We’ve got a plan if our vehicle breaks down and we have to get home.

We’ve got a plan if bad weather is coming to our area and we need to get out.

We’ve got a plan if it’s getting a little tense in our city and we need to hunker down for a few days
.
But what’s our plan if we end up with a 15% pay cut, lose our job, or become disabled.

Preparing for an economic emergency is not as sexy as prepping for other emergencies and won’t justify the purchase of some more cool gear or another weapon, but could be a very valuable exercise in today’s current economic environment.

Contingency planning for a reduction in pay is an exercise that requires a focus on reducing expenses and/or identifying another supplemental source of revenue.  Fifteen percent doesn’t sound like a lot until you don’t have it.  What expenses are easily eliminated? Dry cleaning, cable, entertainment/ eating out, charitable contributions and such are all expenses that could be eliminated by a phone call or just not writing the check.  Vehicle and home downsizing, taking the kids out of private school, getting the spouse to work, picking up a part time job, or finding another job are activities that take a little longer to execute.  Identifying what can be done quickly and what would need to be done in the longer term are exercises that are all part of the preparation process.

Contingency planning for a job loss requires a little more action.  Sure, there’s the unemployment check you can get but it’s not going to support your “good times” life style and keep the creditors at bay for very long.  Would you have to move?  What’s the real estate market in your area commanding for a house like yours?  Could you sell a vehicle for what is still owed on it?  Would you need to be “retrained”?   As far as a new job, a rule of thumb used to be that for every $10K you wanted in salary, it would take one month searching.  So it would take 10 months of humping, pavement pounding, and getting rejection letters before finding a $100K job.  What do you do in the meantime? Besides, in this economic environment, that rule of thumb may not be valid.  

What happens if you become disabled?  Do you have short term disability?  What does it pay and how long do the benefits last? What about long term disability (LTD)?  Did you check that box when you were applying for your benefits at work?   Unfortunately, LTD usually pays only 60% of what you were making before.  Social Security might also kick in but it may pay only another 10% to 20% of what you were previously making. So what’s the plan?

What I’ve found to help me in being prepared for an economic emergency is to know where the dollars are going today, while times are good.  Should you encounter a speed bump on your path to prosperity, you will already know the expenses that can be eliminated in order to preserve your cash.

Speaking of cash, build up an emergency fund of cash.  Personal financial planners suggest 3 to 6 months worth of cash in the bank in case an emergency described above comes our way.  I wouldn’t consider what you have in the market as your emergency fund.  If you need it in an emergency, the market may be in an emergency of its own and that’s not when you want to sell.  While 3 to 6 months may be the nirvana amount, any amount saved would be worth more than nothing saved.  
In addition, the best time to go to your banker is when you don’t need your banker.  In the good times- like when you have a job- go ahead and establish a line of credit such as a home equity line that could assist with potential cash shortages.

Yeah, I know.  It’s boring stuff.  But should the SHTF scenario you experience ever involve your finances, you’ll at least have some sort of a plan.

I truly believe the best Economic Emergency Preparation anyone can make is to strive to be debt free...period.  Anything else is pure "feel good" noise in terms of justifying and rationalizing all the excuses for not being debt free or for not being on your way to being debt free.  Of course there will be people who chime in and claim that becoming debt free for them "at this point just isn't realistic or practical," but that's BS.

A worthy secondary discussion in light of the original topic might be "what are some practical ways to accelerate one's path to debt freedom so as to not be blindsided by economic SHTF?"

My perspective on all of this changed on a dark Wednesday back in 2009 when I was called to the front lobby of my office building along with the rest of my coworkers and told our last day was going to be Friday (2 days later).  Talk about a sinking feeling in my stomach.  Instantly, things like my mortgage, car payment, health insurance, etc. were flashing through my mind.  The drive home that evening was dreadful.  From that point forward I swore to myself I'd do everything in my power to never be subject to the whims of somebody else like that ever again.  One way to ensure that, is to strive daily to answer to nobody when it comes to your financial (in)dependence.

Today, I am debt free and my financial security has never been more robust.  However, because I don't work for myself (yet), every single day I diligently watch my financial back in anticipation of that call to the front lobby again.  And if and when that call ever does come, I'll be ready.

I agree that being debt free is the way to go. Keeping your emergency fund in the bank is not the way to go. If fact keeping any fairly large amount of money (except investments for the future that you can afford to loose) in a financial institution is risky. Ever heard of Cypress?
Go over your expenses and you will find that most things not earmarked to go towards food, water, shelter, heat, clothing and transportation are usually just wants not needs. Most people would do well to down size to less expensive transportation and shelter options unless they just have the disposable income to afford luxuries. Most people seem to live above their means in recent times.
Doing this assessment will expose how much in expenses a person can slash if things get tight and the wants need to be dropped.

Speaking as someone who is debt free I'm not so sure debt free matters all that much any more.  If the economy collapses and you can't pay your debts, neither can anyone else.  Will creditors be able to go after the money they're owed when everyone is broke and the dollar is worth very little?

The best economic preparedness WAS to avoid living beyond your means so you didn't have to take on debt in the first place.  That way you wouldn't be under water the minute you suffered a blow to your income.  People (and governments) have a tendency to live as though the good times won't end.  They set up their finances under the assumption that their income will never go down, and usually go up.  

