If you read my survivalist blog, you probably have at least some interest in self-sufficiency. At a minimum, I know that millions of people in this country are all about “Financial Freedom.” How do I know, because just about every single “financial guru” has become so by selling a book promising you the ability to achieve this freedom. I am NOT saying that these books are good or not, I am making a point. We all want freedom from the typical ilks of this time, and those of us in the survival community feel that it will take hard work and knowledge on our part to achieve it.
The basic concept that everyone already knows and people write whole books on is this: You must bring in more that you spend out and you must be smart with the spending when you do spend. Survivalists feel that investing in food, hard assets, self-reliance, and self-sufficiency are smart expenses. This doesn’t negate the first concept.
Believe it or not, I started this post, thinking that I was going to be writing about earthship structures, but it is time for a direction change because I am on a roll.
Some VERY basic concepts that people need to understand in “Prepper Investing” and these are not in a recommended order:
First: Debt Typically Outweighs Investing- Although this may not ALWAYS be true, it generally is for the normal person. People have credit cards that are upwards of 20% interest and the average is probably around 12-13%. Most that I know that are investing in a typical vehicle is getting a far less return than that, and simple math says that you end up paying for the fact that you saved and invested above destroying this debt. On lower interest, longer term debts, it is generally a scenario-based decision. Kind of hard to pay of a $125,000 house quickly enough to make it more advantageous that building a nest to fall back on, but… who says that we have to pay that much for a house, and who says that we need to do it without a significant amount of equity down.
On top of this, that unsecured debt is a huge hit on credit scores (which I don’t agree with that system but we have to play along) and this is another reason it is so bad. Don’t think just because Stuff Hits the Fan (SHTF), they won’t come after their money. You WILL be fought against before it fully goes down, because they are usually in the financial “know.”
Second: Build Up a Reserve of Cash- Not a large one at first. Baby steps. Your plan is your plan. My circumstances are not the same as yours, and neither is my past mistakes (and boy did I make some!). You need to decide on the dollar amount. A good round number would be 300 at first, because if you remember what I said on my post about getting started in prepping, you would realize that all of this financial stuff has to be also juggled with self-reliance spending. Then just like on the getting started post says, you need to build up more cash coffers at different stages. Eventually, you probably will need 3 months of gross in cash (and we don’t have to limit it there) for job loss, disasters, emergencies, and possible bank shutdown (anyone know about all the stuff happening in Cypress
about the banks where they are shutting down the banks, so they can steal people’s money?)
Third: A Good Diverse Investment System: Business is a good investment, but not what most people would think of as investing. You can invest in stocks and such, but know the risk that you are taking if you do this. Long term investing assumes that our economy will continue to thrive, and most of us know that isn’t going to happen.
A good portion of investing should be in hard assets (and I don’t mean some quarter acre lot in the middle of the city. We are preppers. We don’t need to invest in what we don’t believe can be sustained. We could be investing in a self-sustainable plot of land, or adding a structure conducive to sustainability on that land. Cool thing about this investment is that it helps you live day-to-day while you retain your wealth in it, as long as you are intelligent about your improvements and don’t make it un-purchasable where you have no exit strategy.
Another hard asset that has a little risk to it, but is a more legitimate long-term payback is gold and silver. These precious metals are used by survivalists not only as a wealth generator, but as an insurance policy to their wealth. I don’t mean certificates of these assets; I mean cold, hard precious metals. Gold is a big winner in our community, but silver may be a better idea for small day-to-day transactions for services. Gold would be like my bank account, and I can trade that in for smaller silver coins. I would want both, because no one knows exactly what anyone will want.
Forth: Make More Money While Spending Less- Everyone has the concept of making more money down. What we all fail at is the spending less. We tighten our belts, stop eating out, stop our frivolous spending, but because of our past mistakes, we are stuck with an unnecessarily large overhead (bills, mortgage, etc.) Maybe, a good idea is a life downsize while deciding how to make more money. Our biggest asset is time, and I want to learn to make more or spend less in a way it will allot me more time. With my time, I can make even more or enjoy the “simple life”(remember, we downsized.)
So, we get rid of debt, set aside a cash emergency fund, plan and execute a diverse investment system including soft and hard assets, and we attempt to bring in more while spending less. Simple concepts, but not always easy concepts. It takes a lot of work and tenacity to execute a plan like that.
I am NOT a financial advisor and I am currently in my “baby steps” right now as well. So, you should take what I have written as an idea, and speak to people that are extremely successful in this field (not some financial-liar), to determine you best course of action. You will eventually have to use a financial planner, but remember that many of them are trained by their institutions to benefit their institutions, and they work for YOU, not the other way around.
Enter the challenge for: