25 “What If” Finances Questions


         The economy is on life support. Times are hard and the vast majority of American’s finances are simply limping along. If you are fortunate enough to have a steady income and money to spare after a paycheck, it’s time to ask yourself the tough questions. Are you saving all that you can be? Are you casually wasting money in the present on things you want but don’t need? Is your future secure in the event of a lost income stream? Here are 25 questions to ask yourself to determine if you are where you need to be financially or if you belong somewhere in the “Needs Improvement” category.

         1. What if the government seized your assets and froze your accounts? Emergency funds in a secure, FDIC insured account are wonderful. But those accounts get insured because the government is involved. They can put a lock any one’s account at any time, even giving sketchy reasons behind it. If those accounts are frozen, you will need a temporary fund source to survive. Ideally, you want to keep about $1000 emergency cash at home, in a safe. This will also benefit if something immediate occurs that doesn’t allow you to get to the bank, or if the power grid drops and ATM’s are no longer an option. It’s also wise to keep about $300 in your car in case you become stranded on the road and have no access to your accounts.

         2. What if the economy does not recover? We should all develop the skills to tighten our wallets and find ways to save money. Constantly update your resume and keep yourself available for work. If you have a job, do whatever you can to maintain it. If they try to lay you off, ask if you can take a cut in hours or pay instead. Bargain shop and save as much as you can from whatever you make. Remember the golden rule: save 10% of your income.

         3. What if a sudden, unexpected medical emergency comes up? Not everyone can afford health insurance. That is one of the many challenges facing this nation. Our medical industry is not made to benefit the people who need it most. If you can afford health insurance, be sure to cover yourself and everyone in your immediate family. If you can get benefits through your job, do not opt out. If health insurance is not an option, consider this staggering statistic: the average bill from just a standard emergency room visit is $1500. Do you have that much tucked away? If not, and you are without insurance, you better start your emergency fund account pronto.

         4. What if the cost of food continues going up? Food is getting more expensive then ever to grow, transport, manufacture, and sell. Taxes have gone up on food sales. To counter the cost of production, most companies are raising prices and lessening volume. You should stockpile long lasting foods now, not only for emergencies, but in case those items double in price later on. Starting a small garden at home is a great way to lessen the damage food does on your wallet. Start buying generic products now so that when the name brand companies raise their prices, you will already be used to the taste of generic outlet brands. Find ways to save money on food by eating at home and packing your lunch. Avoid fast food as it has the least nutritional value of any food you waste money on.

         5. What if a loved one dies and you suddenly find yourself needing to pay for funeral arrangements? Research shows that the typical funeral costs any where from $4000 to $6000 depending on what services you require. A lot of people buy plots and tombstones in advance to avoid unnecessary financial burden to the loved ones they leave behind. Creamtion is also a much cheaper option. Many city services will bury your loved one for a small fee. But a lot of municipal councils are doing away with that service. Think about this stuff now, as it’s going to happen.

         6. What if you or a spouse loses a job? Any financial expert will tell you that you should at the very least have 30 days worth of expenses saved back for emergencies. Some will argue that 6 months is better. And still others will tell you that in the current economy saving for a year isn’t too far fetched. Unemployment is skyrocketing. Some people have been out of work for years. Do you have extra skills to take on a side job? Are you prepared to take a pay cut to get a job at a fast food restaurant? Are you mentally prepared to cut out monthly expenses such as cable and other services? Get your wallet and your mind ready for the possibility that you won’t always have a job.

         7. What if you are in a car accident and your vehicle is destroyed? This is possibly one the most devestating things that could happen to a large family. Suddenly the parents can’t get to work, the kids can’t get to school or extracurricular activites. Aside from any medical bills, now you have to pay for the cost of replacing your car. Ensure that your insurance covers whatever your car is worth. On top of that, always drive safely and follow the rules of the road. Keep your car well maintanenced and check fluids. Prevention is the key to avoiding automotive disaster.

         8. What if your home is burglurized, burns down, or gets ruined in a natural disaster? Everyone should have some type of home owner’s insurance. It’s cheap and can cover a large amount of expenses. Even if you live in an apartment, you can get a $25,000 policy for about $300 a year. That is nothing compared to the peace of mind you’ll feel knowing that you can get help if all your belongings are destroyed.

         9. What if cash becomes a comodity nobody wants? Some advice here would be to stockpile at least $250-$500 worth of coins. Nickels, dimes, and quarters. It would be wise to invest in some gold and .99 silver coins. Learn how to trade and barter so that if no one wants to take your cash, perhaps they will swap items with you. Learn the value of your items so you can know what you have to trade with. Develop haggling skills and frequent flea markets to see how this type of business is done.