I've always been a pessimist.  By the time I was 25 I had 6 months worth of expenses saved up.  Now I could live 2 years on just the value of my PMs.  I've lived in small houses in crummy neighborhoods and driven boring cars and taken modest vacations, but I haven't worried too much about job loss because I was never in over my head.  Just this week at work I was invited to a HR meeting to explain my federal benefits if I lose my job due to off-shoring (which will likely happen soon).  Apparently Uncle Sugar has a hand-out package just for people whose jobs are sent overseas. I told them to fek off, I don't want federal benefits from a broke government, I can take care of myself when the time comes.  

Sometimes I wish I had debt to walk away from when the party ends.  I'm getting screwed by everyone else's debt, I want in on the action.

I feel like this sometimes.......My buddy is always "broke", but has a few toys that exceed the value of my house for example........The toys are not paid for, but it sure is fun catching bass at 70mph.  

I always remember what my dad told me many years ago, something like " son, things have ALWAYS been bad.....for my parents it was the depression and WWII......for me and your mom it was the cold war......don't be stupid waiting for things to be good".

So I guess I'll try to remain responsible....

As I understand it, there are already a number of DoD and other Federal .gov workers who are already seeing a 20% pay cut thru the end of the fiscal year (end of Sept.). That's not a trivial pay cut.

Furthermore, according to this article, there are some folks talking, once again, about brinksmanship regarding the combination of hitting the debt ceiling, budget resolution expiry at the end of September, de-funding Odumbo-care, and the lefty-libs wanting to eliminate the sequestration spending caps. If you work for the Federal .gov or a .gov contractor, there is an increasing likelihood of a disruption in pay. (Note, although there was a .gov "shutdown" in '95 where everybody got 3 weeks time off, there wasn't any lost income when it was all over. This time, it is likely to be different as Ocommie-pinko has already demonstrated a willingness to cut the pay of .gov workers as part of a political ploy.)

There are usually a number of ways to cut expenses, unless you're already quite frugal. However, many of those "expenses" are in the form of contributions to retirement plans, savings, buying PMs, etc. Also, cutting expenses to match your income assumes you still have an income, just at a lower level. That may not be a good assumption. What happens if your employer has a week-long furlough? Or, a month-long? What happens if your employer goes tango-uniform entirely?

If you're not debt-free, which most folks aren't, it seems to me that one good thing to do is to determine what your minimum payments would have to be to keep from becoming delinquent. This would include mortgage, credit card, car payments, etc. Then, if you know what the minimum payments -have- to be to avoid problems, you can have at least that much (times 3-4 months or so) set aside in cash so that you won't have to worry about that. In addition, set aside some cash for food, gas, and utility payments (which can vary wildly between seasons). If you plan for a <total> cessation of your income for some period of time, then a reduction, even one as drastic as 20%, will be more tenable. Not pleasant by any stretch, but not enough to incite stress panic.

The single largest monthly expense is usually rent or mortgage. This is why folks with RVs or 5th wheels, toy haulers or even just box trailers have an advantage because as much as it would SUCK long term, the ability to live somewhere - like in a friend's side yard or campground or side road is huge.

There are tent cities for a reason - folks on the bottom who have jobs but can't save enough for a security deposit on an apartment or downpayment need some way of getting ahead.

Food is next...and then insurances....then utilities, phones....

We took at 15% pay cut but sold the home, re-located, and the rent is now much lower than the mortgage was - so even while the total gross is down 15% the 'net' is about the same or slightly better.

We took the Dave Ramsey FPU and it definitely helped - got rid of whole life insurance and kept term (saved about $200/month right there). We went down to 1 vehicle (saved about $400/month on gas, oil, insurance). No cable tv. dropped Netflicks - we'll get library movies instead. almost never eat out.... when you really pay attention to the menu plan for food you can trim about 10% or more off the monthly food bill. When you strategize use of vehicles - to save gas - you can trim 10% off gas....

The Dave Ramsey approach is pretty logical, wise..... do the emergency fund - in cash. Having 3-6 months expenses worth in savings is HUGE. We're not quite there yet, but probably have close to that in food - minus fresh produce, eggs...

If you work it, it's do-able.

typical to feel that way.
i became debt free making sub



40k a year while supporting wife,kid,debt,,bills etc.
but for a while and even now,,we kinda see this. " i cant im broke,,but i have an i pad,,boat and 2013 36k car and 250k home..." on a 80k combined income..with 3 kids....mindset by everyone else.
debt free wins hands down. our credit ratings are super high 800++...just bought a home last year with a mortage thats less than a 60 month car payment....got a new car that cut our gas bill by 200$....so were saving $$



besides that..ive got less than 2k in credit debt at 3/4's of that is medical bills.



its hard to not wanna go buy fancy shit,,but the end reward is better imho.





 

 

No doubt.  Inevitably, after a few weeks or months pass and the honeymoon phase is over, then the buyer's remorse sets in and you realize it was never worth it to begin with.  Been there, done that, learned from it, and don't do it anymore all for those very reasons.

Well, I’m one of those DoD employees getting a 20% furlough pay cut until Oct. It hurts and most of our direct support contractors are also seeing the same cuts in pay. The entire event is political BS and is really hurting many families and support for our soldiers for no real reason what so ever.

