recession-proof-household

Recession Creates Preppers

It has been very pleasing to see new preppers being ‘born’ during these past few years. I can also tell you that I am not surprised that they are all people our age or older. I believe the economic situation of the world today is a big reason why these people have taken to being prepared.

Some of these people are retired and are living on fixed incomes. That alone is a great reason to take advantage of sale prices and stock up. Some of them were children growing up during the Great Depression so they remember the hard times and they can see what is happening.

I was so impressed during one occasion when we visited the homes of family members on both sides of the families. Both families had built new shelving areas and started quite an impressive collection of ‘preps’. The smiles on their faces showed their pride.

There were several reasons that prompted the new shelving units. One reason was the lesson they learned from losing power for days during a freak October snow storm last year. Yes, they lost power, but they were all prepared! That sense of accomplishment is a great feeling. This lesson they learned helped to motivate them along with the fact that they were tired of paying the ridiculous prices for groceries. Both families are taking advantage of sales run by their local grocery stores. It is only common sense to take advantage of these sales and pay a lower price for items you will use.

This week we decided that we will get together one evening, and I will make my homemade pizza. I make my own whole wheat pizza crust. The eyes lit up, “Oh, will you teach me how to make your crust?” she asked.

“First we will mill our flour, then I’ll show you how to make the crust” I said. They were excited. This is what I love to see. I could remember when I was growing up, I learned how to make cake from scratch from my mom. Scratch, not a box mix!

This is part of what concerns me though. Younger people, generally speaking are not prepared. Not only are most of them not prepared, but they don’t even think any catastrophe or tough times could happen. They are oblivious. Most cannot bake from scratch, grow their own vegetables or start a fire. Please, involve them and teach them.

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5 Steps To Financial Survival

Stop Borrowing. Stop the bleeding. Regardless of your current debt, you must (I mean, must) stop sinking further in debt. You will not be able to change anything until you stop spending borrowed money. Period. It is THE most important thing to do first.

Trim Your Budget. Simplify the budget analysis by being honest with yourself. Chances are that there are only one or two categories where you tend to break the budget. Think about it. You know what they are… Maybe you go out to eat too much. Maybe you buy too many clothes. Maybe you spend too much on gadgetry. The point is, instead of over-analyzing your budget, simply STOP spending too much on the categories you know to be your weakness. It takes will power.

Save. Even though there is relatively little interest paid on cash savings these days, this is no excuse not to save. As you begin to save a few dollars here and there, your motivation will grow as your cash stash grows. Instead of creating more debt, you will be creating more cash! Don’t spend every extra dollar on paying off your debts. Instead use some of it to build up a savings of cash.

Expect the Unexpected. A common area where people tend to go into debt is in the category of emergency expenses. This is where having a savings of cash will provide insurance against falling back into debt. Expect things to happen, such as the unplanned car expense or home appliance repair or replacement. Unexpected expenses ALWAYS happen. Save for them.

Plan for Future Expenses. Rather than letting known future expenses catch up with you, which often send people back into debt, plan instead for them. Use simple math. If you know that you will likely need a replacement vehicle in 2 years, and you are planning to purchase a used-car for $7,000, then $7,000/24 months equals nearly $300 per month that you need to save ahead of time. Budget for it. Money to purchase things that you will need to replace or purchase in the future WILL NOT fall into your lap. You must save for it, or go into debt when you need it.

I believe that one of the biggest problems today with those that are in debt is the lack of understanding that you cannot simply spend all of your paycheck or income each month (or week – whatever). There will always be significant expenses that will unexpectedly slam into you throughout life. You must plan for this by facing the reality that you need to set aside a portion of your take-home income for the future. This notion goes against the programming of ‘the system’, which deluges you with advertising and pressures to buy-buy-buy, however it is a false notion, one that will make you a slave.

Understanding the Quantity of Cash Money

As cash money and what you can tangibly hold in your hands disappears and is replaced with digital numbers on statements or computer screens, so too is the fading understanding of the value of money. Too many people are overwhelmed by numbers and don’t see something as being gone unless it was physically there beforehand. Case in point, the elected leaders that still cannot grasp the concept of an enormous debt that is just too much for them to handle.

To those who are responsible, and understand debt and the frugal concept of spending too much, using credit is not much of a problem. To those that spend excessively and don’t see or understand responsible debt management, this can be a very big problem. Credit limit or debt ceiling is a notion that lots of people still don’t understand.

Credit has its place in society, as it enables people to own a home, businesses can borrow to expand, and other responsible uses. Frivolous abuse of credit however destroys lives and makes paupers out of potentially successful individuals. One of the main problems with credit for the abusers, is that the quantity of money is not seen or felt, or understood.