         10. What if you were forced to retire today? This question is more for the seasoned readers. If you are getting up in years and the prospect of retiring is looming in the distance, you should be prepared for this life changing event. Do you have enough saved? Is your porfolio and 401k ready for the transition? Can you live comfortably for the rest of your life and what you have? If no, you have some serious work to do. For the younger crowd, start saving for retirement now.

         11. What if you could change ten things about your finances? What would they be? A learning exercise. Get a slip of paper, make a list, and then act on your desires. Things will never be different if you don’t get real with yourself and make a change. Start today. You are in control of your financial destiny.

         12. What if you could write a letter to yourself ten years in the future and ten years in the past? What would you say? Another training exercise. Write both letters and be honest. You might surprise yourself.

         13. What if your finances took a turn for the worse and you had to move to a smaller place? Prepare yourself for the possibility. This will help you figure out what’s most important to you. What items do you keep and take with you? What would you force yourself to leave behind? Honesty is the best policy would it comes to the future. You may at some point have to downgrade your life. Are you mentally and emotionally prepared for that?

         14. What if you physically lost the ability to work or care for yourself? Who would you rely on? How would you cope?

         15. What if you never took the steps to right your ship? Pretend you stayed a slave to debt. Pretend you kept living paycheck to paycheck. Pretend you never disciplined yourself to do better and to get ahead in life. Now imagine what the outcome of such a life would be. Look into the future, say around your retirement age. Are you content, living comfortably with money to spare? Are are you still working, maybe two jobs, probably for someone younger than you? Do you want to work until you die? It’s time to get your game face on and make whatever necessary changes you need to for a happy, successful, and secure future.

         16. What if you had to immediately come up with $5000? Could you do it? This is important to consider. Thing about ways you could raise immediate cash. Pretend you had no emergency funds or cash. What could you sell to raise money? How could you pull the funds together? Side jobs, donating blood, selling belongings, and even asking relatives for help might have to be considered. Are you prepared to do these things?

         17. What if you suddenly find yourself in legal troubles? It would be wise to always keep an attorney on retainer just in case. Find one with a cheap rate and make sure they are available when you need them. They might not be the best long-term lawyers, but for something immediate and brief, say perhaps a bail hearing, they will be handy to have just a phone call away.

         18. What if you find yourself in need of major home repairs? A water pipe bursts, flooding a whole floor; a beam cracks and part of the ceiling collapses; the roof starts leaking; the refrigerator stops working. These are all things that can and might happen. These types of things are exactly what emergency funds are for. Be prepared for the worst and you’ll never feel the stress of an unexpected expense.

         19. What if you had abslutely no calvary coming to the rescue? Say something horrible happens and you suddenly find yourself without friends or family, completely alone and without any assistance. Could you mentally cope? Could you financially survive? Do you trust yourself enough to fix your problems? If not, you had better start gaining the knowlede you need now. Learn how to write a check, pay a bill, obtain a loan, file an accident report, or keep a budget. There are somethings you need to rely on yourself for. Your own finances should be one of them.

         20. What if a friend or family member unexpectantly asks you for money? You should be financially wise enough to know whether you can afford it or not. If you can spare it, do so responsibly. Don’t over extend yourself or cut into your savings or budget. Only give if you have extra. If you can’t lend the money out, then learn how to honestly and politely tell them “No.” So often we put ourselves at risk to assist those we love. To be financially stable you have to learn when to not give in. This technique helps when dealing with children who want, want, want.

         21. What if you find yourself on the verge of becoming a new parent? This is a scary idea. Children are expensive. Especially in the first year. The best advice you can get on this matter is to save in advance and plan when to have your children. Use contraceptives and some form of birth control. Avoid unexpected pregnancies. Suddenly having another mouth to feed can be a daunting task. Don’t take it on unless you are prepared to deal with the consequences.

         22. What if the stock market crashes? This question is for my investment readers. You can read numerous nightmare stories onlne about investors who put all their money into one nest egg. For some stocks, for some mutal funds, for others a company 401k. You should never put all your money in one place. It’s good to expand and keep many options open. A person should have a diverse porfolio. Invest in stocks, put money into a 401k, have a retirement high-yield savings account, maybe get a few government bonds, or put cash into a CD. Physical investments are a good idea to. Gold and silver coins will always be valuable. Keep yourself spread out to avoid losing everything at once.

