Showing posts with label investing. Show all posts
Showing posts with label investing. Show all posts

Thursday, October 1, 2015

RE: Economy Watch with Bayou Rennaisance Man AKA What To Do With Money Today?

In Economics Watch our friend Peter talked about some applicable news and his current actions. In many ways it is a lot like my post a month or so back. In order of Peters comments:

-The housing market. Well this depends a lot on how you look at it. As an investment I would say there is considerable risk. As a way to meet your basic needs for housing well that is another discussion. If I was able to pay outright for a small cabin or cottage on a little bit of land that would be high on my list of things to do. I would rather have a cabin on a couple acres than live in a rental place and have 50 or 100k in the bank.

-Peter put his retirement funds into cash. I think the need for this extreme principle protection (At least as cash, now of course big mac's might cost $100 but there is risk in everything) may make sense if you are closer to the age where you will be using those funds. If you are younger I am less sure that trying to time the market then catch the knife is a sound move vs just riding the wave. You will have to make your own decisions.

-Precious metals and cash on hand are both pretty common sense measures.

-Storage of precious metals at an outside non bank vault certainly has potential. I would have to look into it some more.

Also of course as River Rider mentioned in my previous post buying those big ticket items you have been putting off, replacing tires on the family hauler before they are totally worn out, etc are good ideas.


Monday, May 27, 2013

Investing These Days

Lately I have been looking at where we seem to be going and questioning some things. How we can best prepare for the realistic range of potential scenarios in a balanced way. Of course I am not a financial adviser or a broker or anything like that. If you choose to do something I am doing or follow my thinking correctly or incorrectly any consequences are entirely on you. Consult appropriately licenses professionals or do your own research then make adult choices.

Between low earnings on secure investments (that are really negative after inflation) and my concerns for the stock market I am less and less sure that stocks, funds, etc are the way to go. I want to go a little outside of the box here. So in addition to things that you can reasonably expect to make money we will talk about ways to work it from the other side by saving money, which will give you more disposable income for other things.

Some survivalist type folks say you should have X amount of food, guns/ ammo, medical stuff, etc all before investing. Of these people some have a vested financial interest in you buying all of this stuff right away; they may even conveniently sell the stuff they recommend! Other people are well meaning, in fact they likely practice what they preach, but arguably are misguided.

The Dave Ramsey type approach lets you mass efforts putting a lot of money towards one goal. This can have an advantage for some people as they can see something getting done which is encouraging as well as rewarding. So the idea is that people are more likely to keep going. If you need that kind of reinforcement then stick with a massed type approach.

Financially we do things in a pretty compartmentalized way. Of course we have normal household expenses. A goes to fun stuff, B goes to precious metals or food, C goes to savings, D goes to retirement investing, etc. The downside of this approach is nothing happens that fast. The up side is that we are working on a lot of things at the same time in a balanced way. It can get a bit confusing but overall this approach has worked really well for us.

Along the lines of compartmentalization I think most people need to be saving for the long term NOW. At least 10% of take home with 15% being even better. The reason I say this is that it is always easier to save tomorrow, until tomorrow. First you are just starting out, then you want to have kids, after that it's about time to buy a home, the point is there is never a great time to get started. It will always be easier tomorrow so you might as well just start today. 

The biggest exception to starting long term savings now that I can think of is paying off high interest debt. Putting money away that might be making a 3-4% while paying Visa 19% does not make sense. Along these lines stop charging anything you will not pay off that month (we use a CC for airline mile, it works fine because we never carry a balance) then throw all available money at whipping those nasty high interest debts.

[Begin tangent. Debt is a self perpetuating cycle. First and foremost you are fundamentally paying more money (interest) to have a hamburger today and pay for it tomorrow. The idea of paying more for something you currently cannot afford is silly if you think about it. That whole credit industry is based on people thinking more in terms of instant gratification and how much money would need to be paid monthly, not the total amount an item will cost.

Even beyond interest debt promises your future earnings. Folks get so stretched out paying for all sorts of stuff that they cannot save up to pay cash for stuff. They cannot save up for a new car because they are still paying for the car that is in the driveway now. Why people are mentally unable to save $300 a month to pay cash for a car but can pay $300 a month on a car note baffles me but that is another discussion.

The only way for people to get out of this debt trap (albeit a trap largely of their own making) is to stop borrowing and start paying things off. Since you will still need to live and inevitably things will come up that you will pay cash for, the money to pay off this debt will have to come from increased earnings or living cheaper. Since most people cannot easily earn more money living cheaper is the way forward to get out of debt. End tangent]

Education that will increase your earning power or make your income/ job more secure is always a good place to put money. First nobody can take it away from you. A bunch of digital money could decrease in value or, in an extreme case, vanish tomorrow. On the other hand that same money put into a degree or certification is not going away.

Now I am not against studying Eastern European literature from the middle ages, gay panda bears, apprenticing yourself to a buggy whip maker or whatever. By all means do that stuff. We are however going to focus more on skills/ degrees/ certifications which will increase your earning power. As an added bonus if these skills could transfer to a collapse type scenario that is even better. For whatever it is worth if I had it to do over I would have studied something medical.

Skills that will save you money. This muddles with the last idea but to me it is to a smaller degree. You are not going to spend a decade becoming a journeyman plumber so you can fix the toilets in your house. Nor do you need to. Learning a little bit about plumbing so you can fix the toilet, a bit about carpentry so you can fix the porch, etc is a good option. This may be more of a skill thing and less of an investment thing parse. Though arguably you would be investing your time helping a buddy or spending Saturday morning in one of those home depot classes, etc.

Stuff to use your skills. I'm not so much talking about buying lots of tools, gear, equipment, etc in case you might need it at your home/ homestead. Of course having stuff you use regularly makes sense. Taking the DIY have the equipment mentality extremes can not make financial sense. Example a tool that costs $300 that you might use 1 day a year. You can probably rent that tool for $25 an afternoon. Considering there are many tools you might need occasionally that would be a lot of money.

What I am talking about is more along the lines of having the stuff to either do what you do at work as a side business or to transition your business in the event of a collapse scenario. A welder or mechanic getting enough tools/ wending gear/ etc to run a little side business makes sense. I would strongly suggest doing this over time, with cash, as deals come up.

