Runway to 2030: Adjust or get bust. How to survive the income freefall
The most important plan!
By 2030 automation of worker roles will be in full force. With every new technology dominance, there is a linger time period where the following aspects take place
Actions and Facts:
- Technology shock first negatively impacts employment investments by owners (Reduction of workforce)
- Workers think in 1-2 year horizons in aspect to employment
- The time to acknowledge a career problem and then act on it, takes longer than the change that will come
- "There is always a job you can take" is no garantuee in uncertain times
- Income level re-allocation can be faster than fighting off debt liabilities
- Debts are long-term liabilities with an assumption, taken from future income, and are unable to withstand rapid change of that future
- The economy is most of the times interwoven with "just-in-time" delivery chains
- Companies will be forced by the market to take self-canibalizing steps in compete for a shrinking customer base
- We live in a time of all-time records in consumer, housing, company debts
- Shrinking income - record high debt serving = A LOT OF PAIN
- All those factors don't care about your life!
Given the statements from above there should be three main focus points for one that wants to stay afloat, when the tide is low.
- Reduce liabilities to a bare minimum
- Learn the ability to adapt faster
- Prepare for 75% less income
Why 75%?
If you ask most of the people around you, you will find out that they consume as much as they earn. These consumption rates often materialize in short term and lont term debt liabilities (credit cards, car loan, morgadge). Most of them can't think ahead to the event when their ability to earn doesn't meet the consumption rate.
In my best years, where i had more client requests than i could handle, i earned $12,000 - $15,000 per month. The limit was my available time and so you come to a comfort zone of plenty of income to fill holes that come your way. Your car broke? No problem, there is another $1,000.
When everyone is on the high tide, there is no reason to look down or ahead. You just enjoy the ride. And that's where you should be most focused on reducing liabilities and building cushions.
There will be a time, depending on the industry you are in, when an eye-opening moment comes and you will be faced with 75% reduction of your ability to earn your regular income.
Humans are linear thinkers and have a hard time to predict a future outlook that is years away. One simple example of this is the health to do stuff. Nobody thinks they will have a heart attack at 56. They project that it might come at 70 or they will be living a healthier life by then.
Act now! And do it in small distinguishable steps.
Areas to work on
These areas are a common thing among all people in todays world. We buy more than we need, to impress people we don't like, to live a lifestyle we don't truly wanna live. Depending on your personal experience, think about what you really favor. Is it the new iPhone or is it a vacation?
Car loan
- Will it be paid down by 2030?
- If not, mentally prepare to sell or downsize by then
- Is the size or amount of cars really necessary or hinders you on your financial goals (e.g. safety cushion, 6-12 months living cost savings)
Credit cards
- If there are cards, that still are being paid down until 2030 then here you have priority #1
- STOP building higher credit card levels
- Reduce the number of cards to a max of 1
Consumer loans
- Which one will go over 2030? Identify it and make payment adjustments
- Pay down small one faster, and use that "new" income to pay the higher ones next
- long term, high financed, consumer debt will force you into making decisions you will not like at a point of no return (job market downturn by 2030)
Housing
- What do you really need to survive?
- What sum would be necessary each month to just live, eat and being able to move freely?
- What would it mean to down-size (e.g. moving from house to flat)?
Book recommendations on this topic
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