Book summary “Don't get caught with your skirt down”: summary

Introduction

You live in a time of growing economic instability where traditional career paths and retirement plans offer little security. Recessions, corporate downsizing, and inflation threaten your lifestyle and leave you vulnerable to sudden financial shock. Women face specific financial risks due to career gaps, lower average lifetime earnings, and the assumption that a partner will handle long-term security.

Take charge of your financial future by eliminating debt, building independent income streams, and adopting a practical, self-reliant recession-proof lifestyle.

Jill Keto provides a blueprint for surviving economic downturns through rigorous self-reliance. You will learn to assess your finances, cut wasteful spending, protect your housing, and develop alternative income streams.

How can you protect your livelihood when the economy collapses? What steps will eliminate your dependence on credit and unstable jobs? How do you build an independent household capable of weathering any crisis?

1. Econ 101 and the Reality of Crises

Wall Street leverage, government inflation manipulation, and peak oil constraints combine to create severe economic instability.

Wall Street fueled the credit crisis through excessive leverage and the creation of toxic mortgage-backed securities. Hedge funds borrowed cheaply from Japan and used a carry trade at 30 to 1 leverage ratios to buy collateralized debt obligations containing subprime mortgages. When real estate collapsed, the underlying values could not be determined.

Goldman Sachs estimated total banking credit losses at $400 billion in February 2008. By March 2008, Reuters reported those credit losses skyrocketed to $1.2 trillion in a $600 trillion derivative bubble.

Asset classes purchased with excessive debt experience severe price deflation when easy credit dries up. Easy mortgage lending and teaser loan rates drove a massive building boom. As those loans rolled over, properties became underwater and worth less than their mortgage balances.

Toll Brothers CEO stated in late 2005 that the housing market would be fine for years, right before U.S. home prices dropped 19.5 percent from their peak as of October 2008. U.S. auto sales dropped 40 percent in one year, and jingle mail became common as owners mailed keys to lenders.

Official government inflation statistics underreport true price increases because they exclude volatile sectors and use quality adjustments. The Bureau of Labor Statistics avoids reporting high inflation because government employee wages, pensions, and Social Security are indexed to inflation. Real inflation is driven by surging commodities like oil and wheat.

Bill Gross questioned U.S. inflation rates when global inflation averaged nearly 7 percent over the decade while official U.S. rates averaged 2.6 percent. Gold surged from $270 per ounce in 2001 and broke $1,000 in March 2008. Oil jumped from $12 per barrel in 1998 to hit $135 in May 2008, while wheat rose from $3.50 per bushel in 2004 to hit $13 in March 2008.

Total American public and private debt reached $53 trillion, creating a net drain on income as foreign creditors collect interest. America adopted a culture of debt and instant gratification since the Federal Reserve Act of 1913 transitioned the currency from asset-backed to debt-backed. Future unfunded obligations for pensions, Medicare, and Social Security hit $64 trillion.

The world's fifth-largest pension fund announced it would no longer buy U.S. Treasuries because yields were too low. This debt load equals $175,000 per person excluding unfunded liabilities and $385,000 per person in total debt.

The retirement of baby born between 1946 and 1965 will depress housing and stock markets while straining entitlements. A Generation X that is 30 to 40 percent smaller than boomers will face unsold homes and reverse market inflows.

Japan's Nikkei index hit 40,000 in 1989 and sat at 13,000 nineteen years later due to demographic shifts.

Global oil production peaked around 2005 while consumption continued to rise. Dr. M. King Hubbert predicted U.S. oil production peaking in 1972 at 8 million barrels a day before dropping to 5 million. Global crude production hit a 74 million barrels a day cap in 2005, while the world consumed 84.4 million barrels a day and the United States consumed 21 million barrels a day.

A Cornell and University of California-Berkeley study showed that turning plants into fuel uses more energy than the resulting ethanol or biodiesel generates.