I’ll tell you, we are all glad to still be employed, especially in this economy, but this furlough is pure crap. There is no shared sacrifice elsewhere in Gov, there are no cuts to welfare, foreign aid or dozens of other totally worthless programs. What is even more of a slap to the face is many of these programs are receiving increases in funding while they can’t properly take care of the military, soldiers or us. I understand that the VA claim system for disabled vets is so backed up that there can be a year waiting period or more just to get into the system! This is a disgrace and our vets deserve better, there is no excuse for this garbage. This is just one small example of how screwed up things are. I guess that is ok thou, as long as the welfare checks keep going out ,that is what is most important…….

What is coming next is going to be devastating to many families with heads of households working for DoD, Active, Guard and Reserve components of the military and or direct support civilian contractors. A massive Reduction in Force (RIF) is coming and it’s going to be a huge freaking mess. I think they are going to try to extend this furlough into FY14 and then they will start the RIF process. My guess is DoD members will see RIFs starting sometime next year and contractors at many locations will start to see layoff notices this fall. I hope I’m wrong about all of this, but the writing is on the wall at this point. It’s fixing to come a flood and there is not enough lifeboats on the ship, It’s not going to be fun…

I'm guessing they don't roll straight into FY14 with another 21 days of furlough.  I bet there will be a few continuing resolutions here and there and if furlough is still going to be in effect for FY14, it won't be enacted until after the new year.  However, that brings a whole new problem to light for congress folk -- 2014 mid-term elections.  I see that as the one and only glimmering light of hope that congress wakes up and stops the dicking around with DoD livelihoods.  If not, then I agree with the RIF scenario.  Defense Secretary Chuck Hagel, who is nothing more than a Nobama yes-man, will simply carry the liberal water and do everything he can to help them fulfill part of their liberal agenda wet dream (trashing the 2nd amendment and cutting the shit out of defense spending).

BTW, do you happen to have any RIF details that haven't already been publicly hinted at?  Or are you just reading/hearing what Hagel has been saying the past few weeks?

Lastly, I agree with your "shared sacrifice" assessment.  Where the f--- is it?  Is the DoJ, Dept. of Energy, Education, Homeland Security, FBI, CIA, NSA, etc getting any cuts?  No.  It's pure political BS.

I’m mainly hearing the same stuff you are from the SecDef in his public comments to the media. I’m starting to hear some talk about the RIF from friends of mine that are very connected with leadership. My guess is they are getting ready for something dramatic and are slowly letting it slip so it won’t be as shocking when it actually happens. They did the same thing with the furlough, I was hearing about that well over a year ago and most just thought it would never happen; well here we are.

If other Gov agencies are not going to see budget cuts, the numbers simply won’t work out for DoD. It’s pretty clear something nasty is coming down the pike. Factor in the AFG drawdown and the cuts already announced for FY14 and one hell of a storm brewing for all of us in the defense sector.

I think our only saving grace is if they push a voluntary (at first) and then mandatory retirement of DoD civilians. It is crazy how many old timers just won’t go to the house. I understand they enjoy working, but many of these folks are not very productive anymore and they receive very high salaries for what little they produce. Hell, some of them would make more retiring then they would working, I just don’t get why so many of these guys that are almost 70 or above are still working that don’t need to for the money.  

Unfortunately, no matter what happens, it looks like being an employee or contractor working for DoD is going to be very stressful over the next few years until we get some new leadership in DC. Personally, I don’t see how they are going to be able to hold the entire Gov system together much longer with the numbers that are floating around….17 trillion in debt, 85 billion in spending a month to keep the economy afloat and 100 million people on Gov services and growing. I hope I’m wrong, but I think we have past the point of no return financially and serious pain is coming. How we deal with that as a nation will decide our success of failure. I’m thinking it’s going to get real ugly for all of us in the very near future.

Beyond being "debt free" I think you have to look further into "How can I continue to make money?" Because even if you have 3 months, 6 months etc...saved...at the end of that time, you're no better off than everybody else. You still have expenses. You lost your job- and probably your insurance- not something you can do without these days. So you go on Cobra, which is probably 2-3x as much as you were paying. You still have taxes on your house, registration on your car, insurance on that car etc.....

You NEED INCOME, it's not enough to just not have many bills to pay. Sooner or later there is going to be some emergency etc....and you will need lots of cold, hard, cash. I've seen MANY people who saved money and "moved to the boonies", they paid cash for everything and were essentially living a subsistence lifestyle. Many of them had to give it up. Why? NO WAY TO EARN CASH MONEY. Take a look at the series "Mountain Men". Every one of those guys is very self sufficient. Most of them have their property paid for etc....but guess what? They are ALL CONSTANTLY SCRAMBLING to make CASH. Eustace for example is damn close to LOSING his property due to taxes. Marty had a bad trapping season last year and it really put him in a bad place etc, etc...Those guys are one busted leg away (missed hunting and trapping season) from absolute poverty and losing their way of life.

You need a way to generate money if your primary income goes away. For me, that means rental property. Is it risky? Yes, it is. If things really go to shit nobody will have any money for rent...but then again, not EVERYONE is going to be living in a tent- we saw that even in the Depression and other economic collapses around the world. If I become disabled- I can still collect a rent check every month- it ain't that hard- especially if you have good tenants. If something happens to me, my wife or kids don't have to bet their savings in the market trying to eke out a living on interest, once a month they can collect a check, it's very simple.

