Surviving Real Life

Commander Zero wrote a post that inspired this. A whole lot of real life happens between crazy regional events, let alone larger national and world ones. Folks get so caught up in stocking up on beans, bullets and band aids that they can forget about more practical things.

We have raided the emergency fund more times than I can recall. Car repairs are the usual culprit but unexpected bills, unforeseen expenses and the occasional sudden trip home have all had their turns. Conversely we have yet to NEED stored food. Sure it has been nice to have an extra bag/ box/ can of whatever to finish a recipe or for those times you decide to deviate from the weeks meal plan. However nothing has happened to us that the typical couple days worth of food in an average household would not cover.

We have had several times somebody ended up needing significant medical care. Without insurance we would have been financially ruined. Conversely while we can all agree guns are comforting the need to have them is rare. Those needs are amply covered by basic guns. One can forgo an expensive AR-15 or precision rifle with almost no risk of it coming back to bite them.

I'm not saying you should stop storing emergency food or sell those politically incorrect guns. What I am  saying is that in addition to those fun survivalist things you need to have an emergency fund and a realistic plan for inevitable medical problems. These are far more likely to save your behind than a pantry full of food and an AK-47.

How Do We Do It?

The subject of money comes up more and more as the Great Recession drags on. Folks have been downsized or had their hours cut, or had inflation magically increasing prices in random areas such as food, fuel and medical insurance that are clearly not an indicator of inflation, chipping away at their purchasing power or whatever. In general the poor poor pitiful me stuff has been on the rise. I have been looking around my residence and thinking.

Right now I am sitting in a pretty comfortable recliner that we purchased slightly used for $100, new they are about 4 bills. The couch next to it was purchased by my parents in 1986. The coffee table in front of the couch was free as I found it beside a dumpster and carried it home. Our dinner table cost Wifey (actually her mom) $30 or something back in college. The chairs are slightly mismatched because we combined the best of what both of us had upon combining stuff. Our printer sits on a nice butcher block that my Dad handed down to me at 14 or so. Our entertainment center thing cost $80, it is sort of a wierd piece and we probably won't take it back to the states with us.
We have a coffee maker I got as a used hand me down about 8 years back. Our electric griddle is about the same age and has some issues with maintaining temperature and hot spots. Our Queen sized bed cost Wifey $50 back in college. I think the frame cost us $100 in Georgia. The bed in kiddo's room cost us $30 if I recall. We paid an average of about 15 cents on the dollar for all of his stuff. He thinks toys come from Grandma, thrift stores and the dumpster. So much so that he urges me to go to dumpsters when we walk by them.

We wear clothes until they fall apart. Wifey recently decreed that a pair of shorts of mine had to go. Something about refusing to sew a half dozen holes and not wanting me to be arrested for public indecency in the near future when those holes expanded. I think they were about 8 years old. My clothes are purchased at used stuff places or Walmart. The hat I wear when not at work was given to me as a promotion. I regularly find myself wearing entire outfits of stuff I was given or scavenged. Wifey'c clothes come from thrift shops, personal sales, gifts and apartment stores when they have good sales. Kiddo's clothes are from personal sales, gifts or once in a blue moon purchased new when something really cute is at the store.
Our stuff is all servicable if a bit worn and quirky. When something stops being servicable we replace it though of course we try to get a deal.

I realize that we are different from most folks. I have had enough conversations with people to know that what we do is not common or normal. The income I bring in is decent, but not anything worth bragging about. We probably live on 60% of my take home wages. Wifey stays with kiddo and takes care of the homefront. We paid cash for both of our modest but decent vehicles and do not have any debt. We have put some money away for emergencies and have some fairly decent preps for our place in life.
Aside from guns, precious metals and vehicles the most expensive thing we own is a Sony flat screen TV we spent $800 or so on, which was a huge deal for us. After that we have a couple lap tops that cost about $500 new and it goes downhill rapidly from there.
This is why every time somebody talks about how they can't afford to prepare or save or pay off debt I WANT TO SCREAM BULLSHIT, YOU CAN BUT JUST DON'T WANT TO!

I am not saying that you could or should live like we do. My point is that folks can choose not to be like the broke jokers with maxed out visa cards and home equity loans who live next door. It is fine if you don't want to but it is certainly possible. You can afford to prepare and or save if it is important to you and you are willing to do what is necessary to make it work. I hope this all gives you guys something to think about.
Edited Later to include:
Commander_Zero said...It's an easy enough thing to do on your own, it's bringing the wife onboard that makes or breaks it. If you're both genuinely on the same page about it you have a good deal going...you each act as the others accountability partner.

Once the debts are paid off, its pretty easy to live within your means. Everytime I feel weak and want to splurge I listen to some Dave Ramsey on the internet and it gets my head back on straight. (And usually puts me into a work-and-make-money frenzy.)

What are you doing with the other 40%? Socking it away, Im guessing? Saving for a house? Just wondering what the longer terms goals are.
I wanted to discuss this on the main page because it brought up a couple points worth discussing.
While spouses are a whole subject of their own it is worth touching on. I think it is fair to say that nothing significant can happen in a marriage without both spouses being on board. If you are the guy who takes a spatula to the mayo jar even though you have a full jar in the shelf a spouse who blows through money shopping faster than a cokehead gambling addict it will be an issue. Having some degree of financial compatability is important for a relationship to work and is one of those practical things folks so often ignore when choosing life partners. This is particularly problematic for folks who do a financial 180 degree turn after a decade of marriage. The scenario where you want to go all Dave Ramsey and the Mrs still likes to take her visa shopping for designer clothes is an ugly one. In a lot of ways I have more sympathy for the spouse who wants to keep on with what she signed on for. I wish there was a good answer but if there is I don't know it.

A partner who is on the same page helps, especially if your weaknesses are different. She is strong when you are weak and visa versa. Also generally being passionate about the same goals helps too. Folks aren't usually willing to sacrifice much for things they aren't passionate about.

I agree with you about debt. The thing is that both the good and bad cycles are self perpetuating. If you pay down debt it is easier to focus on paying it off. It is a lot easier to pay cash for stuff when you have no bills except basic living expenses. Then you can really start getting ahead. On the other hand when your income is going to a couple car payments, a payment on a toy like a bike or boat, 2 credit cards and a line of credit on the house it is very hard to save up to buy stuff with cash. Also you are paying a bunch of interest for the privledge of paying tomorrow for a cheeseburger today. The further you go in this cycle of debt the harder it is to get out.

As to the other 40%. You pretty much guessed it. For awhile we were putting most of it into our emergency fund, then we started making huge payments on my student loan. Sometimes we save for big stuff (maybe that isn't saving parse but more of a save to spend which is kind of it's own category but I digress) like when we need a car. About 15% goes for retirement. A little bit goes for precious metals. Some goes for kiddo's college fund.

You are 2 for 2 with guesses. Right now we are saving to buy a house. If it works out right we will have a solid downpayment in a bit more than a year.