(Guys borrowing money to get side businesses going often end up in a bad spot. They have to pay the loans as well as any fees or bonds even when they are not working. They cannot transition easily to doing the side gig full time, because it is not consistent, yet the side gig's development is stalled by their day job. Not a good spot to be in. Just pay cash that way if the equipment doesn't make any money it is OK. Also the hard truth is that most small businesses fail. You can have a lot of stuff fail if the costs are your time and $500 in ads, business cards and incidentals. However you cannot have many fail if starting them involves 20k in start up money or loans.)

Some spare disposable stuff would be awful handy. Carpenters need nails, plumbers need pipes, glue, soldering stuff, fittings, etc. You get the idea

Gold- In general I like PM's as a hedge more than an investment. However these days gold under $1,400 is probably a deal with a solid upside.

Silver- Same disclaimer as gold (generally more of a hedge than an investment) but under $23 an ounce with coins/ rounds in the 24-27 range depending on make silver is an excellent deal these days. I think there is a real chance to make a profit (above inflation) in silver in the next couple years.

Land- Raw land is a fine hedge against inflation or economic shenanigans. Land that brings income via timber, rental or crops is a solid investment. For most situations the economics only make sense if you pay cash for the land. Most passive/ rental type uses of land aren't going to consistently make enough money for borrowing (which we aren't a big fan of anyway) to do it to make sense.

Real Estate- Folks who can pay cash are going to make a killing in real estate during this whole mess. There are some real deals out there. I said pay cash intentionally. The real estate rags to riches by borrowing money to get a ton of properties you rent out, each of which pays a tiny bit more than the loan and in time become rich as the property appreciates concept has shown to be utterly flawed. At best it is a real high risk/ high reward proposition. Your individual skills matter a lot but you are at the mercy of the market. Lots of people lost everything doing that.

A person who could get bargains on 2-3 modest rental properties in good neighborhoods could have their money in a safe place, earn a nice little income and be positioned to do well if/ when the market bounces back.

Homes- By this I mean the a home you live in or I guess a piece of land you live on vs something purchased for other than your dwelling. I do not really look at this an investment parse. The reason is that 1) A home as used by most of us does not bring in any money and 2) It fills our need for a place to live. If your home was suddenly worth more we would probably not sell it because we need someplace to live and other houses would probably have risen similarly in price. Also we would look at the traditional idea that homes increase in value and thus are a good investment very differently if inflation over that same time frame was considered.

I am however a big fan of getting a home as a step toward financial security. Since we need to live someplace it makes more sense to own that place than pay somebody else indefinitely for the privileged of living in their place.

Dave Ramsey talks about the "100% down" plan which is saving up till you can pay cash for a house. The issue with this plan is you need to live someplace while doing all of that saving. This plan would make sense if you are able to live very cheaply with family or in a very modest place. However if you are paying $750 rent instead of a $750 mortgage it is a bad plan. While I'm not in love with the idea of a mortgage the only thing less palatable is PAYING SOMEBODY ELSE'S MORTGAGE. Granted only a small amount of early mortgage payments really goes to principal but it's better than nothing.

The primary benefits of buying then ultimately paying off a home from my perspective are first that it locks in your biggest single expense. Rent could go up drastically (or really it would probably be the value of money going down) but a fixed rate mortgage is going to be the same. Ultimately when you pay off said mortgage your biggest single expense is gone.

Just as importantly it puts you in a very secure situation. This security is significant in my opinion. By eliminating that expense you can reassess overall family expenses. Maybe it means you can save like crazy. Maybe it means you can work a bit less and put that time into other things. Maybe you will decide to finally take the plunge to work for yourself. 

If something happens like a job loss or whatever you could live really cheap without worrying about becoming homeless. All you've got to do is come up with tax money once a year, fuel and food. If you have a home with a bit of land where you can grow some food that is even better.

Anyway there are probably some more useful things to mention. If I think of enough of them I'll do a part two. 

Going a bit Alpha Strategy and purchasing things you know you will use might not be a bad idea also.

Thursday, June 7, 2012

Preps or Investing?

Our longtime invisible friend Rourke wrote a post that got me onto this topic. Taking a topic somebody else came up with and giving my spin on it is a pretty good way to have a hitting from the tee kind of blogger day. Anyway this topic comes up all the time.

In some circles you can't be a real survivalist unless you have cashed our every investment you have to buy a bunch of buckets full of wheat and extra pants. Clearly every dollar you have will just burn up in a hyperinflationary disaster so the only reasonable thing to do is to get it all out right now, fees be damned and turn it into good tangible's like buckets full of wheat and lots of extra pants.

If you haven't picked it up I am really not a fan of this strategy. There are so many reasons for this. First if you can't see a reasonable (heck probably likely) chance that eventually you may get old and not be able to work consider the possibility that you are a fool. We could debate investment strategies (and will get there later) but fundamentally you need to be saving for your future. Buckets of wheat will not put gas in your car or pay property taxes in 40 years when you can't work.

The thing about experts is that they tend to be a bit fixated on whatever they are an expert in. This makes sense as people don't tend to get really good or attain significant status in areas they are ambivalent about. The amount of time a championship marathoner or powerlifter thinks is reasonable to spend exercising probably differs from most people. A guy who writes for Car and Driver probably puts more of his money into vehicles than most. An uuber gunnie might think a super custom pistol that costs 2k and a tricked out uuber AR that costs 3k and wears another 3k in accessories are totally reasonable. The point I am getting at is that as a sort of jack of all trades (vs just a gunnie or whatever) we need to look at the big picture. Looking at the big picture means we cannot always shoot the same guns as a guy who just does 3 gun tourneys or whatever. It should be pretty obvious that letting the guy from Car and Driver choose your carry piece is about as smart as letting some preparedness guru choose your investing strategy or the champion marathoner pick your next family vehicle.

Maybe more to the point a definite this or that mentality comes up here which I think is ridiculous. There are almost infinite ways you could spend your money so it certainly does not just come down to preps or investing. It is better to look at the big picture. You could invest $500 a month or have a boat with a payment. You could spend $300 a month on preps or have the big cable package and go out to eat a few times a month. The options are endless which is why this whole argument is kind of foolish to me.