My suggestions? Buy now. In some areas prices are still low, financing is CHEAP and that way if things DO go to shit...you're only out your deposit of 20%- an amount you should be able to "earn back" in only a few years- at which point it's PURE profit essentially. Here's a good example of a deal I will close in three weeks. It popped up on a site I monitor on a Saturday. I had it shown that night and by Monday I had an offer in on it. The place was a parsonage- quiet neighborhood, obviously next to a Church. Well maintained, 3 bedroom, two bath, two car garage, concrete drive, big yard, chain link fence. They accepted an offer of $46k. My down payment is $9500 and I will have about $2500 in closing costs. My total expense is $12k. My total payment to the bank including taxes and insurance will be about $450 a month. I can rent the place for an EASY $850 and at that price be very picky about tenants- that's $5k almost a year in income. My risk on that is $12k...I will recoup all of MY money within 3 years, taxes included......

I look for places that need a little work- it scares off a lot of the "investors" and the prices are better. The above place got hit by a hail storm. The Church has insurance though and so I will be getting a new roof on both the garage and house, but some people would have been scared off by the condition of it initially. Place needs some paint and they have carpet in one BATHROOM- that will come out before I rent it! Have a really good banker! They can help you "move" on deals quickly which is critical. Again, I was able to put in an offer within 24 hours of the listing because I knew my guy would finance without hesitation.

I look for 2-3 bedroom places, nothing fancy...We forget that people raised 6-7 kids in 900 sq. foot houses in the "old days" and that time may come again...I also look for places with large garages and fenced yards of decent size. Why? It allows the tenant some ability to be more self sufficient themselves. They can have a dog, keep their kids in a fenced area, raise a small garden, work on their own vehicles, run a small business- small engine repair, welding, car repair etc...If they are "downsizing" a large garage or shed allows them to store their "stuff" for free vs. paying every month for a locker- that's a benefit in lower expenses.....I look for older neighborhoods where people still maintain their properties for the most part. I like stuff that is either close to major employers or the employment centers- gas is not cheap....Another rule, be picky, whatever criteria YOU decide are important, stick to them. You're not Donald Trump, you don't need 3000 rentals, you need 4-5 that are REALLY GOOD places. So get the right ones....whatever you decide "right" is.... They list places for sale every day, I turn down far more properties than I ever seriously consider buying.

I INVEST in my rentals. I put in GOOD appliances- not flashy stuff, not new, but simple stuff that works- I have spares of everything already purchased off Craigs List. If something goes down, I can replace it in a day- Keeps the tenant happy and doesn't interrupt my life all of a sudden. I have converted most of my rentals plumbing to PEX, simple, cheap and easy as hell to work on- I can do it myself. I love metal roofs, 30-40 year life span means no worries. I look for houses with very simple roof lines and have re roofed several of them myself, it's not hard if you don't have valleys etc...you get your first sheet straight and screw it down...

I love tile. I buy tile at our ReStore- basically it's like GoodWill for building materials. The tile is cheap and tile lasts a LONG time, easy maintenance. I buy lots of things at the ReStore, blinds, doors, fixtures etc....Good to have spares of things and like I said, I try to keep my places looking nice. Have good tradesman, honest people, that you can deal with, there are going to be things you can't repair yourself either due to time or knowledge constraints.

Will this make me rich?...Probably not. But it will provide a relatively safe and simple stream of income for me for a very long time. Say you end up with 4 places and you are able to pay them off- Dave Ramsey style, take the profits from several and plow it into the cheapest one, then do that over and over again until you OWN them. Say your average rent is $650 a month- that should not be hard to do at all, in many places..... You are going to subtract out taxes and insurance of course on the owned property, say $150 apiece per month...so basically, one place's income cash flows the rest. As long as you keep them rented, you're looking at over $23k a year in income. Lots of folks live on less than that....AND they are assets you could borrow against, sell, take a note back on etc....

Save, Save, Save or invest in PM's. Meanwhile bunghole gives 800 million to a shithole like egypt!?!

Here's some bad news that if taken seriously might cause some folks to clean up their act.... But fat chance of that...

http://talkingpointsmemo.com/news/survey-4-in-5-in-us-face-near-poverty-no-work.php



Hope Yen- July 28, 2013, 8:54 AM  12135  
WASHINGTON (AP) — Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend.

The findings come as President Barack Obama tries to renew his administration’s emphasis on the economy, saying in recent speeches that his highest priority is to “rebuild ladders of opportunity” and reverse income inequality.  [Miss-direction, dishinformation, and generally, Horse-Shit]  

As nonwhites approach a numerical majority in the U.S., one question is how public programs to lift the disadvantaged should be best focused — on the affirmative action that historically has tried to eliminate the racial barriers seen as the major impediment to economic equality, or simply on improving socioeconomic status for all, regardless of race.

Hardship is particularly growing among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy “poor.”

“I think it’s going to get worse,” said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend but it doesn’t generate much income. They live mostly off government disability checks.

“If you do try to go apply for a job, they’re not hiring people, and they’re not paying that much to even go to work,” she said. Children, she said, have “nothing better to do than to get on drugs.”



Lots more at link.

