Financial Preparedness

Here is the presentation from the Financial Preparedness class held at the 2023 Gun & Preparedness Sportsman’s Expo.

As preppers and survivalists, we make plans for all sorts of emergencies. From being stranded in the car due to weather to a full-scale collapse, we’re all set with food, water, and other supplies we’ve carefully curated and stored for just those sorts of situations.

We spend hours wargaming how we’ll handle bugging out from home, from work, and from any other locations we tend to be on a regular basis. Multiple routes are planned to several different bug out locations, both near and far.

We invest time, energy, and expense into learning a huge range of skills, from food preservation to firearms, herbal remedies to wild edibles.

But, here’s a real-life scenario: If you had an immediate and urgent expense of, say, $1,000, could you handle it? Let’s say your car broke down and you NEED that vehicle to get to and from work. The repair work will cost a grand, no way around it. Could you take care of it? How about $500? How about $100? [Note, these are hypothetical questions. I’m not really expecting anyone to post answers in the comments.]

The reality is that we are FAR more likely to experience a personal financial emergency than we are to see an EMP, nuclear war, or any of these other SHTF scenarios we talk about so much. Don’t get me wrong, the societal collapse stuff is fun to talk about but for many families, job loss truly is an end of the world scenario.

Food preps have assisted many families get through a lean period, no question about it. But, you can’t pay the electric or gas bills with your home canned chicken soup (unless you’re able to earn extra cash selling it, more on that later). Most gas stations won’t accept .22LR rounds as payment (cue the one or two people who have a buddy who runs a gas station….). Losing convenient Internet access at home can put a serious hurt on your job search, too.

I know from where I speak. Like many people, my family has gone through a couple of pretty lean periods. During one of those times, our combined household income for a full year amounted to barely $12,000. Our mortgage payment was about $1,000/month. Yeah, do the math. It was not a fun time. The stress is unimaginable for anyone who has not experienced it. And it affects everyone in the family. No matter how you try to hide it or cover it up, the kids know something is up. They pick up on the stress, the anger, and the frustration.

I’ve always advocated prioritizing your preparedness actions to take care of the things that will hurt you the most first. For example, if you’re lost in the woods, exposure to the elements is what could kill the fastest so you should always ensure you have an emergency blanket and fire starting supplies in your pocket before you go into the field, just in case. The same logic applies with the other areas of your life. Losing your shelter (house/apartment, climate control like heat or A/C) will have a profoundly negative effect on your life. Therefore, do what you can to ensure it doesn’t happen by making the rent/mortgage payments a top-level priority.

Yes, prepping does cost money, no way around it. But, if you’re putting yourself and your family at risk for financial ruin because of prepping, you need to rethink your approach. Don’t trade almost certain disaster for another one that *might* happen someday.

Debt Reduction

Many of us are drowning in debt, and it can feel like you’ll never be free of it. But, there are some things you can do to try and get ahead.

The first recommendation is to get a copy of your current credit report. The easiest way for most people is to use Annual Credit Report. You are entitled to one free credit report every 12 months from each of the three credit reporting agencies (TransUnion, Experian, Equifax). If you don’t want to do it online, you can call 877-322-8228. Consider ordering your report from just ONE of those agencies. In four months, get your report from the second agency. Then, in another four months, get it from the third agency. Keep this rotation going. This way, you can get updates as you go along, rather than having to wait an entire year for another report.

Go through the report line by line and look for anything amiss, such as credit accounts you didn’t know about. If you find anything awry, report it to the credit bureau immediately. You can also ask for a fraud alert to be put on your credit report. This is free and you only need to request it from one of the credit bureaus. As a courtesy, they will communicate it to the others. A fraud alert means that if you or anyone else applies for credit in your name, there will be additional steps taken to verify identity. There are numerous services, such as LifeLock, that can monitor your credit but if you can’t afford their fees, placing fraud alerts on your credit is a simple DIY approach.

Many credit cards offer some sort of monitoring as well. We have all of our credit accounts set up such that we receive either emails or texts letting us know when they are used. They work damn fast, too. Several times, I’ve placed an order on Amazon and before I’ve gone to another website, my wife is asking what I bought so she can log it if it is a business expense. Call your credit card bank and find out how to sign up for these alerts. If someone does somehow manage to use your card somewhere without authorization, you’ll know right away and you can take action before they do it again.

Pay your bills on time, every time. Just one late payment fee can really sock it to you. Commit to getting those bills paid on time. Many creditors now offer online payment arrangements, including scheduling payments in advance. Just make sure the money is in your account so you don’t end up with bank fees on top of whatever the credit card company will charge if your payment won’t go through. Paying on time will also serve to increase your overall credit score, which is a good thing. Among other things, that score impacts your insurance rates, which in turn affects your wallet. It will also affect the interest rates you are offered for loans, should the need arise.

Consider calling some or all of those credit accounts and asking if there’s anything they can do to help you get the balance paid down quicker, such as a temporary interest rate reduction. Every little bit helps, and the worst they can do is say no.

Use balance transfer offers only if they make sense AND you are absolutely certain you can fulfill your end of the deal. The way these usually work is you’re using one credit card to pay off another account, with the agreement that you’ll pay that balance in full within 12 months with no interest. But, if you don’t pay it off in time, then loads of interest gets dumped onto the balance, likely making matters worse than they were before.

