How To Survive The Corona Virus Economic Depression

Harry Truman famously stated that it’s a recession when your neighbor loses his job, it’s a depression when you lose yours.  I know by now a lot of Americans have lost their jobs and many more are coming.  I personally lost my job as well.  I had 3 nuclear plant refueling outage positions lined up and 2 of those reduced the amount of work going on, cutting my position. Even if you are “essential” the definition of essential can change. I found out about losing my job 48 hours after being handed an essential worker badge.  Typically I earn the majority of my income in the spring and the fall, so this is certainly affecting me financially.  I’ve been preparing for a storm for a while, but no one could have predicted how severe and how fast this one came.  This is unprecedented in US history.  Here’s steps to take today to shore up your finances and overall position in life to weather this storm.

Replace Your Income:

If you have lost your job file for unemployment benefits right away.  There is no shame or stigma in doing so. Right now the unemployment offices are deluged with higher demand than they have ever experienced and it may take multiple weeks to get through.  Normally they don’t backdate claims, however with the current wait times to get through they should backdate your claim til when you were laid off.  In addition to that the new bill that was just passed gives an extra $600 per week on everyone’s unemployment check.  For Michigan this increases the maximum payment from $362 to $962. Here’s a chart to put the number of unemployment claims in perspective:

As I’m writing this the official numbers just came back that 3.3 million Americans filed for unemployment benefits last week alone.  That’s literally off this chart. There are also I’m sure millions more who haven’t been able to file yet due to the bottlenecks in filing.

In addition to filing for unemployment benefits go through your stuff and sell what you don’t need to leverage your existing items into cash income. I started a small eBay selling side hustle earlier this year and people are still buying stuff.  Sell anything you can that is not a necessity and work your way down in price. Start with vehicles and work your way down to toys and books.

Start some kind of side hustle.  Do something everyday to bring in some income. Essential workers are putting in more hours while non essential workers have tons of time.  Find ways that you can support an essential worker (or 2 or 10) for a bit of extra money.  Whether it is pet care, child care, grocery shopping, house cleaning,or anything else you can think of.

Look At Assistance Programs: Know what exists out there even if you don’t need it right now.  Know where the food pantries are and when they are open.  Look into picking up meals from your kids school.  My kids school packs up 7 days of breakfasts and lunches for each kid and put them in your trunk.  Look into community action agency or united way programs.  If you don’t need it right now don’t use it but please educate yourself on all options.



Although big segments of the economy are closed down, there are still plenty of people working in secure jobs.  If you have car payments and any equity in the vehicles at all consider selling them and stepping WAY down in car to free up both cash flow and dead equity.  For example if you have a truck worth $20,000 that you owe $14,000 on and have a $500 a month payment selling it will clear the debt and remove the payment entirely.  If you have to sell the truck at a discount of even 20% in this market it is still the right move.  Sell the truck for $16,000 get $2,000 in cash and buy a beater.  Then call the insurance company and with no loan and no need for full coverage you can save another $100 to $200 a month. Net result: $14,000 of debt gone, $700 increased monthly cash flow, and you still have a running vehicle.  Some households can do this twice resulting in a $1,400 cash flow swing.


Refinance your house: This may be easier said than done.  If it is clear that your position hasn’t been eliminated a bank should still be willing to write a new loan on your home.  Shopping around for a lender is imperative because for the first time in history lenders interest rates are varying by over a full percentage point.  This is because some lenders are hiking up their rates to discourage new applications because they have received so many.  Refinancing is especially helpful if you have significant equity in your home.

As an example if you have a home worth $150,000 and you owe $110,000 on it, but you got your mortgage 10 years ago and are paying 5% on a 30 year mortgage with a $775 payment,  refinancing to a new 30 year mortgage will save you a ton of money. A $110,000 30 year mortgage at 3% is $464 a month! That’s $300 a month in your pocket.

Alternatively, get a home equity line of credit and pay off your mortgage with in.  You will now owe the same amount but have your house on a line of credit with a variable interest rate.  This sounds scary, but at least for the short term interest rates will stay low and your payment for the first 10 years on a heloc is interest only.   I did this with my mortgage. Originally my loan was a 30 year fixed at 4.25% with a $116,000 original balance and a $570 payment.  I’ve paid the balance down to $45,000 and with getting a heloc my new minimum payment is $131 a month. For the first 6 months I also had a teaser rate of 1.99% making my house payment $75 a month.  Obviously I need to pay principal at some point but to get through this crisis the flexibility of a low payment is a good thing to have.  Also the closing costs for a heloc are often $0 while a true refinance will cost you $3,000+.