Rhodesia? The politics are aligning- witness George Zimmerman....the economics are aligning, see above......We're fucked, but then I know you already know that.....

I've dealt with all of these since 05. What's the issue?

So what did you do?  How were you prepared?  What would you have done differently?  Share a little about your experience!

I consider myself lucky in that I haven't had a pay cut or loft my job through all of the economic shenanigans that've been going on for the past 5 years.  What has happened to us, though, is that I've only had 1 single raise of ~1% since 2008.  Increases in fuel, food, insueance, medical costs, taxes, and just about everything else we "need" have essentially wiped out any disposable income we used to have.



Don't get me wrong, I'm very thankful to have not been down the road many of you have.  However, a few more years of this and we'll be near crisis stage.  We are the frog in the proverbial boiling pot.  I suspect many others are in this same boat.



 

Not to pirate Wolf202's tale, but last year I took a 50% - yep 50% - pay cut for 8 months (they eventually found the $ to bring me back up to full time).  I never saw it coming, but being prepared ("just in case") definitely helped.  Stored food stocks + frugal shopping techniques learned as a "prepper" let us cut our grocery bill back to maybe 25% of our normal level.  I don't think we had to buy a single tube of toothpaste or bar of soap the whole time.

A big garden also helped. We actually ate mostly the prior year's food, preserved by home canning.

Mostly, though, it's the "survivor" mentality that helps.  You have to be willing to tighten the belt a notch, do without luxuries some consider necessities, and recognize that if the money ain't there for the latest video game expansion pack for the kids, they don't get it.  Most of us live so far above the sustenance level that it's not all that hard to accommodate a pretty severe pay cut if you're good a drawing the the line between "needs" and "wants".

Guys, I understand the "cut, cut, cut" thing....to some degree. But there comes a point where there is NOTHING to cut except the extra pair of wool socks that keep your feet warm in the cardboard box.......Rather than focus on "cutting" why not focus on the INCOME side? In hard times it can get you by and in better times- it keeps the hard times away!

To me, relying on a "job" as your sole source of income-notice I said INCOME, not savings, investment etc.... violates a core rule of survival- putting all your eggs in one basket. Don't we follow the rule of "Threes"? IE, if something is important you need to have at least three ways of doing it? The "normal" way, a back up to that and a back up to your backup....Why is income- as important as it is, somehow different?I just don't see this as a one sided equation. If the problem is a lack of money then the question to me should be, "How do I get MORE money?" Short term, yea, cut away, but at some point it's all about the continued in flow of money.

I know a lady that is a sheriffs' deputy in my county. She has a HUGE business selling fudge at the gunshows in our area. In fact, she now sells to several retail establishments and has opened a store front....but it all started in her kitchen and with a $50 gun show table. She has hired a full time baker and could probably quit her job at this point if she wanted to and cook fudge full time.... It could be fudge, landscaping, meat cutting, firewood cutting, welding, wood working, computer repair, web design, rental homes or retail space- whatever fits you. But I think you have to look beyond "cutting" to do more than just eke out a "life".

Here's a picture from the 'Net of "The Fudge Lady" set up at a local gun show----

http://www.google.com/imgres?imgurl=http://media.yellowbot.com/r/650x500/photos/1ry1-231tO8_o--/fudge-lady-amarillo-tx.jpg&imgrefurl=http://www.yellowbot.com/fudge-lady-amarillo-tx.html&h=488&w=650&sz=68&tbnid=K6x63Vc0gueFoM:&tbnh=92&tbnw=122&zoom=1&usg=__kIu3uMfE4VbjiyhoFcl8JSEfAi8=&docid=Nc9U5meQjB6LpM&sa=X&ei=rK33UbffHIfK9gSc74GwBg&ved=0CGQQ9QEwCQ&dur=105

Absolutely. Lots of trades can be learned locally at a VoTec school- small engine repair, auto body repair, HVAC work, computer courses....For what many people spend on their phone plan or Starbucks in a few months you can learn a skill that will put food on your table in good times and bad.

this is what i did today, went to the jr college down the street to pick up another skill set.

Good thread... While relatively low on debt (only mortgage and student loan) it does makes me realize that I need to stop spending money on gear for a while and stash some penny's.

The point of survival is to get through some unpleasant situation to the 'other side'. But survival isn't flourishing. It's enduring.

Most of us would endure a 1-2 week or 1-2 month SHTF reasonably well. If faced with a layoff and no unemployment insurance (think, economic collapse, bank holiday), then having survival preps in food, fuel, and cash and barter items would allow me to maybe 'survive' 2-3 months assuming I didn't need to pay rent (and couldn't be kicked out because nothing worked anyway).

The trick with trades is..... your resume ought to work for peace time... .the trades ought to at least put something on the table in times of trouble.

Reading the various accounts from 3rd world countries, the collapse of the USSR etc. teaches us that having a stockpile of bartering goods (cases of vodka, smokes, chocolate, coffee, AA batteries, BIC lighters, TP, medicine...) can take the edge off.

Who you know - a network of friends and family is essential too in so many ways.

What you know that's practical - gardening, trapping, fishing, hunting, security, electronics, repair, McGuyvering stuff... that'll open doors where gold coins might not.

Languages

Networks....
no one survived WW2 based on a stockpile alone.