2. Financial Self Assessment and Escaping Debt

The author evaluates three possible economic scenarios for the United States in 2008: a brief shallow recession, a deep prolonged recession, and a catastrophic Greater Depression. The analysis assigns probability odds to the three scenarios: 10 percent for a brief shallow recession, 60 percent for a deep prolonged recession, and 30 percent for a Greater Depression.

Evaluate your cash flow and liquidation net worth, and take aggressive steps to eliminate credit card debt slavery.

Leonard Lone saved frugally, withdrew three thousand dollars in 1928 to buy a farm for two thousand dollars cash, and bought a 1929 Model A Ford with a rumble seat for six hundred seventy-five dollars just before the Bank of Augusta closed, allowing him to survive the Great Depression. Jane McFrugal is forty years old with an annual income of one hundred thousand dollars, meaning her net worth should be four hundred thousand dollars based on the formula of multiplying age by pretax income and dividing by ten.

You should take thirty minutes to complete the financial assessment exercise. You can use median net worth benchmarks by age group to measure your progress:

• $7,900 median net worth for ages 20-29
• $44,200 median net worth for ages 30-39
• $117,800 median net worth for ages 40-49
• $182,300 median net worth for ages 50-59
• $209,200 median net worth for ages 60-69

You must track every dollar to combat financial leaks. You can complete this expense-tracking program over the duration of one month.

• Create an Income section and an Expenses section using bank statements, credit card bills, and pay stubs.
• Calculate Average Gross Monthly Income and Total Monthly Cash Flow Expense to determine monthly cash flow.
• Make two asset columns for estimated value and liquidation value to determine liquid net worth.
• Carry a little notebook and pen with you at all times.
• Record every single purchase, big and small, down to the last postage stamp for an entire month.
• Input the data into financial software like Quicken to analyze spending categories.

Carrying credit card debt traps you in debt slavery with exorbitant interest rates. Liz Pulliam Weston notes that only 4 percent of households owe more than ten thousand five hundred dollars, and 1 percent owe more than twenty-one thousand four hundred dollars. The average U.S. credit card debt per family sits at eight thousand dollars, while 55 percent of households carry no credit card debt.

You can break free by following specific payment rules.

• Cut up your cards and stop using them.
• Call 1-888-5-OptOut (888-567-8688) to stop receiving new credit card offers.
• Establish a budget to pay far more than the monthly minimum.
• Pay off the cards with the highest interest rates first and work your way down.
• Reduce your annual interest rate by calling the company and threatening to switch.
• Consolidate your debt by transferring amounts owed to cards with lower interest.

Student loans saddle graduates with substantial non-dischargeable debt before entering the workforce. Lenders can garnish up to 10 percent of take-home pay for student loans. You should take six or more years to get a degree while working part-time instead of taking heavy debt.

FICO scores distill credit information into a single number that determines loan terms. Payment history accounts for 35 percent of the score, and amounts owed account for 30 percent. On a two hundred fifty thousand dollar mortgage, a borrower with a sixty-seven point four FICO score pays an interest rate one percent higher than someone with a sixty-seven point five score, equating to seventy-five thousand dollars over a thirty-year loan.

• Order your credit reports from authorized agencies like www.freecreditreport.com or www.annualcreditreport.com.
• Report any discrepancies immediately and contact creditors to clear up claims.
• Pay your bills on time and keep revolving credit balances low.
• Avoid opening too many credit accounts too quickly.
• Do your loan shopping in a set window of time.

3. Housing Choices and Career Survival

Renting can be a superior financial decision compared to buying during a real estate market downturn or bubble deflation.

Employees must take proactive steps to become indispensable and avoid layoffs during a recession by following strict workplace rules.

You can use a rent-versus-own calculator analysis to evaluate costs like mortgage payments, insurance, taxes, and maintenance. Demographic economist Harry Dent estimated home values could decline by fifty percent during a bubble burst. You should view a home as a place to live rather than a guaranteed savings account.

The author and her husband sold their Seattle home at the end of 2006. They moved into a rental paying 2,500 dollars a month for a home valued at 650,000 dollars, avoiding debt entirely while the real estate market tanked. Based on their assumptions, they saved 14,000 dollars by renting versus buying over ten years. Historical average annual housing returns sit at 3 percent.