Note that I am talking about taking money that was allocated toward longterm savings (in whatever form) and putting it into food storage or whatever kind of survivalist stuff. Folks who decide to go all contrarian/ hard money are a different sort of discussion. They may be right or wrong but this makes much more sense as they are still saving for the future but in a different way. I know some folks who are seriously contrarian in their investment plans. They keep liquid savings in PM's and put the rest of their money into various things like specialized equipment for businesses or real estate or small businesses that earn money. It is worth noting that lots of "contrarian's" mess up on the part where the point of getting something is that it makes you money. A NIB .44 magnum or gold coin tucked away in a safe does not get you interest or pay a profit. A lot that you rent out to somebody or a share of a local business can make a profit.

However tempting it is to raid your investments to get a jump start on preps I think it is dangerously short sighted. The world MAY end but assuming you do not take an untimely dirt nap you WILL get old. I cringe every time some survivalist blogger/ author/ expert recommends this approach.Taking a couple grand from your liquid savings to buy some basic stuff is not a terrible idea but cashing everything you have saved in your entire life out to buy some stuff you may never need is just not a smart thing to do. A far preferable alternative option is to leave your retirement money alone, cut some stuff you don't need anyway from your budget/lifestyle and use that money towards your preparedness goals. It isn't as fast or easy but you end up in a much better place. Personally I look at the two as entirely different streams of money for different purposes. My retirement account is for if things go just fine and our preps and stores are for if they don't.

Anyway those are my thoughts on that. I am interested in hearing yours.

Sunday, March 11, 2012

Pre 33 US Gold Coins and Pre 1899 Guns

Commander Zero wrote a great post on Pre 33 US Gold Coins and Pre 1899 Guns.
My thoughts are as follows:

A guy recommending pre 33 gold coins who conveniently happens to sell pre 33 gold coins viously has a obvested interest. The people who suggest going this route for gold almost without exception have some sort of financial interests in the mix. Also it comes at a sharp premium as much of this gold falls more into the collector area (particularly the slabed and graded coins in decent condition) than the bullion side. In other words the prices are far beyond a coins metal content.

My personal opinion is that the whole thing is a lot of worrying for nothing. Let us just say that a totalitarian government appears and decided to get gold grabby to say hedge an unstable fiat currency. Seizing gold in big commercial vaults like the ones in New York would be practical. However finding the records from every company that sells precious metals seems like a bit of a stretch. I can't see a SWAT style search and confiscation mission to find every single Krudgerrand or gold Eagle that has been sold. More to the point gold is, at least in my observation such a nitche thing that it is really not an issue. Even if it happened I can't see a bunch of goons who are looking for gold coins seeing your pile of gold coins and accepting the explanation that they are collectible and thus exempt from confiscation.

As to pre 1899 guns to me it is much of the same. The kind of legal loophole they seem to exist in is not one I would be comfortable relying on as my only protection. That could be benefitial during current times in places that are not firearm friendly like New York City but I am not so sure about it. Cops and prosecutors tend to be pretty good at knowing obscure laws that work in their favor but not so good at knowing or following ones which do not work in their favor. Also it is important to note that these guns do not exist under FEDERAL LAW. While I am unsure of it I suspect just about anything more dangerous than a super soaker probably counts as a gun in New York. If there is any relatively recent case law on this I would be interested in seeing it. Maybe some felonious gangbanger in NYC was caught carrying an old Colt Peacemaker and got a pass because of this legal loophole but I really doubt it. Also we have ignored that these guns are very old and finding functional ones at reasonable prices might be problematic. Additionally the logistics involved would probably be a nightmare. If collecting old guns is a hobby you enjoy then pursue it.

However if one has some sort of dark scenario in their head about gun confiscation or whatever I would recommend that instead of getting some pre 1899 guns they move to someplace that doesn't suck and buy some modern guns from private parties. A guy who lives in Alabama or Wyoming and bought an AR or an AK at a gun show is without a doubt better off than one who owns a revolver from 1892 and lives in New York City or Washington DC. Also revisiting the point from gold I can't see gun confiscating thugs who are searching your home passing by a pre 1899 Mosin Nagant rifle, a Winchester 1897 shotgun and a Smith and Wesson 44 special revolver of the same era based on your articulate explanation of their unique legal status.

In closing I think that acquiring old gold coins (at collector, not bullion prices) doesn't make sense and is really only hyped by those with a vested financial interest. As to pre 1899 guns as a way to discretely own viable firearms seems to have a lot of inherant problems and thus likely isn't worth the hassle.


Saturday, November 5, 2011

Crazy Market and Appetite for Risk

I bought a little bit of silver about a week back. I was happy that spot was down a buck, since then spot is down another 9 dollars. I sure bet right on that one. It is probably a nice “dip” if you didn’t blow your wad a week ago like I did. Stocks are down significantly as well. I think it is pretty apparent that Europe is nowhere near done with its fiscal troubles and a Greek default is getting more and more likely.
I don’t know what will happen but we are probably in for a wild ride.

Interestingly I bought stocks awhile back. I do not regret that decision. On the long timeline I am looking at stocks are probably (more so in certain areas) a bargain. However in the short run I do not have a clue what is going to happen. Interestingly a co worker recently bought a bunch of stock on credit in the last couple of days. He figured they will bounce back and he will make some easy money. I wish the guy the best.
That got me to thinking about appetite for risk. There is of course a definite relationship between risk and reward or more accurately put potential for rewards. Also leverage (which we normal people call debt) lets you theoretically raise profits and when it works well it works very well indeed. However when it works badly things come crashing down like a house of cards. Instead of your plan going to heck, your plan goes to heck and now you have to service this debt.

I hesitate to say what is right or wrong for anybody. It depends almost entirely on what you are comfortable with.  I’ve heard it said that if something will leave you up worrying at night you should not put money into it and that makes sense. There is definitely a human component there. I have some appetite for risk as I invest in stocks and relatively more risky areas like energy and in developing markets. However I do it with cash, cash that while it would not be ideal I can afford to lose. Worst case if I take a big hit (especially now while we are relatively young) we call it an expensive lesson and move on.  Personally for me it is about a specific pool of money for a specific thing.  Also since we have some of our bases covered by putting some money away for emergencies and not having debt we have more options and can afford to put money toward something with an element of risk. The money we need to feed ourselves if my income is disrupted is not sitting in some stock that might be wildly down (or up) at any given time.

