What I Do With My Extra Money

Last updated on December 18th, 2017


For those who are in a financial position to ask the question “What should I do with my extra money?”, the answer may vary widely depending on who is asking the question – along with their motivations and goals.

To get the conversation started, here’s what I do with my ‘extra’ money:

I diversify.

First, a quick note: The key to being in a position of having extra money is to live a lifestyle which is well below one’s means. It’s a simple concept, but in practice it is difficult to overcome the influences of today’s modern world of marketing. It takes common sense, determination, and will-power to adjust / live a lifestyle which is well away from the edge of a financial cliff.

Okay, back to the program:

More specifically, I diversify extra money that I may have into a number of different categories. Sometimes I will ‘invest’ more in one category than another, but over time I invest in all of them.

The goal? To be my own banker. To ‘self-direct’ my own investments into categories and tangibles that I see fit.

Why? Because only I know my own situation and only I know what’s truly best for me.

I (and no doubt many of you) have not always had the good fortune to be blessed with ‘extra’. I have learned many of life’s lessons the hard way and have spent my share of time under the influence of mainstream marketing and in debt. However many years ago I (we) consciously chose to pull ourselves out and we painstakingly managed to succeed. We curtailed and eliminated our bad spending habits and we lived modestly instead of ‘that to impress’…

With that said, and as a result of our hard work, determination, and desire for independence, we are entirely out of debt and are rewarded with some extra in our budget. But instead of just blindly putting the extra money all in the bank or in ‘the market’ or in other such intangible financial ‘investments’, we diversify into many other areas (particularly due to the current systemic risks that we are all facing).

Here are some specifics:

The Bank
We do keep some cash in the bank. I know (and you know) that cash in the bank generates no interest in today’s world of ZIRP and NIRP (zero interest rate policies & negative interest rate policies). However to utilize the financial system, we need to utilize the banking infrastructure. Additionally, we keep one ‘bank’ and one ‘credit union’. We purposely stayed away from ‘too big to fail’ banks (empty shells).

Cash at home
We do keep a significant amount of cash at home, in a ‘safe’. In a place which is highly unlikely to be found (by a typical burglar with somewhat limited time). There’s enough there to pay all of our bills for at least six months.

Note: With zero debt, and while living a lifestyle well below one’s means, it is not that difficult to save up a cash stash – even though it may sound difficult. The key is having little or no debt – but especially the second thing (living well below one’s means – spending habits). Even if you are servicing debt, as long as you’re living well below your income level you will always have ‘extra’ money.

Petty Cash
We keep a second safe for our day-to-day ‘petty cash’ – enough to pay cash for ordinary purchases which last at least a month or two. We pay cash for most ordinary things (groceries, diesel fuel, typical consumables, odds and ends…). Every so often we go to the bank and withdraw cash to keep it replenished. I carry a fairly significant amount of cash in my wallet – because I do not use my debit card that often. A side benefit of paying cash is privacy of spending habits (yes, we are all profiled).

Note: Paying cash makes you think twice about purchases – it just seems like more ‘money’ than electronic debits and payments. Here’s an interesting exercise: Withdraw the equivalent cash that you pay each month for your mortgage (if you have one) and see how big the stack is in twenties… I’ll bet that it seems like a-lot more than you thought…

Food Storage
I have already spent the ‘time and money’ to have completed a substantial food storage (which is constantly slowly rotated among what we normally eat). This is among the first recommended acquisitions within the category of basic preparedness. We started with several months food and eventually landed at several years. Now it’s simply replenishment as needed. This important category should always be where a portion of your extra money goes. No need to do it all at once (unless you want to), but just chip away at it and get it done.

General Preparedness
I generally diversify extra money into the potentially massive category of preparedness. Since I am my own banker, and since I am the one who is responsible for my own future, I spend some of my extra money in areas which will help me into the future without as many dependencies on others or other systems (although I realize that no man is an island). I focus on self-reliance whenever I can. The things that will help get me there – the things that will help me now and those things that may help me later.