Families today spend seventy-five percent of their income on five inflexible big expenses, compared to fifty percent a generation ago. After factoring in inflation, people pay 76 percent more for housing, 74 percent more for health care, 52 percent more for cars, and 25 percent more in taxes. These large costs leave two-income families trapped with less flexibility and higher debt.

You must manage your visibility and protect your income when companies cut payrolls. Nonverbal communication makes up 70 percent of human communication. Follow these steps for career survival:

• Never gossip or complain at work, to anyone you work with, or to anyone who knows anyone you work with.
• Don't pout and maintain professional nonverbal communication.
• Get to work early and stay late.
• Stand on your own and avoid office cliques.
• Take a salary cut if your company is in trouble.
• Act like you are grateful for your job.
• Don't make personal calls or send personal e-mails on the job.
• Don't sleep with your coworkers or show up hung-over.
• Make friends with higher-ups and volunteer for executive-backed charities.
• Do or create something valuable that saves money or increases revenue.
• Toot your own horn to the people who matter by taking credit for results politely.

Adopting a nutrient-dense, plant-based diet can prevent and reverse major chronic illnesses like heart disease and cancer. Dr. Joel Fuhrman states that 85 percent of all cancer is caused by environmental and lifestyle factors. In rural China, where the average cholesterol level is 127 and people consume a simple plant-based diet, only 5 percent of the population suffers a heart attack, compared to 40 percent in the United States.

People largely do not have heart attacks when their cholesterol level stays below 150 milligrams per deciliter. The World Health Organization ranks the United States health system at 37. You can use caloric restriction and maintain low body fat to increase lifespan and reduce health risks. Standard body mass index calculations can mislabel muscular individuals as obese. Tennis player Serena Williams has a height of 5 feet 9 inches and an estimated weight of 165 pounds, resulting in a calculated BMI of 24.36 which incorrectly categorizes her as overweight.

4. Frugal Living and Strategic Household Savings

Cut incidental spending, adopt mega-cooking strategies, and negotiate aggressively when buying cars or furniture.

Emotional shoppers use purchases to self-soothe when feeling tired, bored, or stressed. This behavior creates a dangerous cycle of spending money you do not have. Jerrold Mundis and his work How to Get Out of Debt, Stay Out of Debt, and Live Prosperously highlight how shopping for emotional reasons leads to debt.

Watch for specific triggers that cause impulsive purchases:

• Are tired or bored
• Had a fight with a loved one
• Received good or bad news
• Need a break from the kids
• Hear someone say, You can't take it with you
• Are seeking revenge against their spouse
• Notice that everyone else does it
• See it's sunny outside
• Had to suck it up and work all weekend
• Are too tired to go to the gym
• Don't feel like doing the laundry
• Feel that they are a good person

Building a chic and practical wardrobe relies on timeless style and quality items rather than disposable trendy pieces. The author purchased a crimson wool coat in 1997 that was well made in the U.S.A., featured clean lines, and remained a favorite, highly complimented piece for years.

Mega-cooking, also known as batch cooking, once-a-month cooking, or OAMC, drastically reduces food budgets while providing convenient access to healthy food. A commercial 10-ounce can of bean and ham soup costs $1.80, while a 10-ounce serving of homemade spicy lentil chicken soup costs $0.40.

Follow strict rules for food provisioning:

• Buy only whole foods, not commercially processed stuff
• Do not buy anything individually packaged
• Shop and plan meals around cheap and nutritious foods like beans
• Purchase a chest freezer for storage

Personal grooming is a skill rather than a matter of buying expensive designer brands. L'Oreal owns Lancome and Redken, while Estee Lauder owns Jane. You can rely on inexpensive drugstore items like Maybelline mascara, Dove soap, and Eucerin Extra Protective Moisture Lotion with its 30 SPF rating.

