There are many parts of being a Prepper that do not involve money, or much money. And skills and abilities are invaluable and arguably the most important part of preparing yourself for any disaster. But it would be naive for a prepper to decide that the stuff part of preparing is unnecessary, useless, or just something to be overlooked. No matter the scenario for which you prepare, the financial side of preparedness is unavoidable.
Finances, A Very Important Part of Any Prepper’s Life
With this in mind, it would seem that having our finances in order would be a very important part of any prepper’s life. And to this end, I have dedicated this article.
Have A Plan In Place
When preparing, you should already have a plan in place for the potential threats considered. That plan should be well thought out, on paper, and easily accessible. Having a plan is the first step. But from there, a well thought out financial plan is crucial to the accomplishment of the prepping goal. It would be simple for a person, whether new or seasoned in the preparedness arts, to dive right in, start buying gear (whether necessary or otherwise), and end deep in debt, or at very least unable to make ends meet each month.
To Be Effective, Live Without Debt and Prep Your Finances
To be as effective (and not only in preparedness) as is possible, you must prepare your finances. In my humble opinion, the best goal is to live without debt. Either way, prepping your finances is crucial for prepping efficiency.
In a Financial Meltdown, No Worry of Collections Man
This is effective in not only many TEOTWAWKI scenarios, but it is also practical in a daily application. Maybe your idea of the impending doom is a financial meltdown. This could be worldwide, American, or even a local or industry related issue. No matter which of these you believe may come, being debt free gets you started in preparing for that situation. Were some massive financial calamity to occur, whether personal or shared, you would have no worry of the collections man knocking down your door and repossessing your cars, your home, or some other items you may have of value.
You’ll Have More Money to Prepare For Your Version of Doomsday
Even if you are not preparing for a financial disaster, you will have much more money to prepare for your version of doomsday. Let me give you some practical examples.
There were some studies in 2018 that showed the following:
1. The average American household has $16,883 of credit card debt.1
2. The average American household pays $1292 per year in interest.2
3. Assuming a 2% payment, that’s about $340 per month in credit card payments.
4. The average monthly payment for a new vehicle is $515 per month3
5. The average monthly payment for used vehicles is $371 per month.4
Wasting Valuable Resources on Paying Back Credit Cards and Car Loans
If you are an average American household, you are paying over $700 monthly on card payments and one used car. If you have an average loan on two used cars, you could be paying over $1000 monthly. Granted, depending which study you read, these numbers may differ. But the point is the same. If you are in debt, you are wasting valuable resources on paying back credit cards and car loans. This doesn’t take into account the requirement to carry full coverage insurance and any other potential cost associated with simply having a loan.
Credit Card Interest
As another example, “according to CreditCards.com, the average credit card’s interest rate is 15%. At the minimum payment of $189, it’ll take 10 years and a month to pay off that $4,717. The total payments would amount to $22,869. That’s an $18,155 cost for a very small loan.”5
Having Debt is Very Expensive
Having debt is very expensive and costs people resources that could be used to otherwise prepare. How much in the way of food stores, ammunition, medical and first aid resources, and other vital preps could be had with an extra $400 per month? How about $1000 a month, or more, depending on your monthly payments?
Living Debt Free is Way To Be
I firmly believe that living debt free is the way to be. Even purchasing your preps with credit is a bad idea. You end up paying significantly more than what the original cost in cash would have been. The example above gives a great illustration for that.
More Than Anecdotal
“Impossible” you may say. “It’s not possible to pay off that much debt and still have money left over.” Fortunately, this idea is more than just anecdotal for me and my family. A few years ago, my wife and I decided to pay off everything. Just this past March, it finally happened. We are completely debt free. Two years ago we had $4,000 of student loans, $12,000 of car loans, and we also had credit card debt on top of that.
Before assumptions are made about our income, we live on less than $30,000 per year for our family of five. Reaching the place of being debt free is very doable. And it will make preparedness much more doable and much more enjoyable. I no longer have to worry if this prep I’m buying will put us in a financial bind or make next month too tight to bear. I can finally afford to play around with ideas I have, instead of settling for this month’s left overs.
The Operative Question: How?
The operative question becomes “how?” How do I do this…get out of debt and live debt free? And the answer is more simple than you may believe. You plan! Just as with other aspects of preparation, you need a detailed plan.
Before you start paying things off and before you start buying new preps, you need to have a budget. If you do not already have a written budget (on paper or a tablet or phone), you need one. This is probably the most important piece of advice I could give.
Know How Much Money Coming In and Exactly Where Every Penny Has Gone
Just as keeping an inventory of ammunition, a list of food, or other catalog of important preps, you must keep a budget. You need to know exactly how much money you have coming in and exactly where every penny has gone at the end of the month.