         23. What if you died today? Let’s face it, everybody is going to die. When don’t know when or how. So if this happened, are you prepared to leave your loved ones behind with a secure future? You should have a Will in place to delegate left behind real estate, finances, and belongings. Write “In the event of my death…” letters to everyone close to you. Tell them how you feel and leave them instructions. Be sure to leave behind access codes, keys, and the location of anything you might have kept tucked away. Get a life insurance plan so that your family will be financially stable without you. Make sure any health insurance, work documents, or financial options have the beneficiries clearly listed and defined. Don’t leave anything to chance. Tie up the loose ends now and rest easy knowing your family is taken care of.

         24. What if your bank starts charging for the use of a debit card? If you are with Bank of America, you might have already jumped ship. The news is full of other banks thinking of falling in line with the BoA $5 charge. The thing to remember here is that banks are hoping you will abandon the debit card and take out a credit card. Don’t fall for the trap. Recent law changes modified how much banks earn for debit card transactions. They make more money off of credit card transactions and interest rates. They want to charge you for the debit card to make you interested in credit cards. It’s a scam to make money in the dirtiest of ways. You’d be wise to either try to change banks or to just pay the fee and stick to using the debit card. $60 a year is a hell of a lot better than paying insane interest charges on a credit card every month.

         25. What if you won the lottery? We’ll end this post with a bit of fun. Get out a sheet of paper and just write down all the things you’d do if you won a megamillions jackpot. Keep the list tucked away somewhere. You never know, you just might get lucky someday.

The Flip Side


         Today my office went out for lunch for one of our employee’s birthday. My boss drove us and we rode in his very nice Chevy Malibu. The car is beyond comfortable. Very clean and loaded up with a bunch of extras. XM radio, customized seat temperatures, OnStar, you name it. The car made me feel envious. I am still driving my car from 2003, a little Honda Civic. It’s got a giant crack in the windshield, a scratch on the left side that’s starting to rust, small cracks on the right side that have already rusted, a somewhat deteriorating interior, a long stain on the hood from battery acid, and a bungee strap underneath that holds the protection cover for my exhaust in place because it rusted off and was dragging on the ground. My boss’s car made me wish I had something newer. But then he and another co-worker started talking about his car payment. And she started talking about how she just refinanced her lease. And I had to smile to myself. My Honda is a little run down, sure. It’s old, not flashy, leaves much to be desired, but it’s reliable. It’s good on gas. And most importantly I own it; bought and paid for, with a title in my safe. See that’s where we all get caught up in the rat race sometimes. We see the shiny things other people have and it makes us jealous. It forces us into desperation where we make decisions we wouldn’t normally make. I could have easily got swept up in it all and gone out this weekend to get a new car. But when I stopped and thought about it, I realized I don’t need a new car. My Honda is my own. I know what each little scratch and dent is from. My car is me. I’ve never broken down with my car. Never had to spend a fortune repairing anything. And the only money I spend on it is gas, oil changes, and preventative maintenance such as replacing the air filter, belts, or battery when it needs it. Sure, my boss is a few months younger than me. And he dresses very immaculate. He has a house and a brand new car. I’m sure his girlfriend is beautiful as he has mentioned dating models before. But what is the price of all that? Something else he has that I don’t is a mountain of debt. So I sat back there in his backseat in my blue jeans and t-shirt and just had to shake my head at myself. Not all that glitters is necessarily gold. Don’t strive to be like The Joneses. Just strive to be the best you possibly can be within your means. And always keep in mind that looks can be deceiving. Sure someone may appear to have the perfect life, but you don’t know what they do when they get home. You don’t see the stack of bills, the maxed credit cards, or the phone calls from past due accounts. Be thankful for what you have and never underestimate the value of owning your things without letting them own you.

Think Secure, Not Wealthy


Bookkeeping. Fun.

 

         In terms of money, everyone wants to be rich. We all watch countless tv shows idolizing wealthy people from all walks of life who immerse themselves in small fortunes. We marvel at the size of their super mansions and their cars that cost more than a whole neighborhood of suburban homes. We worship The Green, the gold of the land. However there’s something more important than acquiring wealth and being rich. No, I’m not talking about getting super powers, although that would be nice. I’m referring to financial security. What good is amassing a small fortune and then allowing it to dwindle down to pennies by wasting it on meaningless things? If the rug was pulled from beneath us, and the infrastructures collapsed, what good would your jet ski and mansion serve you? Does your mansion have a bomb shelter or a survival pantry with a year’s worth of food and water? Do you have the skills necessary to live off the land when you can’t use your American Express Gold Card to hit up McDonald’s?