Thursday, May 19, 2011

Times and Money

I have a friend who sends me a pretty neat newsletter about our economy, commodities, stocks, etc. I have also been doing some reading about things and while doing various boring tasks or sitting in meetings I have some time to think.
The situation of the average American working type middle class man is going down. There are numerous reasons for this but the endstate is that real wages are droping drastically at least if compared to post WWII standards. At best the dollar value of wages are staying the same and prices are drastically rising. It is hard to quantify but a buck doesn't get what it did just a few years ago.
I don't think anyone would dispute that this is a bad time to be heavily in debt (or in debt at all except maybe a modest mortgage). Also it is a good time to be holding cash. Cash is truly king right now. However at the same time we are feeling real inflation as unlike the CPI you and I have to buy food and fueland safe (maybe not FDIC insured but very minimal risk) investments are earning almost laughably low interest rates.
To me the point is that you want to get as unleveraged (it should say something about a business model that supposed genuises use which doesn't pass home finance common sense) and be in a position with some cash reserves. You need some cash set aside to keep your situation healthy and having some to take advantage of opportunities would sure be nice. It could be a huge dip in the price of a long term stable stock or precious metals or whatever. Also there are those occasional awesome deals on this or that (please buy weapons, gear, PM's etc not skidoo's and such) which come up when lots of folks are having hard times.
PM's have gone crazy recently. I don't know what is going to happen with that one. They have gone up on such a massive scale that I am unsure they will go far higher. Then again some weird economic stuff has been going on. Like most markets buying in big when it is high is a pretty solid way to not make a profit. However physical precious metals have some benefits of their own as a form of insurance and alternative currency. If you are buying as a hedge or insurance it makes some sense to buy but otherwise I am less sure. For people who own PM's past their core holding level the time for profit taking is probably soon. I guess you pays your money and takes your chances. I would be hesitant to go to big into PM's. Figure out a % of your liquid assets that can go there and stick with it.
Pay down and then off debt, save and invest, it isn't sexy but still works.

Monday, December 20, 2010

Financial Preps for WTSHTF or Your Own Personal TEOTWAWKI

Preparing for the worst can be daunting. It is also easy to focus on putting back several rifles, cases of ammo and everything else that goes along with it (Now you need some optics, a safe, spare mags, lights, another safe, etc.), or other emergency gear that we could spend hours listing. Let’s face it – acquiring the cool gear is fun! It’s also one of the most often talked about topics in this community. People like their toys and that’s perfectly fine. But it’s only one leg on your stool. Food and medical preps are covered to a lesser extent but still fairly regularly. Something I feel that is of equal importance, though not near as fun to discuss, is financial security.
I think many people avoid the financial preparedness topic because it can bring you back to reality: sometimes it’s hard to find enough to go around. How can you pay the bills, buy your beans, bullets, band-aids and still find money to save when disaster seems to be looming over the horizon? You better make room for it. That EMP may happen tomorrow or your small town might look like “Jericho” (TV series) next week, but I guarantee you sometime this year your own personal TEOTWAWKI will happen if you don’t put some cash back now. It could be a transmission that starts slipping, a layoff, an ER visit – Murphy will throw something at you when you least expect it. So where do we start?

Rotate Your Stocks AND Your Priorities

Several thousand rounds of center-fire rifle ammo and several reliable battle rifles for you and the family is a noble effort, but not at the expense of everything else. Set up some sort of system where all of your goals are slowly being met. One example can be found below:

Discretionary Spending Schedule:
Week 1: Guns and Gear
Week 2: Medical Supplies
Week 3: Trip to the Local Sam’s or Costco for Food Stocks
Week 4: Cash, Savings or Silver/Gold

Rinse and Repeat Next Month

It doesn’t have to be as rigid as the above example. I grocery shop at Wal-Mart; I’ll throw a box of 9mm and something for the first aid kit in the buggy every week on the grocery trip. I also will put some money back every week to slowly build our reserve. There is no right way to do this, find something that works and stick to it.

So, you’ve got some money set aside for financial preps. What now?

Cash is (for now) Still King

The manager at your local grocer is going to be pretty darn reluctant to let you leave the store with a gallon of milk for a 1964 quarter. Sure he may exchange it for some cash in his pocket but I bet you’re not going to get the most recent spot price from this transaction. If the power is out from the ____ (insert your regional disaster of choice – hurricane, snow storm, earthquake, etc. - here), chances are that credit card is not going to cut it either. Cash still has its place in your safe. One week’s paycheck is probably a good start to get you through most bumps in the road, especially if you already have at least a few weeks of food and a good first aid kit (you do, right?). For larger bumps in the road…

Make a War chest

Not literally, but treat your savings account with the same passion as you would a chest full of sharp pointy battle implements. A lot of folks say aim for 2-3 months worth of expenditures (everything from the mortgage down to gas for you vehicle). My wife and I are taking it a step further and have set the bar at 3 months worth of income (big difference). This is going to take some people longer than others; that’s OK. As long as you are making progress then don’t get discouraged! If an emergency comes up one month and it cuts your war chest in half then look at it like this: Success! You took a hit on the chin and are still standing! Our strategy has another benefit; life is all about timing. Opportunities come and go; if a great deal comes your way on a piece of land or something else and you have the spare cash to jump on it, do it. Just don’t look for excuses to raid your war chest. Make sure it is a worthwhile investment. Then proceed to build your savings back up immediately. Get your savings built up and then start considering…

Silver and Gold

How much precious metal (PM) is enough? It all depends on whom you ask. Just remember, PMs aren’t an investment (well they can be, more in a minute), they are insurance. Investments grow your wealth. Over the long haul, PMs will simply store your wealth. Short-term plays on PMs can be done to turn a profit, but buying and selling coins is the least efficient way to do it. You might as well trade paper gold on the stock market, and that’s not why we’re here. I once read a very interesting article that stated that an ounce of silver today buys approximately what an ounce of silver bought 2,500 years ago (I believe their example was loaves of bread). Try that with any fiat currency in the world! (Well, you can’t – it never stays in circulation long enough) We want to hedge against inflation. PMs are our insurance against the failure of our currency. Whatever currency becomes the world reserve when ours fails, silver and gold will hold value in that denomination as well.