If you are able to track where each cent went, you can then adjust your spending accordingly. This is especially important, because you can see problematic spending trends and correct them. You would be surprised how quickly a few trips to the corner convenience store and fast food joints each week will add up.
A Better Sense of Financial Security
Paying more attention to your finances will allow you to notice when bills go up, stop paying late fees, and save more money (or use more on prepping). Generally, you will have a better sense of financial security.
Fees Are a Prepper’s Enemy
The unnecessary fees are especially important. Fees are a prepper’s enemy! Having worked as an insurance agent for a short time, I have personally seen how getting behind of your finances, instead of making your finances work for you, can create a cycle of late fees and financial problems. I’ve seen people every month pay a $30 or higher late fee. Just one bill late each month could be a lost $400-$500 per year in fees alone!
You may find yourself in a similar position. It’s not good to continually find yourself paying late fees, overdraft fees, and other fees constantly. The first step is a budget.
Know If You Are Overextended
A budget allows you to know if you are overextended or not. A budget allows you to know if you can afford this prep or that, and also let’s you know how long you will need to save for whatever the prep is you are looking at next. Additionally, it allows you to see how to do this without putting yourself in financial jeopardy.
Sticking To It
Just as important as having a budget is sticking to it. This may require talking it over with your spouse or significant other. But the spenders must commit to staying true to the budget or it will not work. There are plenty of budget programs and templates out there. You can have an excel spreadsheet, one of the many budget apps available, or if you prefer, an old school paper budget book or financial planner.
However you do this, you must stick to your budget. This will require discipline. It will take willpower, but it is worth it.
The budget is the core of the prepper’s financial plan. This plan is what will allow you to be as effective and efficient at collecting and affording the necessary preps for your overall preparedness plan.
Tomorrow, we will move beyond having a budget and get into evaluating whether you choose to try for a debt free life or not.
SurvivalBlog Writing Contest
This has been another entry for Round 78 of the SurvivalBlog non-fiction writing contest. The nearly $11,000 worth of prizes for this round include:
- A $3000 gift certificate towards a Sol-Ark Solar Generator from Veteran owned Portable Solar LLC. The only EMP Hardened Solar Generator System available to the public.
- A Gunsite Academy Three Day Course Certificate. This can be used for any one, two, or three day course (a $1,095 value),
- A course certificate from onPoint Tactical for the prize winner’s choice of three-day civilian courses, excluding those restricted for military or government teams. Three day onPoint courses normally cost $795,
- DRD Tactical is providing a 5.56 NATO QD Billet upper. These have hammer forged, chrome-lined barrels and a hard case, to go with your own AR lower. It will allow any standard AR-type rifle to have a quick change barrel. This can be assembled in less than one minute without the use of any tools. It also provides a compact carry capability in a hard case or in 3-day pack (an $1,100 value),
- Two cases of Mountain House freeze-dried assorted entrees in #10 cans, courtesy of Ready Made Resources (a $350 value),
- A $250 gift certificate good for any product from Sunflower Ammo,
- American Gunsmithing Institute (AGI) is providing a $300 certificate good towards any of their DVD training courses.
- A Model 175 Series Solar Generator provided by Quantum Harvest LLC (a $439 value),
- A Glock form factor SIRT laser training pistol and a SIRT AR-15/M4 Laser Training Bolt, courtesy of Next Level Training, which have a combined retail value of $589,
- A gift certificate for any two or three-day class from Max Velocity Tactical (a $600 value),
- A transferable certificate for a two-day Ultimate Bug Out Course from Florida Firearms Training (a $400 value),
- A Three-Day Deluxe Emergency Kit from Emergency Essentials (a $190 value),
- A $200 gift certificate good towards any books published by PrepperPress.com,
- RepackBox is providing a $300 gift certificate to their site.
- A Royal Berkey water filter, courtesy of Directive 21 (a $275 value),
- A large handmade clothes drying rack, a washboard, and a Homesteading for Beginners DVD, all courtesy of The Homestead Store, with a combined value of $206,
- Expanded sets of both washable feminine pads and liners, donated by Naturally Cozy (a $185 retail value),
- Two Super Survival Pack seed collections, a $150 value, courtesy of Seed for Security, LLC,
- Mayflower Trading is donating a $200 gift certificate for homesteading appliances, and
- Two 1,000-foot spools of full mil-spec U.S.-made 750 paracord (in-stock colors only) from www.TOUGHGRID.com (a $240 value).
Round 78 ends on September 31st, so get busy writing and e-mail us your entry. Remember that there is a 1,500-word minimum, and that articles on practical “how to” skills for survival have an advantage in the judging.