As to long term goals. Continue to not make stupid decisions. Buy a reasonable home and pay it off at an accelerated rate. Help the kid(s) pay for college. Continue to save for the future. Get a little doomstead on a few acres in the middle of nowhere. Put away enough cash to retire with some dignity or at least not on a diet of rice and dog food. Also I want a Harley.

Creating Space to Pay for Survivalism

Lots of folks have issues paying for all of the stuff that inevitably comes with survivalism, heck many people are just plain having issues with normal bills. Lets look at the basic options. You can increase income, decrease spending or try some short term measures.

Increasing income is a great idea. The downside is that for most people this isn't an easy option. Most folks tend to be pegged out in their day job working pretty close to their peak of ability/ credentials/ motivation. Motivation can change but often that is usually somewhat linked to how people's minds work which doesn't change.  If you can't earn more per hour (however compensation works you can figure it out per hour) you can always work more hours. If not at your day job at another one. Some time ago Zero figured out how many hours of minimum wage it took to pay for an AR or a Glock. It really isn't that many. Sure a week or month or season of delivering pizzas after work and on the weekends sucks but if that is what it takes to get what you want maybe it is worthwhile? The downside of this plan is that A) for the reasons listed above this is problematic and B) working more sucks.

Coming from the other side you can cut spending. The benefit of this option is that it is can work for almost much everybody. Of course there will be sacrifices and trade offs. Obviously if you keep going to starbucks every day, eating a bunch of meals out, shopping for all manner of stuff you don't need and buying new cars/ consumer electronics/ bling you can't cut spending in a meaningful way. Any way you look at it cutting things you like out of the normal routine just plain sucks. I can say that in time it gets better. Also if the money you save is going to things that are important to you it helps displace the unpleasantness.

For stop gap measures you can try the whole cuponding type thing and otherwise shopping harder for deals. Admittedly this one is close to cutting spending and sort of is; thought to me cutting spending is strait up removing stuff from your life while this is kind of different. You won't free up all the cash you need saving 10 cents a can on corn but it helps.

Also you can sell stuff that you do not need. This is a good one to jump start things and get some big ticket items knocked off the shopping list. Sell a laptop and buy a pistol, a ski do could be sold to buy a ton of food (literally) or a nice rifle. To me this is a stop gap because most people will run out of valuable things they don't really need and are willing to part with pretty quickly. Most folks don't have that many things that fall into this fairly limited nitche. Certainly not enough to just go out and buy everything they might need. Lets be honest somebody who has a collection of vintage sports cars to sell  has enough cash lying around to just buy a solid survivalist setup anyway.

Just like dieting the best answer is probably to attack both so it is not too miserable on any front. Up your exercise and watch what you eat or in this case look to earn a bit more and watch your spending. However again like dieting the real answer is decreasing consumption.

Killed Our TV, Well the Cable Anyway

When I deployed and Wifey went home we canceled the tv, internet, etc all. During the last year the cable company changed the services they offer. They added a couple channels and made it 'digital' then almost doubled the cost. We were not happy with the value of the service BEFORE the price almost doubled. It went up to $80 IIRC which we just were not going to pay.

Also we have another significant consideration, we now have a small child. Babies don't notice things like TV but toddlers sure do. So we decided to drastically cut down on our TV watching. In the past the TV was just kind of on most of the time. As background noise more often than not. Well that needed to change.

We have AFN (which is a few (4 or 5 I think) networks put together by the military to provide US news and entertainment to service members all over the world) which is sufficient. We watch a bit of cartoons with the kid every day, sometimes for him and sometimes for us to get a breather. After he goes to bed we watch a bit of TV before hitting the hay.

Wifey doesn't miss watching more TV. I sort of miss the news in the morning while drinking coffee. I have started listening to news online which is not a bad substitute. Wifey listens to the radio during the day. We don't plan to cut TV out entirely, just to cut it back. Wifey enjoys some shows and The Walking Dead on Saturday night is the highlight of my entertainment week.

If you are short on money and time but still have cable or satelite you might want to consider this.

Saving Big

Saving a lot of money on things takes a few traits.

The first that comes to mind is flexibility. You either need to purchase pretty common things or be flexible and look for a more broad type of good instead of something real specific. Example, buying a mid range mens mountain bike is reasonable. However you could wait a very long time for a Speed Demon 97 with a blue frame to come up on a great sale or gently used. A used 04-06 4 door Honda with reasonable miles is very different than a green 2005 with a tan interior, the VTech engine and a specific list of options.

The ability to plan ahead is next. Getting good prices often requires some time (either looking or waiting) and thus you have to be thinking about what you will need in the weeks or months coming up, not today or tomorrow. Here is an example. Let us say that I like to eat cereal every day and thus go through a box a week. If I go shopping on Saturday and have absolutely no cereal in the house I am stuck paying full price or eating something else. However if I have a few boxes because I planned ahead I can wait until the next sale to get more cereal. The same could be said of winter clothes or any other need you can forecast.

Last is cash on hand. Often deals come when you least expect them. It could be a half off sale on canned goods, a buddy who needs to sell a gun in a hurry or who knows what else. So often a deal will be missed if you have to wait for payday. Having cash to take advantage of all manner of deals is essential.

There are also two areas in which people can go wrong trying to save money.

The first big mistake is getting a "great deal" on something YOU DO NOT NEED AND WILL NOT ACTUALLY USE. This sort of bumps up against the "be flexible" but it comes down to knowing and being honest with yourself. I will talk about it in two parts.

First do you need it? Example, buying a chair or a lamp you do not need (even if it might get used) is not good economics.

Second will you actually use it? Example, I use Heinz Ketchup. It does not matter of Hunts or Walmart brand are on sale for a penny because I won't use them. If in doubt it might be smart to try one or two of something before buying 5 cases. [Note, A family member of mine does that "extreme coupond" type stuff and she donates a lot of things she gets super cheap to charity. Either this or passing it on to a friend who can use it (ideally they would do the same for you;) makes sense. Just so long as the stuff will get used.]

The second big mistake is failing to consider the investment of time and effort involved.  Time is a valuable commodity as you cannot make any more if it. If you save 5 bucks by doing something but it takes 4 hours is it really worth it? I can't tell you what your time is worth (though your wages aren't a bad starting point) but you need to consider it. There is not an exact formula for this but the factors would be enjoyment, your available time and other income producing opportunities. The answer will vary depending on your currenti life situation (how busy you are, how broke you are or are not, etc all). Example, by making tortillas wifey can save a dollar (over the cost of ingredients) by making them herself. When she is working or otherwise busy that dollar is not worth it, however when she has time to spare it can be.

Another classsic fail is driving 50 miles and burning up 7 bucks in a fuel guzzling vehicle to save .75 cents on a package of hamburger. Totally misses the point, unless you buy 25 packages and combine the trip with business in that area.

I often ask myself "would I take a side job if somebody offered me this wage (the amount of savings in the time involves)?" It is a pretty good test.