         Money makes the world go round, and any one that might tell you differently is a fool. Nothing in life is free. Allow me to repeat myself, NOTHING IN LIFE IS FREE. Simple everyday items such as food and water cost money. The essentials of basic human survival –nutrients, shelter, H20, hygiene– all cost something. So never underestimate how valuable money is. What can this value appreciation do for you? Well, it can impact your knowledge by forcing you to put your money to good use. Investing in skills and knowledge, in tools and the confidence to use and maintain those tools. Appreciating money can teach you how to save frequently, shop frugally, and spend sparingly. This blog is all about saving money and surviving. No matter how rich or poor you are, the money you have should never be carelessly wasted. Invest your time and pocket book into meaningful activities. Yes, go a little crazy every once in a blue moon; get yourself something special. But never confuse money with security. All the money in the world won’t stop you from starving or keep rioters from killing you if an emergency arises and your money suddenly becomes useless.

         Being rich is probably a fantastic feeling. But richness isn’t all about money. Be rich in mind, be rich in body, be rich in spirit. Use your money wisely, whether you are a millionaire or a struggling Average Joe working paycheck to paycheck. The American Dream is to become rich and wealthy, but The Survivalist’s Dream is to become secure in every possible way. You can have a dollar to your name, or a million in the bank; either way it should be your goal to use that money responsibly. At the end of the day, nothing is quite as priceless as your life and the beating heart of the loved ones that surround you.

Bank Accounts


       Today I am going to discuss basic accounts through a run-of-the-mill bank. This past year I switched to an online bank (Ally, if you are interested) that has no physical branches. The reason I did this is because their fees are almost non-existent. My previous bank charged me four times the amount for a fee than my online bank does. And my online bank doesn’t have reoccurring charges. I get charged once and only once for an incident. Also, my online bank has 24/7 customer service where I call and get connected with a live human being within a few seconds. Now that is truly convenient. Especially if my identity is compromised, my wallet is stolen or lost, or if I need immediate assistance. The only negative is that I can’t make any cash deposits and anytime I receive a check, it has to be mailed to Ally to deposit. But this can be considered a blessing as it can take up to 9 days for the check to hit my account which helps me to not blow money quite as quickly as just depositing right in a branch and walking out with cash in tow. Another big draw for online banking is that all ATM fees are given back to me. At the end of the month I get a deposit in my account for all ATM fees charged me over the last 30 days. This is awesome and is a nice booster at the end of the month. Ally allows you to open as many accounts as you want for free. Currently I have a checking account, an emergency fund account, a general savings account, a goal fund account, and a retirement fund account. What are all those? Well, I’m going to explain it all below.

       If you receive a paycheck from a company on a regular basis, you need to set up automatic direct deposit in a no fee checking account. This just makes good sense. Once you begin to get a steady income, build your balance up to $500. Once that has been reached, treat the $500 threshold as if it were $0, ie: the bottom of your checking account. And spend your money never decreasing below that $500. That way, no matter what emergencies might be thrown your way, you will always have a $500 cushion to play with. Again, this will be used only in a dire needs type scenario.

       Once you have established smart use with your checking account and reached the $500 “zero” balance, it’s time to look into an emergency fund savings account. Getting a savings account with the same bank as your checking account is logical for easy transfer of funds. However, be weary of actually connecting the two accounts. Overdraft is something you want to avoid completely. Your checking account should never be going negative. However, we all make mistakes so if you do happen to go over your budget, you don’t want the checking account automatically pulling funds from savings to cover it. That is not what an emergency savings fund is. The end game for an emergency fund is to have 3-6 months worth of expenses tucked away for medical emergencies, loss of job, or any other dire needs scenario. An emergency fund is not for forgetting to pay your Netflix bill (we’ll come back to this later). It is for unexpected life disasters. Maybe you get temporarily disabled and can not work. Maybe you or a spouse loses a job and has to spend a month or two looking for a new career. Maybe the engine goes out in your vehicle leaving you without transportation to get you and your family where they have to be. The 3-6 month rule is a great cushion and a real comfort in terms of your financial security. However, do not set out with that goal in mind. If you add up your monthly expenses and then multiple that times six months, that figure will probably be overwhelming for you. Start slow. The initial goal should be $250. Then once that is reached, double it to $500. Then the next goal is $1000. Once you reach a $1000 you should be aiming for one month worth of expenses. After that, go one month at a time until you reach your end game. Ultimately you will reach your goal with discipline and hard work. Eventually the emergency fund will be 3-6 months worth and you can leave it alone and just let it draw interest.