Combined household vehicle costs should not exceed twenty percent of annual income, whereas many people foolishly spend fifty percent of their annual salary on a vehicle. When buying a new car, aim for a dealer net profit between $200 to $500.

Negotiate your next vehicle purchase using strict rules:

• Rule 1: Haggle like your life depends on it
• Rule 2: Run a search online to determine dealer cost and kickbacks
• Rule 3: Shop around using buying clubs like Costco
• Rule 4: Aim for 20% off the sticker price
• Rule 5: Ignore confusing sales and rebates and focus on the target price
• Rule 6: Make the rounds to all dealers and play them off each other
• Rule 7: Do not trade in; sell your existing car privately
• Rule 8: Remember that the bottom line price is the most important variable
• Rule 9: Buy on the last day of the month, quarter, or year

The author paid $1,500 for a 1985 Volkswagen Jetta and sold it for $1,800 two years later, while older used cars can be found using a starting budget of $4,000 in the drive-for-free method. You can perform minor car repairs yourself and avoid expensive dealership fees. The dealership quoted $1,000 to replace an oxygen sensor on a Mercedes. The author bought a replacement part on eBay for $100 and installed the new sensor in 10 minutes.

Secondhand platforms like Craigslist offer superior, solid-wood furniture that can be easily restored at a fraction of retail cost. A solid walnut mid-century modern American dresser was found listed on Craigslist for $35 in a stinky garage and was later identified as a valuable piece worth $3,000 after minor restoration.

Apply specific guidelines when hunting for used furniture:

• Know exactly what you are looking for before searching online
• Look for pieces constructed of solid metal and solid wood
• Ignore ugly finishes or colors if a piece has good lines and detail
• Sanitize old foam in a bathtub with bleach and water when reupholstering

Shipping container costs escalated from $3,000 per container in 2001 to $8,000 in 2008, with expectations reaching $15,000 when oil hits $200 a barrel. Use advanced bidding techniques like sniping on eBay, and follow basic guidelines for peer-to-peer markets:

• Determine your maximum bid beforehand on auction sites and stick to it
• Shop locally for bulky and heavy items to eliminate shipping costs

5. Essential Skills and Self Sufficiency

Master foreign languages, practical trade skills, bargaining rules, and backyard farming to build personal resilience.

As the U.S. dollar drops, prices for U.S. goods and white-collar services become cheaper for overseas buyers, shifting opportunities abroad. Languages like Mandarin, Hindi, Spanish, Portuguese, Russian, and Arabic offer the highest utility based on global economic powerhouses and energy production. There are 1.051 billion total speakers of Mandarin worldwide, compared with 508 million total speakers of English worldwide. You can commit 30 minutes per day needed to become fluent in any language using audio programs.

The author taught herself Mandarin using the Pimsleur Approach while speed-walking in her neighborhood and chatting with native speakers, eventually gaining an authentic Beijing accent. Pu tong hua refers to standard Mandarin.

• Commit thirty minutes per day to an audio language program while doing chores or exercising
• Use online dictionaries with pinyin and phonetic spellings for words not covered in basic lessons
• Practice speaking regularly with native speakers or acquaintances

Cultivating everyday DIY trade skills provides self-reliance and eliminates the need to hire expensive contractors when things break. Relying on professional contractors for minor home repairs drains limited cash reserves during a recession.

• Learn how to fix a toilet, solder metal components, splice electrical wire, or change a car headlight
• Use library books, DVDs, and YouTube videos to learn trade and repair skills

Mastering negotiation and haggling techniques allows individuals to drastically reduce expenses on everything from retail items to hotel rooms. Everything is negotiable, especially during a weak economy. Haggling requires understanding that retail prices are arbitrary, making the seller invest time and energy, using silence, and employing charm or emotional levers.

Sabeer Bhatia, the founder of Hotmail, used negotiation strategies learned from watching family servants haggle over groceries to successfully push Microsoft into doubling the acquisition price of Hotmail from $200 million to $400 million.