I ran the ideas in this post by Wifey because she does this stuff more often and more successfully than I do. She added that a lot of people put start up money into things before they know they will use them. The most common example is spending a ton of money on equipment for a hobby to then use it twice and realize you hate it or for whatever reason will not use it. Bikes, fishing gear, etc all are common examples of this. We have found that borrowing or renting equipment to try things, or at least getting in on the cheap with basic used stuff helps with this a lot. You can always get newer, better stuff down the road and either sell the first set of stuff or keep it for backups.

A couple of recent real life examples which I believe will help to illustrate what I am talking about. We went to a big sale and got all of Walker's clothes in the next size up (well I am sure Wifey will get him a thing or two later to fill a gap or because she likes it, the vast majority of his clothes might be more accurate) for awesome prices. We got gently used shirts, onesies, and pants for an average of about two dollars and fifty cents.

We were at an outlet mall looking for something and needed to stay while and look around because Walker neeeded a break from the car. We went to an outdoor store and were idly looking at the stuff they sold. Wifey noticed name brand shell jackets on sale for $30 (retail of $110). I wasn't in the market for one but could definitely use one and at that price it would be foolish not to get it.

But I don't make enough money to save

As I write this our government is looking like it may very well shut down. This would be an issue as the United States of America is ultimately, through the US Army my employer. I am not particularly (scratch that and insert at all) worried about it. Why am I not worried? The reason is that we save. We could live without any change for a pretty long time without me getting a paycheck. Certainly month not weeks. After that we have some metals and other stuff. Really if the government is shut down for long enough that it becomes an issue for me we would have far more serious problems.

 

However it has been interesting. Wifey is socially active via real life and internet forumns with a lot of military wives and some of them are completely freaking out. They will legitimately not be able to food on the table and gas in the car. Wifey noted interestingly that these are the same people who immediately spent their tax returns on computers and fancy cell phones and TV's. Also the same people who drive brand new cars they can't afford.

 

There turned into kinda a classist/ economic split which is what I am here to discuss. I think the idea that folks can't afford to save because they don't make enough money is really stupid. Do people making less money spend more by percentage on the basics of shelter, food and fuel, of course. However even the lowest paid American's have a reasonable amount of disposable income if you look at what they truly need.

 

The real issue is that the less you make the more important saving is. The reason is that while to a certain degree people who make more money can in theory have larger emergencies (home repair, more expensive vehicle repair, etc) most people seem to have the same kinds of relatively small (say under $500-$1,000 to have a number) emergencies.

Case in point. I make pretty average money (somewhere in the 50k ish range) and can absorb sporatic $400 (it just seems to be the number for us) out of the blue issues without raiding savings or putting it on credit. These somewhat normal emergencies and ones under that dollar amount can just be absorbed into the normal operating budget. A random $1,500 emergency would likely send us to savings while someone who makes 100k might be able to make it work by juggling things a bit in the normal operating budget. On the other side of the coin a student or single mom's 20k income might only be able to absorb $100 in a typical 2 week period.

 

The reason that saving is more important for that single mom then for me, and more important for me then somebody who makes twice as much, is because she can absorb fewer incidents then we can.

 

I think it is important to talk abotu savings as percentage of income then raw dollar amounts. For a single mom with a small income saving $50 a paycheck is a real accomplishment while for me it would be at best a very weak effort. That is why saving a month of cash expenses or 2-3 months of income is more meaningful then a grand and 10k or whatever.

 

I think that the cold hard truth is it is a lot easier to say you will save later when you make more money. It is easier to save later the same way that tomorrow you will go for a run and not eat fast food for lunch. It is easy because it is an excuse and you don't have to do anything today.

 

Random Observation: Got Cash?

Wifey buys and sells a lot of used stuff. It is my job to pick it up and or deliver it and give or receive payment. I am like a drug used stuff mule. (Having a vehicle big enough to deliver puts me in that role and it also helps her close a lot of deals) Seriously it is sort of weird. I am regularly going to some place with a piece of paper that has an address on it to pick up or drop off something and exchange cash.

Recently she has been selling off unneeded stuff. Twice in the last couple weeks I have gone to deliver something and needed to run them to the ATM to get cash to pay me. Not a big deal really. Lots of folks here don't have cars and we can all forget something. The more interesting part is that we aren't talking about a lot of money. One time it was $40 and another it was $60. One of the gal's had no cash and the other was $20 short. I sort of shrugged the first one off but the second showed it is a noteable trend.

This was a stark reminder that there are lots of folks out there who have what amounts to no cash (probably a few crumpled ones and a bit of change) on hand. Folks who would be unable to pay for gas or food (I'd bet a c note the cupboards are almost empty too) if the electricity and ATM/ computer networks were down. Part of a day would be an inconvenience but if there was a power outage/ regional disaster these folks would be screwed.

If you do not keep some cash on hand you are a fool. Despite what the 'tangible investment' and beans and bullets folks say in all of the more realistic and likely scenarios people still deal in cash. You don't see complex systems of barter appear overnight in anything but a total collapse. Maybe a good bargain can be made for gas, shotgun shells or canned food but folks will accept good old greenbacks. As for how much you should keep around I am a lot more flexible. Different people have different needs and concerns as well as incomes, assets and tolerances for specific types of risk. I think establishing the minimum is significantly more important than setting a maximum.

Chief Instructor says that a month's worth of cash expenses kept on hand is a good number. Cash expenses would be stuff you need that is not locked into a regular contract. They are also things that if, and I am just tossing some stuff out here, ATM's crashed or banks went on a holiday, there was a power outage or whatever you would still need to pay for regularly in cash on the barrelhead for. Food and fuel are primary considerations here with stuff like medication, smokes, booze, vehicle maintenance, etc in there also. If you have drank the coolaid and are following Dave Ramsays baby steps just keeping baby step 1 ($1,000 in savings, $500 if you are real low income or 2k if you have a high income) in mixed bills at home. However you choose to figure it the end result is pretty much the same. The point is to have enough cash to get yourself through some sort of emergency or otherwise sustain yourself for awhile.

These low numbers should be fairly easy to meet with a bit of planning assuming you live a sane financial lifestyle. They aren't enough money that inflation is a significant issue but are enough to deal with most of what could come up. Also these minumum amounts are low enough that if your stash happens to get found it shouldn't break you. Though as Commander Zero noted once it is far more likely that your stash will be frittered away by you on a pizza here and a $20 for a trip to the bar there then actually get stolen.

As for the maximum. It is really about what you are willing to risk being lost in a fire or by theft. I wouldn't want so much cash in my home that I couldn't afford to lose it should something happen. A certain percentage of your overall liquid assets is probably the way to figure it out. For me 10% seems reasonable and 20% doesn't seem nuts. That means if you have 10 grand in various stuff 1 or 2k in cash. If you have 100k it would be 10 to twenty. Unless you live a particularly high risk lifestyle where you might need running money I would not want to go much higher than that. Baring the potential sudden need to get out of town for a few months I would not want more than then at risk of theft and getting eaten away by inflation.