There are some people who have managed to get out of debt and balance their finances without credit counseling in very remarkable fashion by getting back to the basics of money related transactions by using cash money for almost or all of what they purchase and pay for. This seeing and touching currency helps them retrain their minds to what they were hopefully taught as children, that you buy only what you can afford.

Here’s a plan to start the road to recovery and someday be debt free for those people who cannot to seem to stop the credit monster from consuming their lives.

First when you get your paycheck, withdraw it to cash (or as much as you can). A checking account and or debit cards will work for some, but many still do not see what they actually have unless it is right in front of them. Many people also still bounce checks because of improper accounting practices. Instead, use cash money for your living expenses. It is there to work with and to be fully visible and understood.

When paying bills use money orders. Money orders only cost around a dollar or so. Not only do you see and feel just how much the bills actually cost, which can help and motivate you to cut back, but you are using what you actually have to work with and not building up debt. The cost of the money orders and inconvenience of mailing them will be vastly made up in the long run.

Get rid of the services that automatically take out money from your bank accounts that are subject to change. The SET monthly bills that are the same each month are not a bad idea, as they leave you with a set amount to work with. However things like utility bills that do change, or phone bills that can change vastly, pay them using money orders. Helps to curb over usage of something that can be cut back, like over electric use for example.

Pay for everything when you go grocery shopping and other shopping with cash. People will often get something that they feel they need at the time to later find out they should not have. Take only the cash that you will need, no more. Having a set limit of cash in your pocket is an excellent way to purchase only the necessities. This teaches people to look for the best prices to (and to add).

Avoid going back to the bank for withdrawals of more cash unless you absolutely must for items or bills that are strictly pending and important. It will be difficult at first to go lean with spending, but after awhile it should kick in and become more of a habit. This is the most difficult part of it as it takes willpower to go without some of the items that people have taken for granted and accustomed to, that they don’t really need.

Do not use the credit cards that you have for any reason other than emergencies. Pay the balances on these credit cards with money orders each month. If you can pay more than the minimum, that is good, if you can’t, at least you will not be adding to it each month.

If anything catastrophic happens in the world, cash money may be the ONLY way to purchase anything as the credit cards might be useless, methods of electronic communications may be down, and banks may be closed. There is an advantage to having cash on hand.

One little advantage to paying with cash is all the coins that you get back. Putting these coins in a jar until it’s full is a great way of saving some fun money to splurge with, or maybe applying it to pay off some of your debt. Coins add up surprising quickly.

This overall method WORKS, I have seen people go back to the days of using only cash money and they get a grip on their finances because they see and feel real currency. While currency is fiat and does not really have much to back it up, it is still physical and can be held. Even the old time Monopoly game works with fake currency but teaches the concept of careful buying and selling. People understand something better when they can see it. Cash money is certainly not the only solution for those plagued by overspending and credit, but it sure helps as an excellent foundation for people getting a much better visual hold on what they actually have to work with.

Thanks to ‘Be informed’ for some of the ideas and statements made in this article.

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10 Things To Do With Your Money

Here are a few ideas of what to do with your money, from a practical-preparedness-frugal point of view.

(Not all inclusive, of course)

Ground rules:
Do not spend into debt. Spend only what you have available to you.

1. Set aside the money that you need for the bills that are required to be paid. This requires that you figure out first, what your monthly bills total. That means figuring out a budget. It’s not very hard to do. The point is, first set aside the money that needs to be paid on your bills, and then consider moving to step #2. Hopefully you have some left over after the bills.

Tip: If your cable costs $80 a month, see if you can do without some of the premium channels and instead get it for $60 a month. Cha-Ching!

2. Save an amount of your leftover money, until you have enough cash saved up to hold you for a time, in case of an emergency, or if you lose your job. 6 months worth of cash to cover bills is an excellent goal. Start small though – set a goal for 1 month worth of bills. Then 2…

Tip: Don’t feel as though you have to devote every extra penny each week to building this goal, unless you want to use all of it for that. For some, it is motivating to witness a pile of money growing.

Tip: It is much more motivating to take the cash money that is leftover and keep it at home in a safe, instead of putting it all in the bank. Actually ‘seeing’ the pile of cash grow is more motivating than watching the electronic numbers of your bank account. Besides, interest rates are so low right now that you really won’t get much of anything in a typical savings account.

3. Use cash for the groceries and things that you normally purchase each week, instead of a debit card or writing a check. When you use cash, it is very ‘real’ when you hand over the money to the clerk. Trust me, it makes a big difference and will help you to control yourself.

