Here is a concept that may need to be discussed based on some responses I saw regarding paying off mortgage and credit card debt. It's called the financial thermostat.
Think about the thermostat in your home that controls your furnace and air conditioner. We set the upper limit for a certain temperature. If the heat in the house gets to that temperature, the air conditioner turns on and cools us down. We set the lower limit to a certain temperature. If the heat in the house gets to that temperature, the furnace kicks on and warms us up. We are kept in a nice comfortable range.
The same happens to us in our financial life. We get used to a certain amount of debt and certain amount of savings.
Let's say we have a debt tolerance of $10,000 not including our mortgage. If we go out and finance a car or charge up a vacation to Disneyland, we start to get a little 'hot' and uncomfortable. Our debt is now above our comfort range and we work a little harder trying to get the debt down to where we like it. In terms of the financial thermostat, our air conditioner turns on. However, we start paying off our debt and get down to $10,000 and suddenly paying more toward debt isn't so urgent anymore. As a matter of fact, if we get below $10K, we might feel free to charge a little more to the credit cards because we're still in a comfortable range.
The same happens with our savings. If we're used to seeing $1,000 in the savings account, not including 401k investments, we don't worry much. Then an emergency strikes and we have to withdraw some of that money. We start to get antsy and work a little harder to get that money back into the savings account. In terms of the financial thermostat, our furnace kicks in. But let's say the savings account gets higher than we're used to. Let's say we get a windfall and suddenly have $2,000 in the savings account. Now $1000 is mentally burning a hole in our pocket and we're looking for ways to spend it. Our thermostat is saying that we don't need an extra $1000 in savings.
One the keys to personal finance, is examining where our financial thermostat is set. Many people are perfectly comfortable having thousands of dollars of debt and ZERO savings. Their furnace and air conditioning never kicks on. That can lead to a rather uncomfortable existence.
The next step is to consciously reset our thermostat. For instance, we can decide that we want to feel really uncomfortable with any credit card debt. As we pay down that debt we have to be aware that we're going to be getting signals that it is okay to NOT carry out our plan. Our old financial thermostat setting is going to want us to loosen up. We'll have to live debt free for a couple of years before we get used to the new thermostat setting. The same thing happens in our house. If we consciously decide we're going to set the furnace at 68 degrees F instead of the old 74 degrees F, then 68 degrees or even 70 or 72 is going to feel awfully cold for a while.
This is one of the reasons why paying off credit card debt with a mortgage refinance or home equity loan doesn't work. When we do that we haven't reset our financial thermostat. We're actually UNcomfortable with zero credit card debt and subconsciously give ourselves permission to charge up the credit again. And this is why so many people have a hard time saving even an emergency fund. Having that money 'just sitting there' makes them uncomfortable. We have to consciously reset the financial thermostat for savings to the new, higher level.
Tuesday, March 17, 2009
Saturday, February 21, 2009
14 Common Stockpiling Mistakes
#1 - Shopping at a regular grocery store.
Bypass the regular grocery store UNLESS they have what you want on sale as a 'loss leader'. Sometimes these items have purchasing limits, though, so you have to be creative in getting the quantity that you want. Instead, look for what you need at warehouse stores. Don't just go to Costco and Sams Club. Look at places like Grocery Outlet or Cash-n-Carry or Smart-n-Final. Also, buy direct from suppliers when you can. That means contacting wholesalers (look in the phone book) to see if they will sell you case lots. Sometimes you have to organize a buying co-op and split an order among the group to get the best deal. If you're buying by the case, NEGOTIATE the price. You should get a discount for a large order. Lastly, contact your local LDS community to see if you can join in on a canning day at a local food processor. For working in the factory, you often get a greatly reduced price on the item they are making that day. Sometimes your local University Extension Office will also have information about these events.
#2 - Buying unusual foods like MRE's or pre-packaged emergency buckets.
Buy ONLY what you're going to eat or use. Buy basics and only what is a necessity. Don't stockpile optional items. Buy items that can be stored for a long time or only buy what you can use before it expires. (And yes, toothpaste expires.) Buy items in container sizes that you can use. It is no use opening up a gallon of olives unless your family will eat a gallon of olives in, say, a week.
#3 - Not storing food appropriately.
Don't expose canned foods to temperature extremes or high humidity. The garage is not usually a good place for food storage. The same usually goes for the laundry room. Be creative but keep an inventory! Store canned goods under beds or stack cases and cover them with a tablecloth to make end tables. Store lighter weight items in the closet space above the top shelf. Use any dead space you can find.