Ill start in 05 when I slipped on black ice one a set of stairs at work id warned my employer that this was a problem and the repairs were $850 this was the second time someone was seriously hurt from this.. First let me say I'm very thankful not to be in a wheel chair.  I spent 6 months in rehab and got cut to 66% of my income. I was investigated for insurance fraud. Once I recovered my employer put me in a much lower position. I found a better job after word at work was they were trying to fire me because id made a claim.  Lesson of the day is disability insurance both short and long.

I got another employer that worked well for 3 years before there was a falling out. I found a job that offered %25 higher pay so I went for it. The pay was hourly and no overtime but I was forced to do 10+ hrs of unreimbursed time each week. Then they failed to pay me for a month. I had to sue to get that pay check and file unemployment and live off my savings while that was going on.   Unemployment for 9 months at less than %50 of my previous wage.  Lesson here is a cash reserve. Also budget your bills below your income.

During those times I lived off my set back food and supplies to help offset the loss.

Good post.

Far be it from me to argue against picking up new skills as a survival tool - I've said here a number of times that I think knowledge and common sense are probably the most valuable things you can possess in a survival situation.

*BUT*....

In bad economic times, one of the biggest - if not the biggest - part of the problem is un/underemployment.  There are a lot of smart, highly-trained folks out there on the streets right now, and it doesn't matter how good a computer guru you are... if you don't have a fairly steady job, it's going to be hard to put enough food on the table.  So, while trade skills are certainly valuable, and definitely tip the scales in your favor, don't overlook learnin' up on those things that you can actually use to live more efficiently.  Many of them are the same: basic plumbing, carpentry, auto repair, welding, etc., but rather than concentrate on a single area as you would do if pursuing it as a career, try to become fairly proficient in a number of them.  That has a high payoff, in that in knowing how to do these things that our grandfathers and their fathers used to know how to do, you can minimize having to call in outside help when you need some of them done yourself.  Learn to re-roof your own house, build your own addition to the house, fix your own plumbing, add a new circuit to provide power to that new deep freeze.  The savings over calling in a "professional" to do it can be immense.

Won't argue with that at all. I can pick up "scruffy" rental properties others might pass on because- 1. I know what's wrong 2. I know how to fix it 3. I know roughly what it will cost. There are some things I won't do because, like all people I have an aptitude for certain things and others just piss me off to the point that I'd rather pay someone to do it- regardless what the cost is! A good example of that is trying to solder copper pipes. Fuck it, I'm pulling that shit out and it's going to be PVC or Pex or I'll hire it done!

While I agree that knowing how to do stuff is good and it SAVES you money- I do it myself, I think it has limitations too. I still think priority one has to be MAKING more money. You have to find a way to bring in cash. Nobody is going to be doing major surgery in their kitchen, and doctors only take insurance or cash! It can be difficult to compete as a part timer as you say vs. someone who is an expert- especially when so many are looking for work themselves. That's why it's important to start now and create a niche for yourself or a list of recurring loyal customers. Or in finding something that is essentially passive- like real estate or maybe a website that you get paid per click or an Ebay store or a vending machine route....Something that doesn't require you to spend large amounts of time now while you are working your "real job" but that still brings in money on a regular basis that could lead to even more money or at least a steady flow that will help keep the wolves away.

Making more money requires more thought and more work in many cases. Cutting is really easy- you just look at your checkbook and say "I don't need that anymore", done. An exception might be if you are making a substitution- like you are talking about- I'm using MY labor vs. hiring something done, or I'm growing a garden or hunting vs. going to the store, but much scaling back is simply not writing a check every month. Making money is generally a more active response. What can I do? How will I do it? Where will I get my supplies? Who are my customers? How do I get the word out? How much do I charge? etc etc etc....I think many people are lazy and that's part of the attraction to "cut, cut, cut".

Did you peek at my 'soldering shower valve' post in the DIY forum or something?

No argument from me either, though.  There will always be times when only cash (or equivalent exchange medium) will suffice.  My point is simply that the more you can do for yourself, the more of the scant cash you may be able to obtain can be retained for those items.

In the end, I think it really boils down to the fact that the true survivors are those who are "do-er's", the open-minded, the innovators... those willing to learn new things and make do with what's on hand rather than descend into a spirit-killing funk of "If Only.."

Actually no, I didn't! Will now do so! I can weld, stick, mig, tig. I can roof a house metal or asphalt. I can lay tile. I can install windows and doors. I can do most basic auto repairs- brake pads, headlights (Not as easy on new cars as you might think!), replace alternator, water pump, rotors etc....I can build a fence- barb wire or board. I can thread pipe and bend small tubing. I can troubleshoot tune a lawn mower or small generator motor, chainsaws too...... I can't solder a damn pipe joint to save my everlasting life and risk burning something down, a flood or at least knocking my head once or twice in the process if I try! I just don't even try anymore.

Paying stuff does feel good.  Just made the last payment on my Suburban ( No I did not buy a new one)  Still have a lot of debt and the medical insurance issues are starting to take their toll on cash but with one car payment gone and just started working part time jobs I am hoping to get back on track a little faster.

Amen!
Forget years, these things last decades. Its not about how much stuff you have. You need some gear and supplies for all the reasons explained here time and again, but at the end of the day its about having an income that allows you to stay afloat while a lot of people around you struggle or sink.

+1.