Then there’s the Debt Snowball. This is a methodical approach to paying down your debt. It takes time, but if you are diligent, it works very well. Contrary to popular belief, this wasn’t invented by a well-known financial guru. It’s been around a lot longer than he’s been talking about it. My folks were trying to follow it back in the early 1980s.

Make a list of all of your debts and rank them by outstanding balance. Each month, pay as much as you can possibly afford toward the smallest balance, while still making at least the minimum due on everything else. Keep doing this each month until that debt is paid in full. Then, take the money you were paying on it and put it toward the next one on the list, adding it to the minimum you were paying. Lather, rinse, repeat. Like I said, it takes time. It also means not adding to the balances as you pay them off, which can be difficult.

Emergency Savings

It is imperative that you set up some sort of emergency fund. I know, that’s a whole lot easier to say than it is to do. But, hopefully some of those debt reduction strategies we just talked about will help you to free up some cash as you move along.

Think about it like this. When we talk about food storage, we recommend building it up a little at a time, right? Every extra can of veggies you sock away adds up. Same with money. Too often, we get hung up about saving money because we can’t figure out how to save a LOT of money all at once. That’s just not feasible for most people. Instead, focus on the nickels and dimes. Some things you can do include combining trips with the car to conserve gas, turning the thermostat lower in the winter and higher in the summer, and learning how to cook more meals from scratch so you can avoid buying as many convenience foods. Trimming the budget will hopefully gain you a little breathing room. Save all your spare change in a jug. When you can hardly lift the jug with one hand, cash it in at the bank. Put half into your emergency savings and spend the other half on something fun.

Consider limiting or outright quitting habits that have a negative effect on your health. If you smoke a pack a day, what, about $7 a day that literally goes up in smoke? I understand the difficulty, I smoked for 20+ years. Tell you what, though. If you want to take your family on a nice vacation, quit smoking now and put into savings every dollar that you’d have spent on cigarettes for a year. Even at $7 a day, that’s over $2500 for the year. How much food and other prepping supplies could you buy with just half of that?

Think about things you could do to bring in some extra income. Could you monetize a hobby? Many people are making a few bucks by selling their crafts on sites like Etsy. Early riser? There are still newspaper route jobs out there. While 99% of the “work from home” jobs advertised are nothing more than thinly veiled scams, there are a few legal ways to make extra cash while sitting at home in your PJs. Writing is one of them. If you have some talent or skill with the written word, there are bloggers out there who will pay you for writing for them. I know some of them use sites like Fiverr to find work. Books and magazine articles can also bring in dough. I have a friend who makes money on the side selling homemade soups, stews, and such to family and friends. If you have a decent vehicle that you can keep clean, maybe sign up for one of the rideshare services. The point is to sit down and brainstorm skills you have that could translate into a little extra cash each month.

The Death File

Few people like to talk about end of life preparations, but they are so important. My dad passed in 2019 and dealing with the paperwork side of everything was just a nightmare, as he hadn’t done much of anything in advance. He had a will, but it was literally less than two pages and didn’t really cover anything. It took months to sort out his finances and I’m positive we lost estate money in the process because there were things we couldn’t find. He had no life insurance, either. So, we had to pay for everything out of pocket, including several repairs to his home before we could get it on the market. And dealing with all of that meant we didn’t have the luxury of time for grieving.

Don’t do that to your family.

The Death File is a collection of documents your family will need in the event of your passing. The idea here is to have everything in one spot so it’s easy to find. Here’s a rundown of what you want in this file. Fair warning, this will be a pain in your ass.

Last Will and Testament – designates who gets what.

Deed Transfer on Death – if you own your home, this is a good idea, as it could save your family heirs thousands of dollars. Basically, it transfers ownership of your home to a specified heir without going through probate. Talk to an estate planning attorney about this.

Living Will – if you can’t speak for yourself regarding healthcare decisions, this lays out what you want done and what you don’t want done.

Power of Attorney for Healthcare – appoints someone to speak on your behalf for healthcare decisions.

Durable Power of Attorney – appoints someone to make legal decisions for you, if you’re unable to do so.

Burial instructions – what you want done with your mortal remains. This should also include any prepaid funeral expenses and such.

Account List – every bank account, retirement plan, credit cards, utilities, cable/Internet, gym membership, investments, everything. This will help a lot when it comes time for your heirs to close things down. Leave clear instructions as to when and how these bills are paid.

Logins – for every online account, email, social media, all that fun stuff. This gives your heirs the ability to go in and shut things down as needed, as well as respond to emails and what not that will trickle in from people who haven’t heard about your demise.

Contacts – most of us have two sets of friends, those we know in real life and those we only really know through online contact, like social media. Leave a list of people your family should notify about your death, along with their contact information. This should also include your employer.

Final Note – if there’s anything you’ve wanted to tell family members and other loved ones, now’s your chance.

Financial preparedness isn’t as fun as firearms or food storage, but I’m telling you right now, it is absolutely vital for a well-rounded plan. It is a sad reality that most of us weren’t taught fiscal responsibility in school, so we end up learning on the fly, often by screwing up and facing the consequences for doing so.

Additional reading – FEMA Emergency Financial First Aid Kit