#4 - Relying on the freezer.
Try to avoid stockpiling food that needs to be refrigerated or frozen. Freezing food is an incredibly expensive way to store food. Save the freezer for really expensive food items like meat that you can use soon. Can the harvest! Even meat can be canned at home with a pressure canner. Dehydrate foods, too. That is an incredibly compact way to store food. Vacuum pack shelf stable foods.
#5 - Not allowing for shrinkage.
We did a great job of shelving our stored foods. Water was on the floor, fragile jarred items were on the shelf above. If they fell off the shelf, most of the jars would survive unbroken. The plan worked, too, until the '89 Loma Prieta earthquake when the food in glass jars fell off the shelves and the shelves of heavy canned foods fell on top of them. Oops! In many emergencies, there is a chance you'll lose part of your long term storage. Count on 10 to 20%. Also, watch for rodent and bug infestations. Prepare ahead of time to discourage them. We lay down sticky trays so we get an indication of what is crawling around when we're not looking. If a critter gets in, deal with it immediately.
#6 - Not rotating your inventory.
DATE your canned goods so you can rotate the stock. If you are going to donate the item, you can remove permanent marker with rubbing alcohol. USE what you store in everyday eating. Whatever forces us to eat exclusively from the stockpile is usually a stressful situation. Don't make it worse by completely changing the family's diet. Know how to use the basics. For instance, I must have over a dozen recipes for making foods out of powdered milk. I can even make cheese with it.
#7 - Not including a broad range of vitamin, mineral and fiber rich foods, especially vitamin C.
Humans need vitamin C everyday. Most long term food store is woefully amiss in vitamin C. We usually get enough protein or could live on less, but a diet low in fiber will be painful. And a diet that is suddenly high in fiber can be worse. Some people store multi-vitamin or mineral pills as a little extra insurance.
#8 - Not storing comfort foods.
For some people this would be chocolate. For others it would be coffee or alcohol. If you smoke, quit. If you can't quit store some tobacco. Keep in mind that some of these comfort foods can be used for barter.
#9 - Not storing emergency non-food items.
Even if you don't regularly eat off paper plates or use a paper towel, if there is no running water, the disposables will become a necessity. The same goes for needing things like wet wipes and large plastic garbage bags. Make sure you have supplies for sanitation.
#10 - Not having the proper tools.
If all you have is an electric can opener, your canned goods are useless if the electricity goes out. Can you cook your food if you don't have power to the stove or microwave?
#11 - Under-estimating calorie needs during an emergency.
Usually an emergency requires us to increase our physical activity significantly. Just a little thing like having to walk or bike everywhere instead of use the car will change our calorie requirements dramatically.
#12 - Under-estimate the need for water.
Water isn't just for drinking! You'll need to wash with it - both personally and objects. You'll need water for cooking, too. While I tend to use rice a lot, I can only really use it when water is freely available.
#13 - Not preparing for medical problems.
If you have chronic medical problems, be sure to stockpile your regular medications, too. Work with your doctor on this. Sometimes they'll give you samples to keep at home or write your prescription for double what you actually need. Mail order pharmacies are cheaper and will usually send you 3 months of medications at a time. Basic anti-biotics can be bought through veterinary supply houses - and yes, it is the same stuff that humans take. Just make sure you're informed on dosing requirements.
#14 - Not preparing on pet needs.
If your pets are members of the family - and some will provide extra security, too - you have to feed them. In the same way you don't want to be suddenly changing your diet, you don't want to suddenly change your pet's diet either.
Bypass the regular grocery store UNLESS they have what you want on sale as a 'loss leader'. Sometimes these items have purchasing limits, though, so you have to be creative in getting the quantity that you want. Instead, look for what you need at warehouse stores. Don't just go to Costco and Sams Club. Look at places like Grocery Outlet or Cash-n-Carry or Smart-n-Final. Also, buy direct from suppliers when you can. That means contacting wholesalers (look in the phone book) to see if they will sell you case lots. Sometimes you have to organize a buying co-op and split an order among the group to get the best deal. If you're buying by the case, NEGOTIATE the price. You should get a discount for a large order. Lastly, contact your local LDS community to see if you can join in on a canning day at a local food processor. For working in the factory, you often get a greatly reduced price on the item they are making that day. Sometimes your local University Extension Office will also have information about these events.
#2 - Buying unusual foods like MRE's or pre-packaged emergency buckets.