Quote of the Day

" If you can’t save 5-10% of your income then seriously review your lifestyle and expenses"
-FerFAL

It's Christmas Eve, I'm Smoked and Random Observations

Yesterday and today have been a definite success. We got together yesterday with some family friends for an annual holiday thing. That was a ton of fun and the White Elephant was a definite success. Today was Christmas with my family. Between multiple families, a couple divorces and other stuff it cracks out that we end up doing the steriotypical Christmas thing twice when we are home. We did presents with my folks then everyone came over. Did the whole drinks, snacks and cookies thing followed by a big prime rib dinner. It was nice to be able to catch up with some folks I don't see a lot, catch up and just talk about life. It was one of those times we get rare combinations of people which is always entertaining.

This has all been a ton of fun but I am just about worn out. A real good friend who I don't see a lot had texted me about getting together this evening. At 2pm I was pretty receptive but at 7pm when people had cleared out and things were cleaned up it was a different story. On the bright side things are starting to settle down, the kids have gotten over the days sensory overload and I don't have much to do. Really just plan to finish up this post, call a friend to wish him a Merry Christmas then try to get a decent nights sleep.

Last night at happy hour a close family friend said a few things about money, finances and spending which could have easily came out of my mouth on this blog. It was like a breath of fresh air for me. Wifey and I realized over this trip is that we really enjoy being around people who are cheap/ frugal and proud of it. It is really great for me to hear other people use and talk about the same sort of common sense thinking we do. Not needing to worry about offending anyone or making it awkward with someone when you mention the concept of saving or living below your means. While I know lots of these people in the blogosphere the ones in my real actual life are especially prized.

I thought about common denominators with these folks. Stuff other than the obvious that they are in our life and are cheap/ frugal. Most of them have decent to above average incomes. Most of them own a nice relatively large TV. Most of them forgo any sort of debt/ financing except maybe some student loans or a modest mortgage. They are without exception not people you would see walking down the street and think, man that guy is really cheap. Most of them have a few nice things/ toys/ whatever you wanna call it. One has a motorcycle and another enjoys ATV's. Some put a bit of their extra money into vehicles and others travel a lot.

The additional common denominators are that while they all have a thing or two they splurge on they do it in a reasonable manner (saving a few bucks every paycheck to get a nice TV in a few months vs putting the biggest best TV the store has on the Visa and making minimum payments forever.) and probably more importantly they pick and choose there they put extra money. They do this because they simply cannot splurge on every single thing and have reasonable finances. They also at the end of the day live a lifestyle that is solidly reasonable with their spending and debt load when compared to their income.

I hope everyone has a wonderful Christmas with their family and loved ones. Unfortunately there are a lot of accidents this time of year. Remember not to drink and drive. Also be extra careful with firearms. Stay safe and I look forward to finishing out another year here with you folks.

MERRY CHRISTMAS! A very happy whateverelseitisyoucelebrate to readers who do not celebrate Christmas too. However since I am not going to say some junk like happy holidays, I always misspell the Jewish holiday (it's really nothing personal guys:) and Kwanza is as real as Dolly Partons boobs it is just going to be Merry Christmas. Sort of how Army manuals say in one sentence "Unless otherwise noted all male pronounse are gender neutral" just consider it Merry Christmasandorwhateverelseitisyoucelebrate unless otherwise noted.

I will post tomorrow if it is convenient and the mood strikes me. Otherwise I will resume regular posting on the 26th.

Financial Preps for WTSHTF or Your Own Personal TEOTWAWKI

Preparing for the worst can be daunting. It is also easy to focus on putting back several rifles, cases of ammo and everything else that goes along with it (Now you need some optics, a safe, spare mags, lights, another safe, etc.), or other emergency gear that we could spend hours listing. Let’s face it – acquiring the cool gear is fun! It’s also one of the most often talked about topics in this community. People like their toys and that’s perfectly fine. But it’s only one leg on your stool. Food and medical preps are covered to a lesser extent but still fairly regularly. Something I feel that is of equal importance, though not near as fun to discuss, is financial security.
I think many people avoid the financial preparedness topic because it can bring you back to reality: sometimes it’s hard to find enough to go around. How can you pay the bills, buy your beans, bullets, band-aids and still find money to save when disaster seems to be looming over the horizon? You better make room for it. That EMP may happen tomorrow or your small town might look like “Jericho” (TV series) next week, but I guarantee you sometime this year your own personal TEOTWAWKI will happen if you don’t put some cash back now. It could be a transmission that starts slipping, a layoff, an ER visit – Murphy will throw something at you when you least expect it. So where do we start?

Rotate Your Stocks AND Your Priorities

Several thousand rounds of center-fire rifle ammo and several reliable battle rifles for you and the family is a noble effort, but not at the expense of everything else. Set up some sort of system where all of your goals are slowly being met. One example can be found below:

Discretionary Spending Schedule:
Week 1: Guns and Gear
Week 2: Medical Supplies
Week 3: Trip to the Local Sam’s or Costco for Food Stocks
Week 4: Cash, Savings or Silver/Gold

Rinse and Repeat Next Month

It doesn’t have to be as rigid as the above example. I grocery shop at Wal-Mart; I’ll throw a box of 9mm and something for the first aid kit in the buggy every week on the grocery trip. I also will put some money back every week to slowly build our reserve. There is no right way to do this, find something that works and stick to it.

So, you’ve got some money set aside for financial preps. What now?

Cash is (for now) Still King

The manager at your local grocer is going to be pretty darn reluctant to let you leave the store with a gallon of milk for a 1964 quarter. Sure he may exchange it for some cash in his pocket but I bet you’re not going to get the most recent spot price from this transaction. If the power is out from the ____ (insert your regional disaster of choice – hurricane, snow storm, earthquake, etc. - here), chances are that credit card is not going to cut it either. Cash still has its place in your safe. One week’s paycheck is probably a good start to get you through most bumps in the road, especially if you already have at least a few weeks of food and a good first aid kit (you do, right?). For larger bumps in the road…

Make a War chest

Not literally, but treat your savings account with the same passion as you would a chest full of sharp pointy battle implements. A lot of folks say aim for 2-3 months worth of expenditures (everything from the mortgage down to gas for you vehicle). My wife and I are taking it a step further and have set the bar at 3 months worth of income (big difference). This is going to take some people longer than others; that’s OK. As long as you are making progress then don’t get discouraged! If an emergency comes up one month and it cuts your war chest in half then look at it like this: Success! You took a hit on the chin and are still standing! Our strategy has another benefit; life is all about timing. Opportunities come and go; if a great deal comes your way on a piece of land or something else and you have the spare cash to jump on it, do it. Just don’t look for excuses to raid your war chest. Make sure it is a worthwhile investment. Then proceed to build your savings back up immediately. Get your savings built up and then start considering…

Silver and Gold

How much precious metal (PM) is enough? It all depends on whom you ask. Just remember, PMs aren’t an investment (well they can be, more in a minute), they are insurance. Investments grow your wealth. Over the long haul, PMs will simply store your wealth. Short-term plays on PMs can be done to turn a profit, but buying and selling coins is the least efficient way to do it. You might as well trade paper gold on the stock market, and that’s not why we’re here. I once read a very interesting article that stated that an ounce of silver today buys approximately what an ounce of silver bought 2,500 years ago (I believe their example was loaves of bread). Try that with any fiat currency in the world! (Well, you can’t – it never stays in circulation long enough) We want to hedge against inflation. PMs are our insurance against the failure of our currency. Whatever currency becomes the world reserve when ours fails, silver and gold will hold value in that denomination as well.