       After your savvy checking account and frugal emergency fund is in place, you need a general savings account. This particular account is what would be used if you deplete your checking down to the $500 threshold and then suddenly realized that you forgot to pay your Netflix account (see, we came back to it, not gonna leave our entertainment hanging). A smart goal for a general savings account is anywhere from $1500-$3000. This fund will be used for everyday inconveniences that might arise that aren’t necessarily considered emergencies. Let’s say, for example, you run out of deodorant and shampoo on Tuesday, but you don’t get paid until Friday and your checking account is at $501.96. Well, you only have $1.96 to spend (because $500 is “zero” balance, remember?), so you could use your general savings to transfer $20 over and get the items you need prior to payday. This does not constitute an emergency, but we’d rather not walk around smelly with oily hair.

       So you’ve worked extremely hard. You have a well balanced checking account, a comfortable emergency fund to leave you worry free, and a cushioned savings account to cover every day “just-in-case” items. Now what? Well, if you are like me, at that point you open yet another savings account (yes, we’re up to three now but Ally doesn’t charge me to do any of this so no harm, no foul). This savings account you can just call the “Goal Fund”. For this savings account, you will use it primarily to save up for something you want. Maybe a family vacation or a new flat screen tv. This is just a nice place to build up funding to take care of your wants, not needs. There is no set rule for this account. You don’t have a specific amount to deposit every paycheck. And you don’t have to keep the money sitting there if you feel like using it. This account is solely at your leisure to do with as you wish. I just find that it’s easier to save for something if you have a separate place to tuck away the funds for it.

       Now we’ve reached the real end game. Have all of the above established and well maintained? Then it’s time to look far into the future and look at the final result of where you want to be at the end of the road. What does that mean for you? Well it means opening some type of retirement account. Now this can range from anything from a simple savings account, to an IRA, or maybe even a broker investment account. No matter what path you decide to take, you must think about your future starting right this second. There’s no point in spending twenty years getting financially secure just to burn your funds out within a year of retiring because you didn’t plan ahead. Currently I just have a retirement fund through my bank that I save what I can in. It isn’t much at the moment, but it has me at least motivated to prepare myself for old age. Once my retirement fund reaches a significant amount (say $5000 or so), I’ll probably split the funds and put half into an IRA and invest the other half. I am still in my mid-twenties so starting this now makes me feel more secure about my future. The sooner you start planning for retirement, the sooner you can retire. And who wants to wait until their 65 to retire? Not me, no thank you.

       There you have it. Starting up new accounts and settling down into a frugal, smart frame of mind so you can live a save first lifestyle. Nothing will happen overnight. Chances are you might even be struggling a bit. That’s okay. WE ALL DO. It’s perfectly natural and you aren’t a freak of nature. Life is difficult sometimes. It can throw some really nasty curveballs. So if you’re in a bad place right now, hold on tight. Start small and slowly snowball your success into something much larger. If you can only tuck away $10 or $20, then at least tuck that away. It’s something. It’s a start. Establish good patterns of saving and spending wisely. The first step in any life changing event is this: just start. Do it and stick with it. It’s as simple as that. Either you do or you don’t, but you are in charge of your spending, your savings, and your financial future. If you want to get where you’re going, you have to leave where you’re at.

Spend Money To Make Money


       First things first, and this may be the most important thing I tell you ever, so listen closely. Yes, this blog is combining survivalism with financial independence. And yes, having an emergency fund of money stashed away is important. BUT, in the event that the government collapses, what good will that money do you? Absolute Zilch is the correct answer. Money is only as good as the government backing it. Gold and silver will still probably be a commodity, but maybe not. Coins may also still be worth something, but there’s no way to accurately predict that. So before you do anything else, spend your money. Yes, that seems counter intuitive to what I am trying to do with this site. But spend your money. Spend it on supplies, on stockpiling food, on getting training for necessary survival skills. Spend it preparing yourself for a day when money won’t exist and where trading for goods or services will be the new economy. Once you have a stable survival kit and pantry together, then you save your money away. Don’t think just because you have thousands of dollars saved in the bank that you are safe. What happens if the economy collapses and the government folds, you think the FDIC is going to keep your money insured? What happens if they entire power grid goes down and the computer servers that held your account information are wiped cleaned? Always invest your money. First, in yourself: skills, classes, training, supplies, books, etc. Second, in your bank: get a savings account and stick money into it! Third, if you feel brave enough, try your hand at investing in some mutual funds, stocks, CD’s, or an IRA. Money might make the world go around now, but if the world as we know it ceases to exist, cash will no longer be king. So prepare yourself for that scenario as best you can, and then save away for a rainy day. Don’t get caught out in the cold with a fat wallet and a hungry stomach.