Buy ONLY what you're going to eat or use. Buy basics and only what is a necessity. Don't stockpile optional items. Buy items that can be stored for a long time or only buy what you can use before it expires. (And yes, toothpaste expires.) Buy items in container sizes that you can use. It is no use opening up a gallon of olives unless your family will eat a gallon of olives in, say, a week.
#3 - Not storing food appropriately.
Don't expose canned foods to temperature extremes or high humidity. The garage is not usually a good place for food storage. The same usually goes for the laundry room. Be creative but keep an inventory! Store canned goods under beds or stack cases and cover them with a tablecloth to make end tables. Store lighter weight items in the closet space above the top shelf. Use any dead space you can find.
#4 - Relying on the freezer.
Try to avoid stockpiling food that needs to be refrigerated or frozen. Freezing food is an incredibly expensive way to store food. Save the freezer for really expensive food items like meat that you can use soon. Can the harvest! Even meat can be canned at home with a pressure canner. Dehydrate foods, too. That is an incredibly compact way to store food. Vacuum pack shelf stable foods.
#5 - Not allowing for shrinkage.
We did a great job of shelving our stored foods. Water was on the floor, fragile jarred items were on the shelf above. If they fell off the shelf, most of the jars would survive unbroken. The plan worked, too, until the '89 Loma Prieta earthquake when the food in glass jars fell off the shelves and the shelves of heavy canned foods fell on top of them. Oops! In many emergencies, there is a chance you'll lose part of your long term storage. Count on 10 to 20%. Also, watch for rodent and bug infestations. Prepare ahead of time to discourage them. We lay down sticky trays so we get an indication of what is crawling around when we're not looking. If a critter gets in, deal with it immediately.
#6 - Not rotating your inventory.
DATE your canned goods so you can rotate the stock. If you are going to donate the item, you can remove permanent marker with rubbing alcohol. USE what you store in everyday eating. Whatever forces us to eat exclusively from the stockpile is usually a stressful situation. Don't make it worse by completely changing the family's diet. Know how to use the basics. For instance, I must have over a dozen recipes for making foods out of powdered milk. I can even make cheese with it.
#7 - Not including a broad range of vitamin, mineral and fiber rich foods, especially vitamin C.
Humans need vitamin C everyday. Most long term food store is woefully amiss in vitamin C. We usually get enough protein or could live on less, but a diet low in fiber will be painful. And a diet that is suddenly high in fiber can be worse. Some people store multi-vitamin or mineral pills as a little extra insurance.
#8 - Not storing comfort foods.
For some people this would be chocolate. For others it would be coffee or alcohol. If you smoke, quit. If you can't quit store some tobacco. Keep in mind that some of these comfort foods can be used for barter.
#9 - Not storing emergency non-food items.
Even if you don't regularly eat off paper plates or use a paper towel, if there is no running water, the disposables will become a necessity. The same goes for needing things like wet wipes and large plastic garbage bags. Make sure you have supplies for sanitation.
#10 - Not having the proper tools.
If all you have is an electric can opener, your canned goods are useless if the electricity goes out. Can you cook your food if you don't have power to the stove or microwave?
#11 - Under-estimating calorie needs during an emergency.
Usually an emergency requires us to increase our physical activity significantly. Just a little thing like having to walk or bike everywhere instead of use the car will change our calorie requirements dramatically.
#12 - Under-estimate the need for water.
Water isn't just for drinking! You'll need to wash with it - both personally and objects. You'll need water for cooking, too. While I tend to use rice a lot, I can only really use it when water is freely available.
#13 - Not preparing for medical problems.
If you have chronic medical problems, be sure to stockpile your regular medications, too. Work with your doctor on this. Sometimes they'll give you samples to keep at home or write your prescription for double what you actually need. Mail order pharmacies are cheaper and will usually send you 3 months of medications at a time. Basic anti-biotics can be bought through veterinary supply houses - and yes, it is the same stuff that humans take. Just make sure you're informed on dosing requirements.
#14 - Not preparing on pet needs.
If your pets are members of the family - and some will provide extra security, too - you have to feed them. In the same way you don't want to be suddenly changing your diet, you don't want to suddenly change your pet's diet either.
Sunday, February 15, 2009
Preparedness categories
Let us start preparing by figuring out where and what we need to prepare. Here are the categories to consider:
~ Food: this includes cooking and storing methods plus special needs like feeding a baby or pets. This category also includes seeds in case the crisis goes on so long we need to grow our own food. Water is in this category.
~ Clothing: yes, I also have more clothes in my closet than I need, but do I have a spare pair of walking shoes and socks in my car? Do I have winter gear for everyone? Do I have appropriate clothes for hard work that I might need to do in an emergency?