My personal goal would be to eventually (long term) have 1 year’s salary in PMs. I think an 80/20 gold/silver holdings ratio is reasonable, but do your own Due Diligence and find what is right for you. You will probably want to start with silver, but at some point you have to switch to gold because silver gets bulky quick. I’d recommend starting with Pre-64 junk silver and 5-10 oz. bars. If you run across a good deal on some silver eagles, buy them! I bought some silver eagles last week for under spot! How did I do it? I deal solely with a local merchant who I trust completely and him likewise. I can’t stress the importance of dealing locally. If I find a 1965 dime (no silver content) in my roll I bought from my local guy, he graciously exchanges for a silver dime. No questions asked. Try that on E-bay.

I won’t talk about gold much because if you invest in silver first, by the time you are ready to dive into it, you will be fairly savvy with PMs; you will have done extensive research, right?

Now that we’ve covered some financial ground, let’s see if we can change the way we look at our other areas of preparedness to save us some money.

Streamline Your Gear

I have approached my firearms purchases in a manner that reduces the amount of different ammo we have to purchase. We have multiple pistols and carbines serving multiples purposes chambered in 9mm. We have also chose to standardize 12 gauge and 7.62x39.

A case of ammo in any of the above 3 calibers has the immediate benefit of being utilized by multiple firearms. Stocking up is much easier and cheaper.

Of course we have other firearms that are not in our standard calibers, but we don’t stock ammo for them like we do for the standard calibers. In theory you would want not only the same caliber, but the same brand as well. I say “In theory” because this is a tough one. In practice everyone in the family will have different tastes so it may be hard to convince everyone that carrying Glock 19s is in their best interest when they cringe when they have to hold the ugly bugger. A good goal would be to aim for full uniformity, and settle for caliber uniformity.

Another cost saving measure is go out and buy a .22 rifle and pistol if you don’t already have one as soon as it is financially sound to do so. This will obviously save you countless money over the years.

This doesn’t simply go for firearms. Try to buy battery-operated equipment that takes the same size batteries. Once again, this makes stocking up much easier and cheaper.

Make a Budget

The word “budget” can strike so much fear in a man, you would swear Hessians had just breached the privacy fence and are now occupying the pool house. It doesn’t have to be so scary, however. Your budget can be as loose or strict as you like, as long as it serves its purpose. One of the main benefits of the budget is it forces you to think through your expenditures.

I create a simple budget on spreadsheet that first tallies our income for the month, and then deducts all of our estimated expenditures. This allows me to determine our surplus and project what our end of the month balance should be in our account. If we surpass our goal, I do a little dance and then try to determine where I’m overestimating. If we miss our goal, we take step back and determine what went wrong. I don’t subscribe to the Dave Ramsey School of budgeting (budget down to the very last penny) because to me it seems like a lot of effort for not much of an improvement over my simple system. It works for many people, so I’m not knocking it. Find something that works for YOU.

Trim the Fat

Often people tell themselves that they just don’t have the money to save (you may even hear them say this on their brand new iPhone). They’ll say maybe next year, or after the house/car/boat is paid off or the kids are older/grown/etc. – that’s procrastination. One day you may wake up retired and struggling to make it; let’s avoid that outcome.

Internet, home phone lines, cable TV, cell phones, new vehicles every five years, too much house, etc. are all traps people fall in. I won’t tell you to turn off all of your services and move to the hills, but do take a rational look at your expenses and determine what you can reasonably cut or downgrade to allow you to put back some money. One thing I do recommend that has saved me over the years is brown bagging your lunch. Learn to love it. In one year brown bagging can save you enough money to buy that AR you want (Or – several pounds of silver).

Prepare for TSDTWAWKI (The Slow Decline of the World as We Know It)

TEOTWAWKI has happened for thousands of years, but the sun still rises in the east and the birds still fly south for the winter. If you were born in 1910 in Germany and lived 70 years, I’d say you lived through several TEOTWAWKIs (Weimer Germany, WW2, a literal divided nation, etc.). Our grandfathers and great-grandfathers had it hard at times; but they raised families, grew old, and hopefully were able to enjoy some sort of retirement after decades of work. The world may not end tomorrow, but it may slowly change for the worse for the rest of your life. Don’t rely on entitlement programs in your retirement years. Stock up on beans, bullets, band-aids and bullion, but also contribute to your 401K (at least get your company match, if offered), sock away some cash, buy real estate – diversify. Do not over-leverage yourself in our economy, but at the same time don’t rely solely on tangibles as a store of your wealth.

A true survivor plans for all contingencies. His portfolio is as diverse as his options. He buys cases of ammo and rolls of old coins, but he also contributes to his 401K to at least get the match his company offers. He has several acres of land in God’s country somewhere far from the city lights, but he also strives to be debt free. He has the cash on hand to G.O.O.D. and the savings and insurance to come back and rebuild (and the larder to live on until then). He doesn’t know the future so he prepares for all outcomes; no matter what happens his family will have options. He also recalls that Rome wasn’t built in a day, and American affluence has been squandered slowly for a while now; there is trouble on the horizon, so he starts now.

New Rules For Your Money And Debt

I stumbled onto an article today and when I went to post the thing I saw it was already up here. It brought on some thoughts. I think these coming years may not significantly reward good behavior (saving, etc) but will absolutely punish bad behavior. As Mayberry put it when you borrow money you are gambling that you will be able to pay it back. In bad times like this income disruptions are more common than normal. That means debt is a really bad gamble. It will seriously punish folks whose obligated expenses are too high. I wrote about this over at Keep It Simple Survival. Here is what I said One thing I've seen with different folks I know is that if an individual or family hits a bump in the road (job loss, etc) the ones with the fewest obligations fare best. They have the maximum ability to adjust their lifestyle to living with their new (if just temporary) reality. They have a few lean months then when a job is replaced are quickly back to normal.

A family with modest housing costs (rent or mortgage) and the usual food, fuel, etc but no debts can circle the wagons and live real cheap. However a family with big housing costs, two car payments, personal loans, a home depot credit card, a visa, etc can't. These folks usually get some stuff repossessed and have their credit trashed, possibly even losing their home. While their income is down they often get so far behind it is difficult to get caught back when they do replace the income.

It isn't popular or flashy but living well below your means should be the rule of these times. Lets say you make 40k and can live decently on 25k. That gives your family 15k to save, invest and prep with when things are good. It also means that if things get rough you can find a job earning a lot less and still make it, if just for awhile.