My personal goal would be to eventually (long term) have 1 year’s salary in PMs. I think an 80/20 gold/silver holdings ratio is reasonable, but do your own Due Diligence and find what is right for you. You will probably want to start with silver, but at some point you have to switch to gold because silver gets bulky quick. I’d recommend starting with Pre-64 junk silver and 5-10 oz. bars. If you run across a good deal on some silver eagles, buy them! I bought some silver eagles last week for under spot! How did I do it? I deal solely with a local merchant who I trust completely and him likewise. I can’t stress the importance of dealing locally. If I find a 1965 dime (no silver content) in my roll I bought from my local guy, he graciously exchanges for a silver dime. No questions asked. Try that on E-bay.

I won’t talk about gold much because if you invest in silver first, by the time you are ready to dive into it, you will be fairly savvy with PMs; you will have done extensive research, right?

Now that we’ve covered some financial ground, let’s see if we can change the way we look at our other areas of preparedness to save us some money.

Streamline Your Gear

I have approached my firearms purchases in a manner that reduces the amount of different ammo we have to purchase. We have multiple pistols and carbines serving multiples purposes chambered in 9mm. We have also chose to standardize 12 gauge and 7.62x39.

A case of ammo in any of the above 3 calibers has the immediate benefit of being utilized by multiple firearms. Stocking up is much easier and cheaper.

Of course we have other firearms that are not in our standard calibers, but we don’t stock ammo for them like we do for the standard calibers. In theory you would want not only the same caliber, but the same brand as well. I say “In theory” because this is a tough one. In practice everyone in the family will have different tastes so it may be hard to convince everyone that carrying Glock 19s is in their best interest when they cringe when they have to hold the ugly bugger. A good goal would be to aim for full uniformity, and settle for caliber uniformity.

Another cost saving measure is go out and buy a .22 rifle and pistol if you don’t already have one as soon as it is financially sound to do so. This will obviously save you countless money over the years.

This doesn’t simply go for firearms. Try to buy battery-operated equipment that takes the same size batteries. Once again, this makes stocking up much easier and cheaper.

Make a Budget

The word “budget” can strike so much fear in a man, you would swear Hessians had just breached the privacy fence and are now occupying the pool house. It doesn’t have to be so scary, however. Your budget can be as loose or strict as you like, as long as it serves its purpose. One of the main benefits of the budget is it forces you to think through your expenditures.

I create a simple budget on spreadsheet that first tallies our income for the month, and then deducts all of our estimated expenditures. This allows me to determine our surplus and project what our end of the month balance should be in our account. If we surpass our goal, I do a little dance and then try to determine where I’m overestimating. If we miss our goal, we take step back and determine what went wrong. I don’t subscribe to the Dave Ramsey School of budgeting (budget down to the very last penny) because to me it seems like a lot of effort for not much of an improvement over my simple system. It works for many people, so I’m not knocking it. Find something that works for YOU.

Trim the Fat

Often people tell themselves that they just don’t have the money to save (you may even hear them say this on their brand new iPhone). They’ll say maybe next year, or after the house/car/boat is paid off or the kids are older/grown/etc. – that’s procrastination. One day you may wake up retired and struggling to make it; let’s avoid that outcome.

Internet, home phone lines, cable TV, cell phones, new vehicles every five years, too much house, etc. are all traps people fall in. I won’t tell you to turn off all of your services and move to the hills, but do take a rational look at your expenses and determine what you can reasonably cut or downgrade to allow you to put back some money. One thing I do recommend that has saved me over the years is brown bagging your lunch. Learn to love it. In one year brown bagging can save you enough money to buy that AR you want (Or – several pounds of silver).

Prepare for TSDTWAWKI (The Slow Decline of the World as We Know It)

TEOTWAWKI has happened for thousands of years, but the sun still rises in the east and the birds still fly south for the winter. If you were born in 1910 in Germany and lived 70 years, I’d say you lived through several TEOTWAWKIs (Weimer Germany, WW2, a literal divided nation, etc.). Our grandfathers and great-grandfathers had it hard at times; but they raised families, grew old, and hopefully were able to enjoy some sort of retirement after decades of work. The world may not end tomorrow, but it may slowly change for the worse for the rest of your life. Don’t rely on entitlement programs in your retirement years. Stock up on beans, bullets, band-aids and bullion, but also contribute to your 401K (at least get your company match, if offered), sock away some cash, buy real estate – diversify. Do not over-leverage yourself in our economy, but at the same time don’t rely solely on tangibles as a store of your wealth.

A true survivor plans for all contingencies. His portfolio is as diverse as his options. He buys cases of ammo and rolls of old coins, but he also contributes to his 401K to at least get the match his company offers. He has several acres of land in God’s country somewhere far from the city lights, but he also strives to be debt free. He has the cash on hand to G.O.O.D. and the savings and insurance to come back and rebuild (and the larder to live on until then). He doesn’t know the future so he prepares for all outcomes; no matter what happens his family will have options. He also recalls that Rome wasn’t built in a day, and American affluence has been squandered slowly for a while now; there is trouble on the horizon, so he starts now.

Wednesday, November 10, 2010

Houses and Housing

I have been thinking a lot about the nature of this beast. I think sustainability and affordability are sure interesting. Something occured to me recently. We think about housing almost all wrong. The concept of a home as an investment is kind of a misnomer. I think houses (and to a certain degree all realestate) as a physical brick, mortar and wood structure are a good investment. Of course they aren't going to go up 30% a year like they did in the run up to the housing bubble. However assuming you make reasonable choices house values will go up. Also in the meantime they can product income for you. Sort of like a stock that pays dividends you will do OK even when the market is flat. Where I think people go so wrong is that they lump housing in with the brick and mortar structures themselves. Housing is definitely a liability. Housing is a liability because you need, in some form or another, a place to live. To me the concept of purchasing some dirt and a structure isn't about investing it is about a place to lay your head and keep your stuff. Paying off that place is about reducing your liabilities.

Affordability is so important and is something we seem as a culture to have lost. The smart money folks say things like a payment not more than one third of your income. I have also heard your high total amount shouldn't be more than 3 times your total annual income. Our blog friend's advice to ignore the loan people and get what you know YOU CAN AFFORD is sound. Personally I think being pessimistic is the key. Don't think about the good months where you get some overtime or the great months where you get a big bonus but the bad months when you have a few down days and some unexpected expenses. Assuming you take the life of a loan to pay it off you are looking at between 15 and 30 years. While your income may grow and or inflation will make the true value of the monthloy cost lower a lot of bad things can and will happen in that amount of time.