Tip: If your paycheck is direct-deposited, withdraw cash money from the ATM each week in the amount that you normally would spend with your debit card at the grocery store, etc…

4. With some of your leftover money, purchase extra food items that are a regular part of your diet. Food prices will only continue to go higher as the dollar continues to be debased. You cannot go wrong by buying more food now rather than later. Start with a goal of 1 month extra food, but build towards 3 months, then 6 months… It’s not that hard to do, and you will feel good about it when you look in your cupboards or pantry and see all that food.

5. Think about the consumable supplies that you go through each month and purchase more of them as extra storage. Things like toilet paper, soaps, trash bags, coffee filters, plastic wrap – aluminum foil, etc…

6. Productive tools and supplies that will assist you while growing and managing a home garden from germination to production.

7. Tools and supplies that will assist you while repairing things around the house, or purposed towards building or cobbling together solutions around the home and yard.

8. Items that will help provide security for your person, family, home, and property.

9. Extra gasoline, propane, diesel, etc… for your vehicle and fuel-powered items. Purchase proper storage containers (e.g. 3 or 5 gallon gasoline jugs). Know the number of miles that your vehicle gasoline tank will get you, and realize that a 18 gallon tank will require six 3-gallon containers, which may be more than you first thought (the number of containers).

Tip: Use an additive like ‘Stabil’ to prolong the life of gasoline in storage.

10. Splurge. So long as you are, for the most part, smart with your money, it is important to occasional splurge on self-indulging items or ‘toys’. Treat yourself once in a while. It is important.

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Debt Free Living, A Simple Concept?

Sounds simple, right?
Living debt free is a simple concept: Spend less than you earn, and accrue no debts. Pay as you go. Sounds simple, right? So, why are so many of us unable to do it? The financial experts tell us to “live within our means,” give us plans to get out of debt, and help us develop budgets. But in the end, most of us inevitably find ourselves back in the hole, trying to dig out. Why didn’t it work? Why, after paying off all of our loans and credit cards a year ago, are we facing mounting bills once again?

Permanent lifestyle changes
Going back to the basics, staying debt free happens when you spend less than you earn and are committed to live that way. How did you get out of debt last year? Chances are, you developed a plan, saw it through long enough to get out of that hole, then went back to your old habits. But in order to stay debt free, you need to plan for the long-term and make permanent lifestyle changes. Eliminating debt is only half the battle; you also need to develop sound financial skills to keep you on track down the road.

Plan now for those expenses
So, how do you plan for a future that involves minimum debt? “Debt free” is a misnomer, as few people can afford to pay cash for a home or car these days.
First, develop a long-term financial plan. Do you want to buy a home, or a new car, in the next five years? Are you planning to start a family? Plan now for those expenses, and start putting money away. Instead of waiting until after the purchase to budget for the $500 car payment, start setting it aside now, and use it as a down payment. Remember, less money borrowed means less interest paid.

Budget, be honest about your expenses
Next, develop a realistic budget. Budget is not a bad word. In fact, successful people and corporations live by budgets. To create your personal budget, you must take into account your current expenses, your long-term plan, and the development of an emergency fund. Every budget should also include some “me” money – this is cash you can spend, without strings or thought, on whatever you want. Be honest about your expenses and goals when you develop your budget – this needs to be a plan you can follow for years, not for weeks or months. You need to think of a budget as a life plan to reach your goals, not a restriction on your money. Don’t know where to start? There are many programs and professionals around that can help you develop a sound budget, if you need assistance.

Discipline, follow it through
Finally, you must face the hardest part of staying out of debt – making these plans part of your everyday lifestyle. Most people don’t fail because they have a bad plan; they fail because they lose sight of the plan, and don’t have the passion and discipline to follow it through. Now that your budget and long-term plan are done, stop debating and discussing them – it’s time to follow through, and live by the decisions you made. You may need to be brutally honest with yourself, and take some drastic actions to make this work: If you tend to use your credit card impulsively, then take it out of your wallet and leave it at home. If you enjoy shopping with friends, only go when you have “me” money to spend. Only shop in places that fit into your budget (there’s no point test driving a Jaguar, if you can only afford a Kia) to minimize temptation. Practice saying “no thank you.” Remember, this is your money.

Retrain your thinking and spending
Yes, debt free living is a simple concept, and one not easily executed. Many of us have spent our entire lives learning to live in debt; it will take time, commitment, and skill to retrain our thinking and spending, and get us back to living this way. Living debt free requires change, and change is a process. We will face setbacks, make mistakes, and wonder “Why did I do this?” at some point. But in the end, adjusting our lives in these simple ,yet crucial, ways will provide many benefits.

Some people may be in too far over their heads and would benefit from some simple professional help. Professional help with managing existing debt – with an approach to get out of debt, or maybe debt consolidation of an out-of-control mix of debts.