Medical Insurance and the Fundamentals

Wifey and I were talking last night about our worries, concerns and all that stuff about what is going on with Walker. One thing that occurred to me is that we aren't worried about paying the bill. That is because we aren't going to have a bill because we have good insurance. Not so long ago I was laid up myself with the pneumonia and it could have been a real problem for us.

We have good insurance through my job and it is one of the real benefits. Some jobs offer insurance and others don't. I do suggest you consider that as a piece of the overall compensation for a job. Sometimes particularly when you look at the military the numbers are a bit deceiving.

I am not saying everyone should have X or Y type of medical insurance or even needs necessarily medical insurance at all. Certainly I don't think people should be forced to purchase coverage any more than they should be forced to floss or eat vegetables or save or exercise even though they are smart choices. However I am saying that if you can possibly afford it you are foolish not to have a serious plan for dealing with the costs of medical issues which may come up. Particularly if you are active or your family has a woman of child bearing age it is foolish not to plan for this scenario. A lot of folks talk about all of this self healing herbal stuff. I think that is great but matter of fact it doesn't replace being able to get legitimate medical care for serious illnesses and injuries. When I was laid up with pneumonia all the herbal tea and st johns wort in the world wouldn't do what IV antibiotics did. A nice salve of naturally occurring elements will not replace an x ray and a cast in healing a broken arm.

Medical bills are, if memory serves me correctly, the biggest leading cause of bankruptcy. To spin in in a way that may seem important to the beans and bullets crowd it is really hard to carry around all your beans and bullets in the car after you go broke trying to pay medical bills and end up homeless.

I recall an analogy used by some smart financial type. He described priorities like building a house. The foundation was insurance and your emergency fund. The main floor is retirement planning, paying off your home and investing. The roof was stuff like college funds for kids, charitable donations, etc. The point is that if you try to skip steps you do not have the proper foundation (pun intended) and at the slightest tremor or storm the whole thing will fall down. You could weave preps in there at every level. Maybe the basement would be a real basic 2-4 weeks of food, gun with some ammo, water filter, etc. Real basic but good enough for a power outage or hurricane. The main floor might be a lot more food, heating and lighting plans, alternate shelter plans, a couple more guns with a good amount of ammo, clothing, etc. The roof might be precious metals, barter items and even the coveted off grid retreat complete with alternate power plans.

Survivalists far too often focus on statistically unlikely events instead of realistically and likely ones.  For example this year and the one before, and the one before that we have not tapped into our food storage for anything but getting something we forgot at the store for a recipe. We haven't used our medical supplies for anything but normal occurrences nor the rifles for anything but fun at the range. Our cases of ammo have not been opened and deployed in anger. We have however over the course of the last couple years made a few trips to the hospital. So which is more important? Personally I would say medical coverage though it is simplistic to say the two are mutually exclusive. The point isn't to say you need this or that but instead to talk realistically about how to face life's little challenges. Taking care of the basics like medical coverage and emergency savings before most other stuff just makes good sense.

Thoughts?

What Did You Do To Prepare This Week?

The biggest thing was that I ordered an ACOG from Idaho Preps. Been planning and saving to purchase an optic for some time. Hadn't thought I would be able to afford what I wanted but the good folks at Idaho Preps reached out to me and were able to make it work. Really happy that at the end of the day I was able to get one.

I also opened up a ROTH IRA. We had been saving for awhile and this week we signed up for an account and all that stuff. Pretty psyched about the whole thing. Made a few bucks so far which is just cool.

Picked up a few odds and ends of canned and staple stuff at the store. Stocking up a little bit but probably for the most part just rotating what we already have. Sometimes the stores on post have weird super cheap sales for no real reason. I guess they get too much of something or their stocks are getting old or whatever and so they sell it for half price. This week they have Natural Light Beer for $3.25 a twelve pack which is half the normal price. I got 4 of them to stash away as a beer reserve.

Been looking at ammo as my inventory of 9mm isn't quite up to my own standards.  A case of Federal hollow points is pretty darn tempting and would put me in a good place. I've got to save a few more bucks before I can seriously consider that purchase. Really can't complain because I just ordered a sweet rifle scope.

A very solid week for me. What did you do to prepare?

Putting My Money Where My Mouth Is: Personal Finance Ramblings

I was doing some math yesterday. It turns out that we live on right about 50% of my take home wages. The rest goes to accelerated debt repayment, retirement, PM's and a couple other odds and ends. That means our emergency fund is right about 5 months of normal life expenses without cutting anything. If we needed to raid the emergency fund we would obviously cut some stuff like discretionary travel, eating out and such.

How do we do this? Simply we don't buy all kinds of stuff we don't need and can't comfortably afford. It is my observation that people who are in debt up to their eyeballs are almost always in it for stuff they don't need. Instead of a new BMW or two we have older more modest cars. Almost everything we buy is used. We enjoy traveling very much but do it within our budget. Sort of like Dave Ramsey says it is simple but not easy. However I can say that it is very rewarding and I don't worry about money very often.

Somehow we got to talking with Miley about money. I started talking about the huge relationship benefits we have derived from having personal money. Basically the concept of personal money goes like this. Wifey and I each get some money every payday (it could be monthly or whatever) and it is entirely ours for discretionary purchases with no accountability. Save it, spend it, whatever. Wifey makes small purchases of candy and such then occasionally saves up for some clothes (that she doesn't need) or an expensive purse. I buy good liquor and preps. The real benefit is that it cuts out all those small little money arguments. The "why the hell did you spend 12 dollars on X" kind of stuff. For some folks they both just spend reasonable amounts on stuff that doesn't bother the other person. However my observation is that most people have their weird little quirky money habits that bother their spouse. This makes that a non issue. I simply cannot see us not doing personal money. If our financial situation changed we could and would adjust the dollar amount but I just can't see not doing it.

Lots of people talk about living below your means but don't do it. Are you one of them? If so what are you going to do to improve your situation? Pay down debt, decrease your lifestyle, earn more? I don't think there is a wrong answer here. If you are happy and comfortable spending everything that comes in then go for it. However if you are not happy with where you are then DO SOMETHING ABOUT IT.

How Many Guns Are Too Many?

This blog post which is also titled How Many Guns Are Too Many? got me thinking. I believe I also talked about this in a post over at Commander Zero's place some time ago. However writing every day is hard and sometimes you go for the base hit. I think this is a lot easier question to answer than how many guns are too few/ how many guns you need for X.

I think that unless you live in an RV or on a small (like below 50 foot) boat the issue of space is largely mute.

If you like to collect firearms as a hobby or want to have additional weapons for redundancy then it is pretty easy to end up with a lot of guns. I used to be pretty gun centric but now, even though I am less gun centric my budget is a lot better so buying stayed somewhat steady. I seem to average about 2.5 guns a year over the years. Look at it this way. 3 guns in a year is .22 for plinking, a deal on a used 870 which is just too good to pass up a Glock for your birthday. If you have decent, let alone significant, resources and keep up the interest in acquiring guns over decades a huge collection of hundreds of weapons can be accumulated.