Our Grandparents typically bought a home and stayed in it. Sometimes they got a really small starter home and upgraded after a kid or three to a place with more bedrooms. However the difference is that THEY STAYED THERE. Also though a house might have 4 or 5 bedrooms it wasn't typically a gazillion square feet. A house payment which might have been a little tight when the kids are young and the parents are in their early 30's (they got married younger) was comfortable 10 years later after Dad went from working on the line to being a supervisor or bring a teacher to a principle or whatever. Their payments got more comfortable because their incomes grew and there was some inflation. Conversely today people upgrade their house every time they get a raise and take out home equity loans to boot.

I think the way to look at housing and homes both as an investment and a place to live needs to be adjusted. The housing boom is over and while prices may rise they aren't going to be the idiot proof investment they have been for a decade or so. Think more about securing your families ability to well, not be homeless, than making a profit.

Write a post on your site/blog/forum elsewhere online about how you use ammo cans. Here is a shell you can use if you want.

" Lucky Gunner partnered with TSLRF to put together a contest. The goal is to come up with the most creative way to use ammo cans. I use ammo cans to _____________________. The prize is a half case of free ammo! See the full details here."

If you paste that shell into your blog or website or favorite forum then add in what you use ammo cans for and you will be good it go. You do not need to use the above shell. I just wrote the shell out to make it as easy as possible for you to enter. For a qualifying post you just need to be sure you link to ammo cans and TSLRF in your post!

b. Copy the link to your post and add it to the comments section on this post. You can also email a link to your entry to me. This enters you into the contest.

c. The contest will run until 14 November. After the contest has closed, I'll do another post w/all the qualifying entries. Our readers will get to vote on which post was the best (either entertaining or most informative) via a survey. Folks who enter can tell their readers/ friends and family about the survey and they can vote in favor of your entry - so be sure and spread the word!

d. Based on the poll results, the winner gets their choice of 500 rounds of ammo from Lucky Gunner. See full details here.

Thursday, October 28, 2010

New Rules For Your Money And Debt

I stumbled onto an article today and when I went to post the thing I saw it was already up here. It brought on some thoughts. I think these coming years may not significantly reward good behavior (saving, etc) but will absolutely punish bad behavior. As Mayberry put it when you borrow money you are gambling that you will be able to pay it back. In bad times like this income disruptions are more common than normal. That means debt is a really bad gamble. It will seriously punish folks whose obligated expenses are too high. I wrote about this over at Keep It Simple Survival. Here is what I said One thing I've seen with different folks I know is that if an individual or family hits a bump in the road (job loss, etc) the ones with the fewest obligations fare best. They have the maximum ability to adjust their lifestyle to living with their new (if just temporary) reality. They have a few lean months then when a job is replaced are quickly back to normal.

A family with modest housing costs (rent or mortgage) and the usual food, fuel, etc but no debts can circle the wagons and live real cheap. However a family with big housing costs, two car payments, personal loans, a home depot credit card, a visa, etc can't. These folks usually get some stuff repossessed and have their credit trashed, possibly even losing their home. While their income is down they often get so far behind it is difficult to get caught back when they do replace the income.

It isn't popular or flashy but living well below your means should be the rule of these times. Lets say you make 40k and can live decently on 25k. That gives your family 15k to save, invest and prep with when things are good. It also means that if things get rough you can find a job earning a lot less and still make it, if just for awhile.

Wednesday, October 27, 2010

Medical Insurance and the Fundamentals

Wifey and I were talking last night about our worries, concerns and all that stuff about what is going on with Walker. One thing that occurred to me is that we aren't worried about paying the bill. That is because we aren't going to have a bill because we have good insurance. Not so long ago I was laid up myself with the pneumonia and it could have been a real problem for us.

We have good insurance through my job and it is one of the real benefits. Some jobs offer insurance and others don't. I do suggest you consider that as a piece of the overall compensation for a job. Sometimes particularly when you look at the military the numbers are a bit deceiving.

I am not saying everyone should have X or Y type of medical insurance or even needs necessarily medical insurance at all. Certainly I don't think people should be forced to purchase coverage any more than they should be forced to floss or eat vegetables or save or exercise even though they are smart choices. However I am saying that if you can possibly afford it you are foolish not to have a serious plan for dealing with the costs of medical issues which may come up. Particularly if you are active or your family has a woman of child bearing age it is foolish not to plan for this scenario. A lot of folks talk about all of this self healing herbal stuff. I think that is great but matter of fact it doesn't replace being able to get legitimate medical care for serious illnesses and injuries. When I was laid up with pneumonia all the herbal tea and st johns wort in the world wouldn't do what IV antibiotics did. A nice salve of naturally occurring elements will not replace an x ray and a cast in healing a broken arm.

Medical bills are, if memory serves me correctly, the biggest leading cause of bankruptcy. To spin in in a way that may seem important to the beans and bullets crowd it is really hard to carry around all your beans and bullets in the car after you go broke trying to pay medical bills and end up homeless.

I recall an analogy used by some smart financial type. He described priorities like building a house. The foundation was insurance and your emergency fund. The main floor is retirement planning, paying off your home and investing. The roof was stuff like college funds for kids, charitable donations, etc. The point is that if you try to skip steps you do not have the proper foundation (pun intended) and at the slightest tremor or storm the whole thing will fall down. You could weave preps in there at every level. Maybe the basement would be a real basic 2-4 weeks of food, gun with some ammo, water filter, etc. Real basic but good enough for a power outage or hurricane. The main floor might be a lot more food, heating and lighting plans, alternate shelter plans, a couple more guns with a good amount of ammo, clothing, etc. The roof might be precious metals, barter items and even the coveted off grid retreat complete with alternate power plans.

Survivalists far too often focus on statistically unlikely events instead of realistically and likely ones.  For example this year and the one before, and the one before that we have not tapped into our food storage for anything but getting something we forgot at the store for a recipe. We haven't used our medical supplies for anything but normal occurrences nor the rifles for anything but fun at the range. Our cases of ammo have not been opened and deployed in anger. We have however over the course of the last couple years made a few trips to the hospital. So which is more important? Personally I would say medical coverage though it is simplistic to say the two are mutually exclusive. The point isn't to say you need this or that but instead to talk realistically about how to face life's little challenges. Taking care of the basics like medical coverage and emergency savings before most other stuff just makes good sense.


