Years ago, when things took a financial turn into the ditch, I figured I’d try living on a budget. It’s not as constraining as it sounds. You might think “But if I have to live on a budget how will I ever buy a gun?” Uhm…pretty easily, actually…you simply budget $xx each month for gun purchases. It’s not rocket science. My budget is, maybe, 20 items. And thats the budget I try to live on. Follow the plan and everything works out.
Financial resilience… simple, just not easy.
When I make my budget, obviously, I have a pretty good idea of what I need to purchase/spend each month. I know I need to put money away for property taxes, auto insurance, etc, etc. And my budget is predicated on bringing in a certain amount of money every month. Although you can write a budget without knowing how much you’ll have to work with, its a lot easier when you do know how much you’ll have to work with.
So, I have my usual budget. But, what if I lose my job? Or I can’t work? Or, for some reason, my income gets halved…or worse. Theres a plan for that. I call it The War Budget. It’s the budget for when belts need to be tightened, fat trimmed, and resources stretched as long as possible….without starving to death or becoming homeless.
I take my normal budget and start slashing through it… Cable, Spotify, entertainment, dining out, subscriptions, etc….all zeroed out. Grocery budget? Knock 25% off, at least…this is why we keep a lot of food on hand. Gasoline? We’re riding the bike more and traveling less. That sort of thing. It’s the budget that is used on what cash resources are left.
Of course, this means that you have to have something tucked away to fall back on ‘just in case’. After several years of living on a budget that includes setting aside money every month specifically for this sort of thing…I’ve got about six months of living expenses in cash. And, interestingly, another six months worth of living expense in gold and silver. Theoretically, I could have $0 income until this time next year and nothing would have to change. But, of course, I’d be an idiot to have no income and not trim my expenses. Thus…The War Budget. In the frenzied “OMG what am I going to do” mindset that follows when your boss says “Don’t take off your jacket”, the last thing you’re going to be able to do is think clearly enough to come up with a workable financial plan for how to make what you have last until you get back on your feet. This is why I plan the War Budget in advance. I can mope back to the house, flop into a chair disgustedly, have a nice pity party, and basically flip a switch and know how to spend money going forward.
Is it sexy? Is it exciting? No, of course not. But it’s what keeps me from having to carry an armful of beloved guns to a pawn shop three weeks later because the water, electric, and gas bill is due. It’s just another part of preparedness….no different than wargaming how you’re going to get out of your town and to your bugout location. Except this scenario might be a tad more likely to happen before the other one does.
At the moment, my job is pretty secure. But so what? For all I know the building may burn down tomorrow, the .gov may shut it down, the franchise may get bought out by corporate, the boss could get drunk and fire everyone…whatever. No job, even when you work for yourself, is truly secure. You. Just. Don’t. Know.
So, my suggestion, or recommendation, to you is that you might want to wargame a scenario where your income gets cut to $0 for a period of time. What will you continue to spend on? What will you stop spending on? What resources will you set aside for that contingency? It’s worth thinking about because sooner or later, you’re going to find yourself staring down the barrel of a job/revenue loss… especially nowadays. Go jump into Excel and write up your own War Budget. And here’s the most important thing: if youre willing to live on a budget in a time of crisis like that, then be willing to live on a budget when things aren’t in crisis…because that how you wind up being able to be ready for that crisis period.
What’s the cost, in silver, of chocolate in 2050? Other than that I’m OK
“you might want to wargame a scenario where your income gets cut to $0 for a period of time”
Been there and it’s a lot less frightening than you would expect if you have no debt.
If you still have any debt, your first priority should be to eliminate it. Once that is done the second step is to live within your means without borrowing while stockpiling the stuff you think you’ll need if things go south.
Having enough to pay your debts for a half year is nice but what happens at the end of that half-year when the gold is gone and you still have mortgage payments? I’ve helped friends that have taken years to find work. Commander, you are in your fifties and that’s a magic age where you are too young to retire and so old that nobody wants to hire you at a living wage.
Once you are clear of debt, you will find that you need a lot less to live on than you think. So, losing your job is a lot less frightening than you would expect.
Debt except for student loans and taxes are bankruptable,not always ethical but have all tools in a arsenal for SHTF. The day after BK you will be overwhelmed with credit offers.
As I’ve mentioned several times on the blog, I have no mortgage nor debt. So, half a year seems pretty good. But whats the answer to your question? “What happens at the end of that half-year?” No matter how long I prepare for anything, someone always says “But what if its longer than that.” If I had enough in the bank to cover me for, say, three years would you then say “What happens at the end of that three years?” Five years? Ten years? Twenty years?
Being out of debt and having lost jobs in the past, I know exactly how frightening it is. At the moment, I’ve got a years worth of cash, gold and silver set aside for expense…but I also have a years salary sitting in a cash account as well. The notion that I’m overstating the fear that comes from job loss seems a little unfounded since I’ve BT;DT and know how *I* feel about it. Maybe you feel far more confident in your ability to weather such a thing….good for you, I respect that. But for me, it’s different… I want as much resiliency as possible.