For example, this past year I spent a significant amount of time and money on a solar powered PV system for the homestead. Although it is not massive, it is enough to power all of my essential systems during the short days of winter and most all else during sunnier months. So going forward into my later years (and in the event of a collapse) I will not have the dependency and expense upon the power grid. Rather than investing in some intangible risky ‘stock’, I put the money into a very practical tangible asset that will last decades into the future for me.

Food Production
A garden. Investing money (and time) into a method of self-sustaining sources of food is an investment that really can’t go wrong. The more food that we can grow for ourselves, the less we need to buy at the grocery store, and the more independent we become. Similarly I invest into various methods of food preservation (for example, a quality Pressure Canner to preserve my garden bounty – and the canning supplies to go with it…). Because without the methods and materials to preserve and save your food, all excess will go to waste (common sense). This can be applied beyond just a garden (chickens, livestock, etc..).

Homestead ‘tools’ and related supplies. Generally speaking, I spend extra money on any and all practical tools of the trade for the various practical ‘hands-on’ skill sets which I posses – as well as those which serve towards running a self-sufficient homestead. For example if I buy a particular quality shovel today, that investment will serve me well into the future (and that same shovel would have cost me much more later – or be entirely unavailable in a collapse…). Remember my post the other day about that ‘pull saw’? You get the idea…

Backups and Spares
I spend some of my ‘extra’ money on backups – especially for critical systems that are necessary for life on the homestead here. This might include a spare well pump, an extra set of work boots, certain ‘electronicals’ kept in a Faraday cage, extra magazines for the AR-…, etc.. While I do not go overboard in any one area, I do look to acquire extra things which may eventually wear out or break – especially critical items which may directly impact our lives and lifestyle here.

Investing money in maintenance is something that many people unfortunately ignore. Having worked for many years in the area of ‘field service’, I understand the importance of regular maintenance. So many ‘things’ could last much longer if they were only taken care of. Since I am investing in my own future, I therefore invest in maintenance where applicable. This will save me money down the road, and it will enable my ‘things’ to last longer. Any monies spent in this category are well worth it. This might include my vehicle, new tires, my furnace, my tractor, my tools, a new coat of paint or stain on the house, etc..

Especially in a collapsed world, my personal and homestead security will be VERY important – more than you might imagine… So I have invested in a number of different ways to fulfill this category (although I’m not finished yet 😉 ). Spending one’s extra money on one’s own personal security is a no-brainer. While it may seem like it’s a bit unnecessary during a time of relative peacetime, the fact is that when the collapse comes, you will be VERY glad that you did. This may include any number of various firearms, ammunition, and practice. There are many additional aspects to security that are also well worth spending one’s extra money on. For example I have spent money on the best outdoor motion lighting that you can get. Perimeter security. Things like that…

We donate some of our extra money to various charity purposes.

I believe that you’re getting the idea. I focus my ‘extra money’ on what I can do to help my household, my homestead, my life, my future. I concentrate on preparedness. But it doesn’t stop there…

Precious Metals
I also diversify into silver and gold. On a semi-regular basis, a portion of my extra paper money gets exchanged for Silver Eagles and sometimes Gold Eagles. Having my own physical precious metals in my own safe at home is an investment in an asset class that has been considered tangible ‘money’ for many thousands of years – and will into the future. There is no debt or counter-party risk attached to silver or gold. It is what it is. Money.

Fun and Entertainment
Now lets have some fun. While the aforementioned general categories are important, you should not overlook the category of fun and entertainment. Even though you’re into preparedness, you cannot live 24/7 in a constant state of risk assessment, mental readiness and preparedness, ‘condition yellow’, doom-and-gloom, etc.. without a break from the bad things in the world around us. While being careful not to go overboard, we occasionally treat ourselves to ‘fun’ things in this category (this is different for everyone).

I could continue on and on. I’ll stop here because I hope that you’ve got the ‘jist’ of what I tend to do with some of my extra paper money. I tend to exchange some of it for the hard asset tangibles as described above (and others). Just remember to diversify across the board. Try not to go too deep into any one thing – unless and until you need to. Be your own banker. Set yourself up for future success. Think ‘self-sufficiency’, ‘self-reliance’, ‘independence’. Support your own practical skill sets with the corresponding tangibles. Most of all, be your own banker….

Do you have any additional thoughts on this?

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