• Set your first offer at 50% to 75% of your goal price to eventually meet in the middle
• Make the seller show you lots of items to invest their time and physical energy into the transaction
• Negotiate multiple items separately before asking for a bundle discount
• Use charm, humor, or subtle tactics like head tilts and smiles first, and resort to crying if necessary
• Shush and recoil in silence after the seller offers their first discount price
• Be prepared to walk out by fixing a maximum walk-away price in your head
• Pretend you are not the decision maker by invoking an imaginary or real boss

While external events and economic crashes cannot be controlled, personal attitude and flexibility remain completely within individual control. Clinging to material status and ego leads to self-destruction, whereas resourcefulness and humility ensure survival. The author highlights a New York Times story about an investment banker whose income dropped from $8 million to $2 million, who borrowed millions behind his wife's back to maintain extravagant spending rather than letting go of his ego and facing reality. The text notes 1.22% of insured deposits currently covered by the FDIC, and a $4.50 current price of gas representing a nearly 600% increase minus taxes from 1998. Additional figures show 42% of college graduates who never read another book after graduation, and 80% of U.S. households that did not buy a book last year. The Recession Heat Index measures economic distress.

Mini-farming and square foot gardening methods allow families to produce massive amounts of food in tiny spaces with minimal physical labor. Traditional agriculture requires 1/3 to 3/4 acre of land required to feed one person using traditional agriculture methods. Bio-intensive farming uses less than 1/10 acre required to continuously feed one person. Less than 200 square feet of raised-bed garden space needed to provide the majority of calories and nutrition for a family of four.

• Set up a raised garden bed aboveground on patios, decks, or lawns
• Use cheap tools such as a small trowel, a pencil, and a pair of scissors
• Recycle coffee grounds, eggshells, and produce scraps to make compost

Treating the household as a working family by delegating age-appropriate chores teaches children independence and frees up parental time. Overcoddled children are deprived of the chance to learn essential life skills. Implementing a team-oriented approach with shared household duties builds self-esteem in children and fosters camaraderie, with the $29 cost of the bagless, cordless Shark Quick and Quiet sweeper ideal for young children.

• Make a list of all ongoing household duties and their frequencies
• Assign approximately three rotating chores per child
• Create a chore chart and hang it in a public space
• Hold a family meeting to explain chore requirements and incentives
• Provide necessary supplies and demonstrate how chores should be done initially without smothering the children
• Give immediate positive feedback and praise upon job completion

Building an authentic local and professional network provides crucial emotional and financial support during an economic recession.

Networking is not about using people, but about forging genuine relationships with friends, neighbors, and community groups. Knowing nearby residents creates a local safety net that helps families navigate crises and share practical skills. An elevator pitch provides a ten-second summary of what you do. A progressive dinner involves traveling from house to house for different courses of a meal.

• Build authentic relationships with people you genuinely want to associate with and help
• Volunteer with organizations you care about
• Stay visible as a resource or expert in a particular area
• Develop a ten-second elevator pitch about what you do
• Follow up promptly with phone messages or emails
• Take daily walks at varying times to meet neighbors
• Host neighborhood events like garage sales, potlucks, or progressive dinners

6. Second Incomes and Alternative Investments

Economic downturns weed out speculative competitors and force owners to be more aggressive. Businesses can negotiate lower order minimums and better payment terms because suppliers are hungry for revenue. Finding top-notch talent becomes easier due to rising unemployment.

Start export-oriented manufacturing businesses and diversify your portfolio away from traditional Wall Street assets into precious metals and foreign markets.

Physical manufacturing businesses that create exportable goods are far more resilient during a recession. Tangible products benefit from high demand abroad and a devalued domestic currency. U.S. manufacturers gain an export advantage because overseas buyers have strong currencies.

Supermodel Gisele Bündchen chose to be paid in euros rather than U.S. dollars in late 2007, anticipating the subsequent 15 percent plunge of the USD.

• Identify a product that fills a need, looking for inspiration from successful start-up profiles or unique overseas products lacking in the domestic market.
• Negotiate favorable payment terms and lower order minimums with contract manufacturers.
• Refine your sales pitch and build a customer base so you are ready for the economic rebound.