Sunday, October 10, 2010

What Did You Do To Prepare This Week?

The biggest thing was that I ordered an ACOG from Idaho Preps. Been planning and saving to purchase an optic for some time. Hadn't thought I would be able to afford what I wanted but the good folks at Idaho Preps reached out to me and were able to make it work. Really happy that at the end of the day I was able to get one.

I also opened up a ROTH IRA. We had been saving for awhile and this week we signed up for an account and all that stuff. Pretty psyched about the whole thing. Made a few bucks so far which is just cool.

Picked up a few odds and ends of canned and staple stuff at the store. Stocking up a little bit but probably for the most part just rotating what we already have. Sometimes the stores on post have weird super cheap sales for no real reason. I guess they get too much of something or their stocks are getting old or whatever and so they sell it for half price. This week they have Natural Light Beer for $3.25 a twelve pack which is half the normal price. I got 4 of them to stash away as a beer reserve.

Been looking at ammo as my inventory of 9mm isn't quite up to my own standards.  A case of Federal hollow points is pretty darn tempting and would put me in a good place. I've got to save a few more bucks before I can seriously consider that purchase. Really can't complain because I just ordered a sweet rifle scope.

A very solid week for me. What did you do to prepare?

Saturday, October 9, 2010

question of the day

I have noticed recently that I talk about money, finances, investing and such on here a lot more than I used to. Maybe because our finances are starting to reach a point where we actually have a bit of money but anyway. Does this topic interest you guys? Or is it just something that you skim past to get to the other posts you actually might like. 

I can think of 3 potential options:
1) Basically no change at all from the current plan.You like the talk about money, finances, budgeting and such and want me to keep things the same as they are now.
2. Don't totally get rid of it but tone it down some. I could restrict those conversations to (lets say) not more than once a week.This way it would still be around but wouldn't hog the whole show.
3. Scrap it entirely. You think I should take the whole topic elsewhere. Maybe just shelve it, maybe another venue or whatever so long as I get it off TSLRF.

It goes without saying that I can do whatever I want but I do seriously want your input. I don't try to please everybody all the time as it just wouldn't work. However there is no point in me going to the trouble to write a whole subject of posts you folks don't enjoy. If this isn't a topic that in some way is resonating with you folks I can either just save the energy or try to find an audience it would resonate with.

Anyway please do let me know what you think.

A New Passion

We opened a Roth IRA a few days ago. I went to the site to screw around and read some stuff today. Out of idle curiosity I checked our balance. We made some money, a bit less than 20 bucks. This is really exciting. I earned money without doing anything. More aptly my money earned me some money. This is so awesome I don't even know what to say. It isn't a lot of money or anything but it is just really cool.

There is lots of talk about inflation and all kinds of stuff. I can't say that I think the next few years, and maybe even decade will be rosy. However I differ from some folks in what I am doing now.  One notable reason for the difference between my perspective and that of many fellow survivalists/ bloggers is age. What is a horrible situation to someone who is 50 is a buying opportunity for me. Particularly when I am investing for retirement my time line is very long.

Anyway this is just really cool. My money making money of its own really motivates me to keep saving and investing. Eventually if I get enough money working for me I can sit back and enjoy life while it supports me. I guess it is good to have ambitious goals. This doesn't really have much anything to do with preps or that stuff. However it got me more excited than anything except Walker has in recent memory. Anyway I think it is pretty cool.

Friday, October 8, 2010

quote of the day

"No investment will pay returns as high as paying down debt." - Nolan Lickey, Business, Seventh Edition, by Pride,, Houghton Mifflin Publishers, 2002

Stolen from Survivalblog

Saturday, October 2, 2010

Paying Yourself First, Diversification and Such

Every once in awhile I read something that just makes my head spin. A few days ago Chief Instructor wrote one of those posts and I just got around to reading it today. I commented on it but it it has stuck in my head. I was trying to go to sleep today at about 2 pm [Kiddo is kinda all over the place in terms of sleep schedule. We're kinda sleeping when we can.] and the wheels were just spinning. I should probably mention that I spent all of last night watching the BBC news and reading various financial stuff online. This post is brought to you by the above two influences plus a bit of narcolepsy.

The concept of paying yourself first came to mind. Basically the concept goes like this. Before you pay your bills, before you buy groceries, before you do anything else, set aside a portion of your income to save. Put the money into your 401(k), your Roth IRA, or your savings account. The first bill you pay each month should be to yourself.   It is just so easy to say that you will save later when you make a bit more money or just vaguely in the future. Especially when we talk about far off concepts like retirement it is easy to say you will start saving next year.

I don't think it is entirely accurate to say that even practitioners of this idea truly pay themselves first. The reason I say that is when push comes to shove few people will make their 401k/ Roth IRA/etc contributions before say paying the electric bill and buying groceries. It would probably be more accurate to say that after you pay basic operating costs (housing, energy, food, fuel, etc) you make that contribution before the discretionary stuff. In any case the key is that you are putting a regular amount into whatever investment vehicles you choose on a regular fixed basis.

I was thinking that it might be prudent to use the same sort of spirit when it comes to preparedness. So often people really want to do great things but money or a lack thereof holds them back. Putting a regular fixed amount into whatever kind of preparedness goals you have on a regular set basis can go a long way towards solving that problem. It won't be a cure all but it will probably help. Maybe it is food storage or gear or water filtration or who knows what but this should allow you to meet reasonable goals over time.

I was listening to this video by these financial management people (they didn't mention till halfway through the presentation that they only talk to people with TONS of money, grrrr) and they did a lot of talking about asset classes. Stuff like specific types of stocks, bonds and the like. The smart people will say that to meet certain goals you will want certain amounts of different stuff.

For awhile I have applied the same kind of thinking to preparedness but without such an articulate explanation. Stuff like food storage, medical, firearms, ammo, alternative energy, spare clothing, gear, etc. I don't know exactly what the right percentages are but it is smart to balance between these different classes. A bunch of one doesn't make up for not having any of another.

