair/overhaul shop operating for the past ~40 years. I am 57 years old with a wife who has another totally unappreciated job as a public school teacher in one of the lowest funded schools in Alabama but is also a state and local award winning educator, just lately winning $20,000 for her school due to the most improved and highest test scores in the area. Her students show improvement every year due to her dedication, hard work, and true caring for her students. Yet she went 8 years without a raise while inflation was sky rocketing. Since my job is union, I have received a ~3% raise every year. (Those awful unions!!!!) But I still make lower than the national average for my profession and the new contractor is plotting while I type ways to screw me and my fellow maintainers in our next contract because the only thing that matters in our precious US of A in the last 35 years is making or taking everyone else’s money and just like a crack addict can’t get enough. Greed and not wanting to pay taxes is what is killing MY country. Yes, I paid for both of my kids college, my daughter is an RN with associates in psychology and my son is an Electrical engineer out of THE University of Alabama, has CEOs, plant managers as friends and is helping design the next generation helicopters and missiles for our military at Redstone arsenal in north Alabama. So because of my debt (one fourth of which is from trusting dodge and Chevrolet to stand behind their products which they didn’t so I will NEVER own another although I PAID THEIR DEBT!!!!!!!) will never get to retire, NEVER!!!!! Even though I am a disabled vet. Tell me why I should even stay in this country that my family helped establish in the early 1700s. GREED WILL KILL THIS COUNTRY IN RECORD TIME!!! We will not last as long as the Roman Empire. After I built my house on family land in 1993 for $33 per square foot, 9 months later the contractor told me inflation had driven that cost to ~$75 PER SQURE FOOT!!!!! Unnecessary, greed driven INFLATION just to TAKE the ordinary man’s money!!!! Inflation has shot up 500 to 600 percent and paychecks have not even been close to keeping up. Now, SOMETHING has to give!!!!! If there is no relief for us little people ahead, things will not be good. For anyone.

    • Very thoughtful insights Thomas. You and your family have a lot to be proud of through your hard work.

      Like you, I worry for my own children because there are several things that are “broken” in this country. One of my recommendations is for each person to read and apply “Self-Reliance” by Ralph Waldo Emerson. Less dependance on Uncle Sam and the mega corporations can reduce some of these problems.

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