The big thing is about resources required to get said guns and then kept tied up in them. I don't think you can have too many guns but I do think that you can over allocate your limited resources towards guns at the detriment of an overall well rounded plan. Simply put five hundred dollars that goes to a Glock or an AK cannot by default go towards food storage or savings or paying down debt or infinite other places, think about balance.

It is great to have a nice well rounded collection of (just to toss out a number) say a dozen guns. However it is probably better to have half a dozen guns, a well stocked pantry and a few hundred dollars. You may need a spare semi automatic rifle to arm someone else but you WILL need food. You may need that super accurate sniper target rifle but you almost certainly will at some point need $1,500 for an unforeseen expense or emergency.

If you find yourself pawning guns when a car breaks down or a paycheck is late/ small or whatever then maybe it would be wise to shrink your collection and beef up your savings. If you are in a dumpy money situation then getting 5 high end battle rifles with great scopes doesn't make sense. You need to put resources towards getting to a sane and stable place, not an arsenal you can brag to your friends about.


Again balance is the key. Certainly once you meet a basic level of capability, say a basic 4 maybe plus one or two extras (like a semi auto rifle if your first is a bolt gun and a concealable pistol) with mags, ammo and all the other ancillary stuff to keep them going then it is worth at least considering if those dollars would be better spent elsewhere.

Personally over the next few years I plan to pick up up a couple Glocks, a couple rifles and a random gun or two. During that time I am also going to improve our situation in terms of defensive gear, food storage, some outdoor equipment, precious metals and of course savings. All of this stuff will increase more or less together. If our financial situation is such that we need to tighten up a bit or full on circle the wagons then all that stuff (except food storage because you can make real cheap progress there and it is well, important) would slow or stop more or less together.

Is there a point where I will decide I don't need any more guns? Probably. At the point where every member of the family has a rifle (potentially a defensive one and a hunting one), pistol and shotgun with us having some spares for each of us in the safe I would look at things. Most likely at that time I would start getting guns I want. Stuff for my collection which while functional (stainless Beretta 92, Walther P1, etc) aren't group standard or common tertiary type weapons (AK's, etc). Basically stuff I just want because it would be cool. 

Will I ever get to this point? Probably sooner or later. I'm in my late 20's and have a pretty good start already. If my average slips to 2 guns a year over a decade it would be 20 more guns. Figure if I am real good and focused that would be 15-17 group standard/ common tertiary weapons and 3-5 randoms.  So a few core weapons per individual. That would be a pretty solid situation. I imagine at most by my early 40's there won't be anything left which we need or much which I want.

Just remember that it is about keeping some balance and allocating your scarce resources in the best manner possible.

Privatising Social Security

I have an idea. How about we choose to save, invest and plan for our future or not. Those who do not can try to continue working, mooch off family or starve. So if you don't have the discipline to save then be sure to have really good relationships with your kids I guess.

I am pretty confident in my ability to take the money which is stolen from me every paycheck and put it towards my long term future. I put a good portion of my take home earnings toward that goal and if I put that toward my personal retirement plans it would be just great. I am far more confident in our planning than I am in the government's promise to provide me with a safety net by stealing from my children and grandchildren.

Stay At Home Wife IPR#1

Wifey has been back at home full time for awhile now. I have been noticing some differences and they are worth talking about. We bring in less money now. Obviously if we needed her income to pay bills or support our lifestyle we would be in a rough place right now. For us that isn't a huge deal because we never really let our lifestyle increase with her income. Still we notice it because occasionally a couple bucks from her paycheck was the answer to something we wanted to do but couldn't (well chose not to) fund out of my pay. We hardly every used it but it was comforting to know we had excess income. More significantly her income really let us kick butt on getting ahead. We are still doing good things in terms of saving and paying off debt and all that but are no longer in overdrive.

However we do save some money. She has the time to cook real food, life with flour and sugar and stuff. That saves money. Also she can haunt the used stuff boards and sites to get great deals. So instead of spending a few hundred bucks on a piece of furniture we spend $35 and a bit of gas. If we had been paying child care costs that would be a big savings. Also with just me working we don't totally need a second car. Of course it is pretty darn nice but if one broke we could at a minimum wait awhile to get it fixed. 

Also the total amount of available time to do household stuff has gone up by 25-35 hours a week (what she was working). That means stuff which we used to have to do during the weekend gets done by her during the week. When we both worked basically all of Sunday was eaten up by laundry and grocery shopping. Now weekends are free to do whatever.

This also means the amount of time I have in general has increased. I can focus on work and not worry about what I am going to make for dinner or stopping by the store to get something. I don't know that it has made me more effective at work but it certainly hasn't hurt. When I get home I don't have to worry about household stuff because it is taken care of.

Wifey is liking having time to get Walkers room strait. She also enjoys getting stuff for cheap and now has time to do that. There is a risk that she starts to get bored/ down when not active outside the house. These days she is relatively active with some neighbors and wives of my co workers so that is pretty much taken care of.

The whole thing is going pretty well and we have adjusted to it. I feel like for right now this is the best answer for our family. Of course more money never hurts but the other benefits currently out weight it. I hesitate to say what is best for any other family but it is working well for us.

Home Finances 101

When I asked what your goals were our friend Sam included learning more about micro/ home finances. It seems like this is a good time to talk about home finances. I know a little bit about this concept. While I am not 50+ and financially comfortable (yet!) I am in some ways more fiscally prudent and capable in this arena than many older folks. This is one of those things that some people seem to get at a young age, others a bit later in life and some just never get it.

A couple of things to be up front about.

1) I have drank the Dave Ramsey cool aid. I wouldn't give him all my money and then follow the guy to a compound in the jungle but for the most part I have bought in to his ideas. [I say for the most part because I would be inclined to keep the first baby step worth of money in cash and while paying off the visa at 19% makes sense I might be inclined to get more of an emergency fund (say a month or two's expenses) prior to the full on snow ball.]

2) Also I think far too many people see budgets in the wrong light. They see it as somebody trying to impose a real penny pinching and rigid lifestyle onto them. Personally I see a budget as how we decide what to do with our money instead of saying "where did all my money go". If you want to have a $5 super grande mochawhackachoca latte every day I think that is a poor choice but it is entirely your decision. Just put it into your budget so you know how much it adds up to and where that money is going.

As for how to manage your money there are a lot of different methods. Sort of like the division of labor in a marriage there are about as many methods as there are couples. Just because it works for one person doesn't mean it will for another. What fails miserably for one will work great for another. This is more of an art of finding what works for you than a science.

Dave Ramsey suggests a budget that literally allocates every penny which comes in. This system uses envelopes for the cash that goes to each area. Your $180 for groceries goes in one envelope $90 for electricity in another, etc. You only spend what is in the envelope on a given area and thus you stay within the intended plan. This is about as extreme as you can go in terms of budgets.