The topic of precious metals is interesting these days. I think it depends so much on where you are at and what you want the money to do. Precious metals are a good non dollar denominated liquid asset. However they do not earn interest or benefit from compound growth. I have some real reservations about going big into PM's all at once (versus dollar cost averaging) especially when the market is high. The time when one might reasonable want to shift their liquid assets to 30% metals by buying a some silver and a couple rolls of one ounce rounds is probably a year or two past. Some folks say gold and silver will go way higher. I don't know if we are at the absolute top but I do know it is bad to be the last one to buy into a commodity upswing. Personally I'm buying silver right now and won't purchase any more gold until it corrects significantly.

I suppose that just like anything else you're open to make your own decisions. If you are absolutely positive that anything in stocks or dollar denominated will go into the can then betting heavy on precious metals makes sense. I do think however that hedging your bets is a sound idea. Some classes of assets like stocks tend to run hot while bonds run cold and visa versa. Sort of like dollars and euro's or dollars and gold.

One trend I see in survivalists is to just go all in. Folks get an idea that this or the other thing might happen then bet everything on it. I don't really understand this. To me a huge part of survivalism is managing risk. I want to be able to do OK if the economy tanks and also do OK if it does well. Managing your risk by having plans to succeed if our economy goes up, down or sideways just makes good sense.


Friday, September 24, 2010

quote of the day

"Living a financially healthy lifestyle is a slow-cooker concept that isn’t always popular in our microwave society. "
-Dave Ramsey

Thursday, September 2, 2010

Oh the News

I think it is amazing how the MSM just keeps trying to talk about how we are in a recovery. Yeah we are in a jobless recovery where the stock market is pretty flat, and housing is still in the dumpster. That would be sorta like saying you were sober last night even though the facts are that you drank a case of beer, got kicked out of the club, vomited on the side of the road on the way home and passed out. It doesn't matter what you call it, it matters what the actual facts are.

I don't know where things are going. I suspect that significant joblessness will be an issue for some time. With so many people unemployed it is easy to replace workers so security will be lacking for many people. I don't know where the bottom of the housing market is but until the foreclosure mess is over and banks get all the foreclosed houses off their books things won't be in an honest place. Banks will try to hold onto these homes until prices come back but there are just too many of them for that to work.

From roughly 2008 at least partly into 2009 was really circle the wagons time. Things are better now but not necessarily good. Even if almost 1 in 10 is out of work most of us are still employed and a lot of the uncertainly has gone away. You can probably let up a little bit but I wouldn't go crazy. If you can afford it then by all means go out for a nice dinner or take a weekend vacation to the beach. However I would still hold off on getting your dream boat or touring Europe for a year. For the purposes of short and mid term planning right now I would sacrifice some return in order to have liquidity. A CD that earns an extra tenth of a percentage point but locks your money in for two years is not something I would go for right now.

It might be a great opportunity to get some great deals on stocks. If you have the appetite for risk and are looking at the long term. Personally I meet those characteristics and am buying. Wheat and tube socks do not benefit from compound inflation while investments do.

My point is that the news isn't everything. Especially the propaganda headlines. Look for stories with facts from places you trust. Look at what is going on in your community and with people you know.

Sunday, August 22, 2010

Monday, May 24, 2010

One Thing That Has Been Bothering Me

Why is it that some folks seem to think the first thing to do if you get into survivalism as an adult is to pull every penny you have out of retirement and put it into preps? It reads like a worn out record. "I saw the light and immediately pulled every penny I had out of retirement and bought food, guns, etc."

This bothers me for a lot of reasons. First it is more emotional than rational. People see (legitimately) a threat and this is their knee jerk reaction. Just like a super fast halfway from the hip "point shot" it is almost always a miss. To continue my shooting analogy they would be better off to get a half a shooting stance or at least bring the gun level and the front sight onto the target before squeezing the trigger.

Second I have an issue with this plan because it is almost binary. It eludes to there being only two options, normal life and TEOTWAWKI. The unfortunate fact is that life is not that simple. You can definitely get a mix. A great example is Katrina. I am sorry to tell you this but in terms of realistic worst case 'survivalist' scenarios this is about as bad as it gets. For several weeks things were completely screwed. Not killing your neighbor over Krispix or all Mad Max but pretty screwed all the same. Assuming he wasn't stupid enough to stay right on the coast or in New Orleans proper a guy who had enough food and water to be comfortable and maybe some to share with the neighbors, batteries to run a radio and a couple flashlights and a couple guns with some spare ammo things were manageable. After awhile things got back to normal. In 20 years that guy who was well rewarded for having plenty of food, water, fuel, a couple/ few guns and ammo is going to sure want to stop working. So for a period your life can be completely screwed and then it can go back to normal.

As much as it is nice to think you will be richly rewarded for cases upon cases of canned food and rows full of buckets of dried goods and cases of ammo that may not be the case. Food and bullets are great and all but will not pay a mortgage or property taxes or buy a tank of gas. Do consider the question of "what will this do to me if the world doesn't end?"

I do not gamble. Not saying you are bad if you do but it just isn't me. Even aside from all games being rigged to give the house an edge it just isn't me. For example if you think it is 51% likely that the world will genuinely end is it smart to put your whole darn nest egg towards that? What about that other 49%. However if you honestly believe 51% that a full on genuine end of the world Mad Max scenario is going to happen I would submit that either you have a screw loose or have some information (prison planet type stuff doesn't count) I have not seen. Our world might get a bit crazy now and then or even change in significant ways but digging a fighting position in the front yard or bayoneting your neighbor to protect your canned goods is probably not so likely.

Any financial adviser worth the title will say that unless you can absolutely avoid it raiding retirement accounts is the absolute last thing you want to do. While it is true that I would not ask their opinions on storing wheat in buckets or pooing in a bucket I also think it is equally imprudent to let a survivalist tell you what to do with your money or how to plan for retirement.  Of course a "survival expert" will say you should put all your eggs into that. Kinda how guys who work at Motor Trend probably think you should spend more money on a car than is prudent or guys from Gaming Laptop probably like gigabytes and ram more than they do your pocket book.

Of course if you have a few bucks just sitting around putting it towards preps isn't a bad idea. Raiding the money you plan to live on in old age however is just a bad idea. For most people the money maker is going to be selling off unnecessary toys (swap an old dirt bike for a good rifle, etc) and cutting/ changing your lifestyle to create money to go towards preparedness.

I plan for things going all crazy AND the world going on more or less normally with me getting older and wanting to work less or not at all. I think you should do the same.
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