The retirement wave of the baby boom generation combined with tight capital markets will create massive opportunities to buy private businesses at steep discounts. Private equity experts expect valuations to drop significantly after 2010.

• Research local and online business acquisition guides to understand how to evaluate small companies.
• Negotiate owner financing with retiring owners who want to step away from daily operations.

Wall Street investment dogmas like the 60-40 investment theory are outdated marketing gimmicks. Subtracting your age from 100 to determine equity allocation is arbitrary and risks pushing you into poverty if fixed-income U.S. bonds collapse.

Shift assets out of traditional stocks and bonds and into foreign markets and hard commodities.

You should liquidate domestic real estate and traditional portfolios to allocate assets across international resource stocks, BRIC and Asian exchange-traded funds, foreign income trusts, foreign fixed income, and precious metals.

Dick Cheney disclosed 25 million dollars invested in high-quality European bonds, taking advantage of European interest rates and currency appreciation.

• Evaluate your investment portfolio jointly with your partner twice a year.
• Research international resource producers, foreign income trusts, and exchange-traded funds through independent research groups.

Precious metals serve as an essential inflation hedge, but governments can confiscate or restrict private ownership during severe financial emergencies. President Franklin D. Roosevelt issued Executive Order 6102 on April 5, 1933, prohibiting the hoarding of gold coins, bullion, and certificates.

• Purchase precious metals through secure international vault services or government-backed mints.
• Monitor delivery times and buy physical bullion or coins via authorized online dealers or local coin galleries before market access tightens.

FDIC insurance reserves represent only a tiny fraction of total insured deposits. If multiple financial institutions fail, the agency would need to borrow massive funds from the U.S. Treasury.

• Avoid keeping all savings in standard checking, savings, or certificate of deposit accounts where low interest rates fail to outpace inflation.
• Monitor macroeconomic trends, interest rate policies, and money supply growth rather than relying solely on mainstream financial advice.

Conclusion

Economic turbulence requires a complete shift in how you manage your money, career, and daily life. You protect yourself and your family by cutting reliance on fragile systems, eliminating debt, and building tangible self-sufficiency. Personal financial survival depends on decisive action taken long before a crisis hits.

1. Eliminate all consumer and credit card debt immediately to free up your cash flow.
2. Calculate your liquidation net worth and build a cash reserve away from traditional Wall Street instruments.
3. Adopt a frugal lifestyle by cutting unnecessary expenses, mastering mega-cooking, and negotiating every major purchase.
4. Learn practical trade skills, grow your own food, and develop alternative income streams through side businesses or export ventures.
5. Secure your primary employment by following strict workplace rules and making yourself indispensable to your employer.

10 Key Ideas

1. Economic instability, debt-backed currency, and peak oil constraints require individuals to take charge of their financial futures through rigorous self-reliance.
2. Tracking monthly cash flow and eliminating credit card debt slavery protects your household from sudden economic shocks and high interest charges.
3. Renting can be a superior financial decision compared to buying during a real estate downturn or housing market bubble.
4. Employees can survive corporate layoffs and protect their income by managing workplace visibility, avoiding office cliques, and acting indispensable.
5. Adopting a frugal lifestyle involves cutting emotional shopping, mastering batch cooking, and negotiating aggressively when buying cars or used furniture.
6. Cultivating practical DIY trade skills, foreign languages, and negotiation techniques eliminates the need to hire expensive contractors when things break.
7. Bio-intensive mini-farming and square-foot gardening methods allow families to produce massive amounts of food in tiny spaces with minimal physical labor.
8. Building authentic local and professional networks provides a crucial emotional and financial safety net during an economic recession.
9. Starting export-oriented manufacturing businesses and acquiring private businesses at steep discounts creates viable alternative income streams.
10. Shifting assets out of traditional Wall Street stocks and bonds and into foreign markets and physical precious metals protects your portfolio against inflation.