Warning: With moving your mortgage to a heloc the rate is variable and can change.  You also aren’t required to pay any principal for 10 years so 10 years later if you started out owing $110,000 you will still owe $110,000.

Setup A House Hack:

Look for anyway you can find to setup an extra bedroom that you can rent out in your house.  If you are handy this could be as simple as raising 2 walls, putting in a door and laying down some sticky back carpet squares in a basement. This can be done for under $500 in cost.  Pair your kids up in a room.  Renting out a room to someone else can give you an extra source of income and help someone else who can’t afford a full house or apartment weather this storm as well.  In my area a single bedroom can rent for $300 to $400 a month.  Obviously since this person would be living in your home screening will be super important. Whether you move in a stranger or move in a relative on hard times, being prepared to house extra people is a big value add.

Cut Services:

OK, so Netflix has a lot of utility right now, but use this time to evaluate your cell phone costs, gym memberships, etc. Turn the heat down, shut off some lights and if you haven’t switched all lighting to LED yet, do it today.

Call your insurance company and see what you can do to lower your costs for home owners and car insurance.  If you have health insurance through the federal marketplace let them know your income has changed and they will adjust your health insurance costs as well.

Garden / Hunt / Fish:

I would like to think that the global food supply won’t be affected by this pandemic but I am not so optimistic.  While working in Texas the Walmart in the city I was staying in limited all purchases to 1 per item.  When food truly runs out of the stores we need a plan.  Produce as much food off the land as you can.  If you don’t own any land either find a friend or relative who does and help them get started growing food for a split of the harvest. Get crops in the ground ASAP.

Get some chickens and build a small chicken coop.  Learn to hunt and fish today, not in 6 months when the food finally runs out. Learn how to process walnuts and acorns while we still have internet.

Stock Up:

Slowly stock up on essentials as to not reveal what you are doing.  Go to 5 stores a day if you have to. Focus on food staples that most people are ignoring. Buy in bulk.  Flour, Wheat, Rice, Corn, Salt, etc.  I buy these items in 20 to 50 pound bags. Work on building a 6 month food storage supply.  Don’t neglect water storage either.  Start getting your kids accustomed to eating new foods cooked from scratch. Froot Loops and Pop Tarts will run out before oats and rice do.

People have to continue buying in order to get production to increase. What we have now is a massive failure of the Just In Time inventory management system.  I’m not advocating going to every store and buying ALL the toilet paper, I’m saying work on buying up staples, you are still leaving food for others but you are also telling the store to buy more, which tells the manufacturers to make more.


The stock market is down because people are out of work and businesses are shutting down right?  Well that’s one reason, another reason is that there is a large decrease in market buying and a large increase in market selling.  Think about it, if 10 million are out of work (and I think it will be higher than this) and on average they invested in their 401Ks an average of $100 a week that’s $1 billion per week not being invested. You also have people wanting to shore up their cash positions pausing their retirement contributions even while still working.  Then you have people who are panicking and selling en masse because of fear.  Those couple together makes the situation much much worse.

Step 1 is do no harm.  Do not sell any investments unless its to literally put food on the table.  The worst thing you could do now is liquidate stock investments.  Look at those people who sold in 2009, don’t be that guy unless you HAVE to be.

Step 2, if you have taken all the above steps and have available capital over your 6 month emergency fund invest in stocks today, preferably in tax sheltered retirement accounts.  I would prefer a ROTH IRA because if you have to you can withdrawal contributions tax and penalty free if in a real bind (once again ONLY to put food on the table.) I typically invest in vanguard stock mutual funds however this environment has created some stocks that have been in my opinion unfairly devalued making them a prime BUY opportunity.  I’m not saying you should invest in what I am investing in, but I will state that I have recently purchased Ford, Whirlpool, and Apple stock.

Look Out For Each Other:

Check on your parents and grandparents, your siblings, your friends, and the widow or single mom down the street.  We are so used to asking how people are and getting a response of “I’m good”.  Dig deeper and truly make sure your circle is good and do what you can to help, whether it is sharing resources, knowledge, skills, or time.

Humans have come through very difficult times in the past. We are a resilient species.  What makes us the king of the animal kingdom is our capacity to think and work together paired with our ability to adapt to change. Have a fire in your eyes and your heart. Wake up each morning with the drive to solve as many problems as you can and do whatever you can to improve your situation.  We won’t survive and thrive if we approach this as a vacation to catch up on Netflix. Things may get much worse before they get better.  “It will all be all right in the end, and if it’s not, then it’s not the end.”

What are you doing to shore up your position to survive this recession / depression?  


John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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