Another approach is budget from expenses -minimums on basics(food,heat,lights) with remainder swept into “savings”. This method can be austere but helps create savings in rapid fashion. Have also been “saving” in diversified forms;$.59 canned veg(2+yr exp) year+ supply,$3# choice beef, vacuum sealer and chest freezer,tools, etc. Cash is Trash with rampant inflation.
So does the war budget allow for old Rugers or does that kick you down to Bryco/Jennings territory?
It’s a budget….its whatever you put in it. You wanna buy a new gun every month, you make it part of the budget.
“Cash is trash in rampant inflation”. That’s what’s going to hurt the most people. They don’t understand the paradigm shift and continue to hold cash without realizing that it is self destructing all on its own. Until after its too late. In anticipation of inflation over the past decade, I have many brand new pairs of shoes, boots, socks, jeans & underwear. Soap, toothpaste, laundry detergent – everything I normally need.
I agree with holding SOME cash for taxes and other financial expenses, but the inflation we are seeing is going to keep increasing. Read the book “When Money Dies”. IF we are entering hyperinflation, dollars become the hot potato. You’re best off exchanging them for anything other than dollars. Under that situation, we will be living under a barter system.
My point is that you need to recognize early when to convert all of your dollars into things you or others need. My personal plan is to use a sliding scale. The worse the inflation rate gets (based on my own analysis and not from the officially reported rate) the more I plan to convert.
Here’s a crazy tip: Buy tobacco seeds. They are very tiny and quite inexpensive (I’ve even seen them for sale at Walmart). It grows just about everywhere. You can either sell the seeds or grow it and sell the leaves. If things really go sideways there will be a large number of people interested in what you might have to offer.
fwiw, i grew up in tobacco country and if you dont know what you are doing, you will lose virtually your entire crop. Every Single Time. Tobacco diseases run rampant if you dont catch them early with the proper chems. And Going Green on tobacco aint gonna work, no matter what the tree huggers tell you.
Oh and having speared more than my share in the tobacco fields, i assure you caring for that stuff is a job way below cleaning toilets at an insane asylum. Nasty NASTY job. Only way i would even consider growing that stuff is if it is teotwawki and i am an addict. Well, even then I’d probably grow dope and trade it for nicotine.
I once read a story by someone who spent a little time in a level 1 prison in VA. They went out to work for the county every day. A lot of the times it was on farm land and some of the crop was tobacco. You can work out what they did, but the thing is they could never cure it into smocking tobacco. OK they could not do it in the open, but they had more reason than most to get it right.
Back in ’06 or ’07, my wife asked how long I thought new house construction was going to last. We were flush with work and thought it would never end. She thought differently and made sure we paid everything off, the house, the cars and a couple of other loans.
Then ’08 hit and although I still had work, it wasn’t always guaranteed that when we finished one new house, we’d have another one to build. Started buying silver and stashing cash in the safe, only leaving enough in the bank to cover regular monthly bills.
My last job, after working for the company for 7 years, I traveled the country to work, 44 states. My disabled wife got to where she couldn’t take care of herself anymore so I had to quit. Thankfully I was at the age where I could take early SSN at 62, although it took a few months to apply and get approved. A five figure savings account and the cash stash in the safe came in handy so my wife could continue to live in the style to which she had become accustomed, which is to say…eating three meals a day and buying basic survival stuff on line to set back for hard times.
IMO, being debt free is the most important thing to do for preparedness.
It allows you to buy the stuff you need/want, and to have cash on hand.
This is going to be unpopular, but a low fixed rate is your friend in an inflationary environment.
The notion being that by having the low fixed rate you wind up paying it back with devalued dollars as inflation increases?
That works great in a hyperinflation situation, but not so well if we enter a true stagflation. If you don’t have access to the cheap cash to pay off the loan, they will take you to the cleaners and you’ll lose it all.
Way back in the 70’s when I was in high school the economics teacher opined the people that benefit most from high inflation are those in debt. They get to pay back their loans in dollars worth less than they were when they took out the loans. Kind of abstract but it made sense at the time.
It does, but it ignores the main idea of this post…that rather than having devalued dollars to pay off your debts, you have NO dollars. Even if inflation slashes the buying power of the dollar to the point that you can pay off your mortgage with the same amoun of money it takes to buy a nice dinner, you still have to have SOME sort of income in order to pay with. If you’ve no job and no income, then you have no dollars, devalued or otherwise, to spend.
What can also happen is the debt(especially to .gov) can be indexed to the inflation,so you would end up paying Far more.
I have 12 months in cash with no change to spending (Netflix, going out to eat, attending monthly gun training classes, etc.) but I also just bought a 2019 Ford F-150 last week so that took a chunk of cash to buy outright. Interestingly if only my wife or I lost our jobs we could live for 48 months on that same cash pile plus one income and no change. There would be a very big change though because with us both working we pay $560 a WEEK to have 2 kids in day care. Give me back that roughly $2,400 a month on average and some other cuts and we can live indefinitely on one income but that’s how we have designed our life. I love the piece of mind that comes with savings…now to figure out a way to protect it from high inflation.
would it be cheaper to have a live in Swedish foreign exchange student watch the kids?
I’ve seen more than a few..uhm…’short movies’..about this scenario. I suspect the real-life version might not end the same way. Dang it.