I'm going to play Devil's Advocate to a couple of earlier points:

1.  Rental Properties:  Rental properties are money pits.  Even in the best of times, it's darn near impossible to cash flow enough to cover your personal expenses.  I've been a member of three real estate investment clubs in two different states and I've helped the owners of two of the larger real estate investment info product web sites get started.  I've owned a four-plex, a duplex and several single family houses and my family has owned property (both commercial and residential) for three+ generations.  Don't believe the hype: You need large cash reserves if you're going to hold rental properties, even if you own them free and clear.  The culture has changed in America.  Most tenants-- even when you screen them well-- will not take care of your property like YOU would.  Even if they do: Owning rental property (I repeat) is a money pit.  Roofs need to be replaced.  Air conditioners break and need to be replaced.  Properties get infested with bird mites and the tenants need to be put up in a hotel while you have the property tented.  Money pit, Money pit, Money pit.  How are you going to pay for those expenses when you don't have a job and you're trying to live on whatever the property cash flows? (After PITI? Good luck!)  Don't believe the hype.  Guys lie about their great investment deals just like they lie about their truck MPG and their penis size.  

Every successful investor I've met eventually graduates to holding paper (I.E.  lending money) or jumps up to big multi-family units, which are beyond the scope of anyone still working a day job.  

In a bad economy, people stop paying their rent.  Not only will you not have cash flow, but you'll also have lawyer fees to get the tenant out.  Once they do leave, you'll find that they have destroyed your property.  Where will the money come from to fix it up and get another tenant?  (If you can find another tenant, because there are now so many vacant properties to compete with).  Rental property is fine if it's part of your investment portfolio.  But it is foolish to depend on it as a source of income.  Sure, you might be that one guy who gets lucky with his rental property.  But if you want to play a game of luck, you might as well just invest in the market and sidestep the leaky toilets.  [/flame shield ON]

2.  The Trades  Let's look at the Great Recession as an example:  Construction jobs dried up.  Suddenly, carpenters, plumbers, roofers, drywall guys... were out of work.  What did they do?  They either sold everything and moved (contributing to the glut of housing and depressing rents) or they tried to pick up odd jobs and start "handyman" businesses.  Are you really going to compete in a crowded market with your newly acquired trade school skill?  I visit a lot of pawn shops in my free time, just to get a gauge as to what is happening with the economy.  I still see a lot of tools for sale.  The pawn shops can't get rid of them.  

My guitar instructor used to work on a construction crew.  When the construction jobs dried up, he started teaching guitar.  He makes enough to pay his bills.  What he found is that: People with money -- and retired folks-- will still pay for guitar instruction.  Parents with money will scrimp on other things to make sure their kids can still get an education.  Now, if the Great Depression 2.0 hits, will he be able to make a living teaching guitar?  I doubt it.  But it was good enough to get him through the Great Recession.  

I wrote about a guy buying and selling used appliances, on my blog.  Now that's a recession-proof business.  Is it easy?  No.  But it's easier than competing against the throngs of experienced tradesmen in a bad economy.  ** Although I should note that tradesmen in my area are busy as heck, right now.  But they weren't a few years ago.  

I think the trick is to find a little niche (like buying and selling used appliances) that will continue to make you money, regardless of the economy.  I've lived in some real shit holes.  One thing I've noticed is that: People will always find a way to buy the latest cell phone device, and young men will always spend money on fancy rims and car stereo systems.  Neither of these are businesses that I personally have an interest in getting involved with, but the examples should at least get you thinking in the right direction.

The specifics of how people produce income doesn't really matter, it's going to differ from person to person, what are their abilities, economic resources etc.... What's more important is that they graduate beyond the idea of simply cutting their expenses to finding a way to continue to produce income after an economic SHTF. There are people who make money in every sort of endeavor in every economy- BE THAT PERSON by having a plan and putting it in play NOW. As my daddy always said, "The best time to find a job, is when you HAVE a job".

These types of conflicting plans and opinions reflect exactly why a person can spend years in indecision concerning the best course of action regarding investing and gaining skill sets.

Related to rental property, I once had a friend who had a well to do grandmother.  The grandmother rented rooms.

While I'm not about to rent a room to a stranger, I may one day have my mother move in with us and take care of her while she helped with my expenses - which would be cheaper for her than living on her own.  Or maybe have a cousin rent a room while they attend the local college. Or maybe a friend has an a family member, who can be easily vetted, who needs a place for a few months.  

I have a family member who lives out of town and he rents a room from an elderly couple.  I think he pays a little more than $500 a month.  I'm sure they report it as income on their taxes.   Not bad.  Not bad at all.

This is one of these things where you just have to do the best you can.  It's very difficult to prioritize because you have no idea what the problem will be.  For example, let's say that you get on board the Dave Ramsey train and bust your ass to pay off ALL your debt.  Doing so makes you very cash poor because all your $ is going to pay off those big debts you have.  Enter the specific class of SHTF scenario where you can't live in your just-about-to-be-paid-off house....but you have close to zero disposable income to support you without the house to live in.  Congrats, you're a homeless guy now even though you were doing something financially responsible in many ways.

Because of things like this, I tend to be more of a general 'saver' rather than a debt pay-downer.  I have some 0.0% CC debt...and my mortgage is a fixed 3.375%.  Personally, over the long term (especially when/if really heinous inflation hits!) I am pretty sure I can beat 3.375...so it makes sense for me to save all that $ that I can that would otherwise be dedicated to paying down that loan.  