The other extreme would be having no budget. I know only one person who is successful ( difficult to define but he never had money problems and continually lived well below his means and saved) with what basically amounts to no budget. He is just a real simple person with very minimal needs and modest desires. He lived comfortably on a pretty typical rather physical semi skilled job making $10 an hour or so. A couple years later after getting into a skilled trade that paid close to 3 times that much his lifestyle didn't change much. [ He also had a true entrepreneurial multiple streams of income mentality and executed one of the most creative and smart alternate housing ideas I have seen. Those are however stories for another day.] It worked for him but doesn't really seem to work for other folks.

I would say as a general guideline the more significant your money problems or desired improvement the more strict your budget should be both in terms of planning more specifically and cutting the fat. If you have a lot of debt AND your expenses are out stripping your income then a pretty rigid budget is essential. If you face a significant income change and have to adjust to that harsh new reality then every penny counts. If you just want to save a bit more or just keep some track of where your money is going then a less stringent budget may suit your needs. If you are doing fine then having your budget be more of a broad plan might work.

We do not have a strict budget parse. We take the money we want to save for various purposes or make principal payments out when a paycheck comes in. Other than that we pay our couple bills and just sorta go with it. We generally eat out about twice a week and have a rough idea how much can be spent on various stuff. Sometimes we spend a bit too much and the checking account gets low then we tighten up some.  

Upon reflection it might be more accurate to say that the formality of our budget sort of ebbs and flows as needed. When we got married and had no money but needed pretty much everything things were tight things and thus pretty formalized. Over time things loosened up some. In general right after we move (which is a lot) we watch it pretty closely for 2-3 months as the new expenses of that living situation get figured out.

I consider a budget as a living thing. Instead of being a rigid plan you must stick to it is every evolving. If you find that the amount you planned for something (say the electric bill) doesn't work you have to adjust things elsewhere to balance the scales.

So we have established that pretty much everybody needs some sort of a budget. I find that they need to be written down in some form or another at least at the stage of inception. If you are real old school a simple piece of paper will work though excel makes for easy changes and the auto sum feature is sure nice. I have found that if you are willing to take the time to figure it out Mint.com is very useful. That brings us to the next point. Also to help my finances click on an ad now and then. 

In order to know if you are actually following your planned budget you will need to track expenses to some degree. Following through is essential, otherwise a nice written budget is a moot point (see I finally got that right. If you Grammar Nazis keep at it sooner or later all of my bad habits will get fixed). Otherwise you will not know if you are meeting your intended plan at all, let alone in specific areas. As with anything else it is difficult to fix something you don't know is broken. Knowing you spent $200 too much this month is not helpful. Knowing you spend $50 too much on food, $40 too much on clothes and $60 too much on entertainment is quite helpful. You could use the envelope system or keep receipts and tally them up, maybe using Mint.com.  Could be that your banks online system is good enough to do the job or you could even write everything down in a little notebook (thought that seems like a hassle which means most folks won't actually do it).

I find that going along with a budget comes having mid and long term financial goals figured out. Short and mid term goals flow naturally with a budget because you are allocating money towards them or planning to allocate money towards them. Maybe you are working the baby steps or trying to save for a vacation or whatever. Of course some goals like paying off debt are probably better decisions than others like saving for a jet ski but the point is that if it isn't in the budget it isn't getting funded. As for longer term goals you might not be funding it currently but if there isn't some plan to fund it in the future it probably falls more into the wish category.

What have you done in terms of family budgeting that has worked? What have you tried that has failed?

Debt N' Why It's Bad

I tend to have a broader concept of preparedness than a lot of folks. I see physical fitness and financial stuff being just as important as sexy things like AK47's and cases of freeze dried foods. In other words if you are a fat slob and have a messy financial situation you are not well prepared even if you have beans, bullets and band aids. Sorry but I keep it real.

I got to thinking about why debt is really bad yesterday. To me there are three major reasons.

The first reason is that debt is promising future money you have not even earned yet. Not necessarily a big deal if things go humming along as usual but what if a job is lost or your income changes? A payment that might not be a big deal when you are working full time at a good job (whatever that is for you) might become a big deal if you get cut to part time or have to take a lower paying job.

The second reason sort of piggy backs along with the first. It is often tempting to pay for something over some time instead of trying to come up with all the cash immediately. Having a $50 payment on a whatever isn't a big deal. However my observation is that for whatever reason pretty quickly people have so many payments (even little ones add  up) that it is no longer realistic for them to pay cash for stuff. Kind of a vicious cycle that is easy to slip into and not fun to get out of.

The thing is that for most of us average folks our financial power comes from our salary/ income. The more of our income that isn't already allocated to some junk we got on payments means we have money to put to things we want to do or save. A guy who has 1k a month in money not already going to service debt or meet basic needs (food, shelter, etc) can use that money however he wants. He can also decide on a month to month basis where that money will go. Maybe it is a nice ski trip and a handgun one month and savings the next or whatever. He could use that money to meet whatever needs may come up be they real or perceived. He can also use it to save up to pay CASH for stuff. On the other hand if his neighbor makes the same amount of money but has a car payment and a credit card payment and a home depot card he doesn't have that money to put towards whatever. Thus he can't decide it is a good idea to get a gun this month or save cash for stuff.

So up to this point the issues with debt are first that your situation may change and a comfortable payment will become a real issue. Secondly having most of your money going to service debt leaves little room to do things you want to do be they completely frivolous or super practical.

Lastly people do not generally loan you money because they like you. They are in business to make money by lending you money and getting it back with interest. Credit cards with 10-18% interest will destroy you in a hurry if you get over your head. Servicing the interest alone becomes difficult so hardly anything actually goes toward the principal. Even lower rates really add up if you take the super long payment option. The real cost of a $500 washer paid off over a couple years at 6.99% interest is more than $500. Also at places where you can realistically bargain (of course you can try to bargain anywhere but the guy working the floor at a big box probably has no authority) the position of somebody who needs financing is very weak. Try to buy a five thousand dollar car with cash and you may well get a deal. If you need financing you will pay five grand THEN interest.

Whenever possible pay cash for stuff. If you can't pay cash then if at all possible save and wait until you can pay cash. I am not saying you shouldn't go on nice vacations or have some fun toys but I am saying if you can't pay cash then it probably isn't a good idea. If you are in debt try to get out of it. I still have a student loan and now that the emergency fund is at a comfortable level we are putting a lot of money towards paying it off early. Making an extra 200% principal payment every month will see that debt put to rest around the end of this year. After we get out of debt I can't really see borrowing money except to buy a reasonable home.

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quote of the day

"Personal history has shown me that long before TSHTF in a cataclysmic, biblical, Mad Max, zombierific way there’ll be plenty of small scale ‘personal SHTF’ moments….job losses, broken limbs, faulty transmissions, clogged pipes, broken furnaces, uncovered medical treatments, and that sort of thing. The sorts of situations that cant be fixed with an AK47, solar panels and a case of MRE’s. So…being pragmatic….we prepare for those ‘minor’ emergencies as well.

It follows, naturally, that if we’re not plunking down several hundred dollars a month to service debt then we’ve freed up that money to do other things…things we want to do rather than have to do. So…yeah, minimizing debt may definitely open up a few doors."

-Commander Zero