Of course, a lot of this is dependant on your age and future earning power.  I am 38, so I have quite a few $ earning years ahead of me.  If I was closer to retirement, being mortgage debt free would be a higher priority...

I think what I am saying is that there are a LOT of factors here.  Everyone is different and there are both known unknowns (to quote rummy) and unforeseeable issues also.  Therefore, it's hard to imagine any one plan will work for more than a small minority who happen to be in very similar circumstances...

I think a better strategy would be to pay off all of your other debt first (which I think Ramsey advises) and build your emergency fund.  Then pay off your house.  Or if you wanted to be really conservative: Put all of your excess monthly cash into the bank until you have enough to pay off the mortgage in one fell swoop, which is what we did.  

We just saw the movie, "This Is 40."  Kind of a chick flick, but there's one line in it where the aging rocker Graham Parsons says, "Do you wanna know the secret to life?  It's having a small nut to cover."  

That was followed by a bunch of "I've got big nuts" jokes.  But he made a valid point: The smaller your nut, the easier life is... especially if your records stop selling so well.  

Live debt free. Generate as much of your own supplies as you can.
We are driving all paid for vehicles. Toyota's and a 1990's Chev 1500...they have proven to be the most reliable. Insurance paid a year ahead.
We generate our own pork, chicken, eggs and veggies. Hope to get into dairy as well. Animal feed is produces here on our 6 acres.
We are working towards generating our own power, but that's a little more tricky.

Read 5 acres and independence to start with. Not depending on a job to pay your utilities and mortgage is the first part of it in my opinion.

My dept is getting furloughed also. 4 days so far with 3 more possible, and rumors of 22 next year. I'd like to know why government retirees and those on social security aren't getting cuts. That's where over a 1/3 of the spending goes and that's the generation that got us into this mess. They should have to pay some. I'm not too worried about RIFs most of the people I work with are ready to retire anyway and I have vet preference points. We will probably be facing a shortage of people in 5 years after they all retire. Just the same I prepare for the possibility by keeping my skills up to date and having an emergency fund and no debt.



 

I thought all of DoD was supposed to be getting 11 days of furlough?  You're only getting 7?  Must be nice.    I don't know if you've heard the latest, but rumor is circulating that they may be able to reduce it by 4 or 5 days with some "extra" money they've found.    So, it may end up only being 6 - 7 days of actual furlough (I'll believe it when I see it).

Also, I just heard yesterday that Boehner is starting the whole "continuing resolution" talk, just as I figured in my post above.  I've also heard that democrats are now calling to end sequestration for next year because it "creates too much economic uncertainty."  God, they are so damn slimy!  They are the ones that wanted it to begin with!  Now they want to look like heroes for calling for its end?  Please...give me a freakin' break!

I'm with ya regarding the retirees and SS issue.  The answer of course, is because this whole entire thing is nothing more than a political stunt.

We also heard the rumors about a possible curbing of furlough day for this cycle; I’m not sure how they are going to do that since Congress is out of town until Sept and I understand they need their permission to do that. I have been watching the estimated DoD budget numbers for FY14 and beyond, it is ugly no matter how you try to slice it. They just don’t have the funds to pay us and keep all the current programs operating. The AD Army is going to get hard along with other services. The AF is starting a 15 year early retirement programs and I hear the other services are ready to do the same.  How DoD civilians and contractors get hit is still up in the air, but it looks like they are leaning towards RIFs for FY14 and beyond. I think they are going to push another round of early retirements, but so many people are freaked out due to the economy, they don’t want to retire. It’s a sh*t sandwich and we are all going to take a bite.

Our problems we are having with funding DoD is nothing compared to the larger problem we face as a nation. This country is teetering on the verge of failed state status if we continue this out of control spending and endless printing of money. Hell, we may have already crossed the point of no return to solve this, but we don’t know it yet. The problems we are seeing in DoD is just the tip of the iceberg. God only knows how all of this is going to play out, but unless you are a Pollyanna on Prozac, the writing is on the wall; a storm is brewing and it might be a mild F1 or it could be an F5 monster, either way, it’s just over the horizon and it’s not going to be fun for any of us average schmucks.

Its not a matter of if... its when.

So have a plan A to D at least.

Emergency fund (savings) to cover 1 month's expenses (rent/mortgage, car, fuel, food, etc.)

A: lose job? immediately send out 100 resumes on day 1. Immediately look for all local part-time jobs...before looking for unemployment insurance etc.
B: after 2 weeks if no leads, and no part time jobs and no for cash jobs.... cut all perks, stretch cash.
C: downsize (sell of 2nd vehicle, bike, take any income producing job.
D: move in with family, friends.... haul stuff in trailer... don't touch your 401ks. Don't sell off heirlooms just yet.

Getting rid of the 2nd car saves us $500 per month. Moving in with friends for 18 months years ago allowed us to save up for a downpayment on a home - and helped them pay off bills as we paid them $500/month (vs. $1300 in our apartment).

Itemize everything - it all has value. If you try to sell things you usually take a loss and eventually need to replace it so sell off things carefully.

Having a network of friends who will let you board with them is like having money in the bank...