~ Shelter: this includes where we live currently but also how we're going to find / make shelter in case we have to relocate. We also have to be prepared to 'shelter in place' in case of a tornado, bad winter storm, or environmental hazard (all that duct tape and plastic sheeting we were supposed to buy a few years ago, remember?) This will include how to heat the space and get light.
~ Medical: including first aid, treating on-going chronic conditions, and advanced aid in case help can't get to us. I'm putting birth control this category, too.
~ Self-protection: (no, not birth control) this category is for how we're going to protect ourself in case of looters, rioters, and other dangers. This means writing up an action plans and testing them out, for instance, house evacuation in case of fire. I'm also including in this category the 'bug out bag' which is a backpack (more than one, actually) that contains basic self sufficiency supplies. If you have to leave and you can't grab anything else, at least grab the B-O-B. (stop laughing - yes I know what else is called a BOB.)
~ Communications: How will you gather family together if you're seperated? How will you get word to far-flung family that you're safe? How will you get help?
~ Transportation: What if you need alternative transportation? What if gasoline isn't available (electrical outages and the pumps aren't working, etc).
~ Currency: this includes cash on hand and items or skills that can be used for barter or trade.
~ Sanitation / cleanliness: this category includes everything from washing dishes to washing clothes. How will you bath / shower? How will you take care of toileting needs if the sewers stop working or the septic system fills up?
~ Moral and mental health: in this category consider how you will entertain yourselves without a TV, computer / internet or a gaming system. How will you keep from getting on each other's nerves. Remember, stress will probably be high. How will you keep the youngest ones out of harms way so you can labor on taking care of the basics? Will you homeschool the kids if the schools close?
Reference books for all the above would be sorted by each category. I'm thinking the same would go for tools, ie: a shovel to dig a temporary potty with or a manual can opener for all the canned goods, etc.
~ Food: this includes cooking and storing methods plus special needs like feeding a baby or pets. This category also includes seeds in case the crisis goes on so long we need to grow our own food. Water is in this category.
~ Clothing: yes, I also have more clothes in my closet than I need, but do I have a spare pair of walking shoes and socks in my car? Do I have winter gear for everyone? Do I have appropriate clothes for hard work that I might need to do in an emergency?
~ Shelter: this includes where we live currently but also how we're going to find / make shelter in case we have to relocate. We also have to be prepared to 'shelter in place' in case of a tornado, bad winter storm, or environmental hazard (all that duct tape and plastic sheeting we were supposed to buy a few years ago, remember?) This will include how to heat the space and get light.
~ Medical: including first aid, treating on-going chronic conditions, and advanced aid in case help can't get to us. I'm putting birth control this category, too.
~ Self-protection: (no, not birth control) this category is for how we're going to protect ourself in case of looters, rioters, and other dangers. This means writing up an action plans and testing them out, for instance, house evacuation in case of fire. I'm also including in this category the 'bug out bag' which is a backpack (more than one, actually) that contains basic self sufficiency supplies. If you have to leave and you can't grab anything else, at least grab the B-O-B. (stop laughing - yes I know what else is called a BOB.)
~ Communications: How will you gather family together if you're seperated? How will you get word to far-flung family that you're safe? How will you get help?
~ Transportation: What if you need alternative transportation? What if gasoline isn't available (electrical outages and the pumps aren't working, etc).
~ Currency: this includes cash on hand and items or skills that can be used for barter or trade.
~ Sanitation / cleanliness: this category includes everything from washing dishes to washing clothes. How will you bath / shower? How will you take care of toileting needs if the sewers stop working or the septic system fills up?
~ Moral and mental health: in this category consider how you will entertain yourselves without a TV, computer / internet or a gaming system. How will you keep from getting on each other's nerves. Remember, stress will probably be high. How will you keep the youngest ones out of harms way so you can labor on taking care of the basics? Will you homeschool the kids if the schools close?
Reference books for all the above would be sorted by each category. I'm thinking the same would go for tools, ie: a shovel to dig a temporary potty with or a manual can opener for all the canned goods, etc.
Friday, February 13, 2009
What kind of disaster?
Before we start preparing, we should identify what kind of disaster we're preparing FOR...
~ Local, short-term disaster: This could be anything from your house catching on fire to a 3-day power outage to a neighborhood manufacturing facility suddenly spewing toxic chemicals.
~ Weather related disaster: You know ... the usual ... earthquake, snowstorm, ice storm, hurricane, tornado, flood, volcano eruption, sink hole, et al. Identify the most likely to occur in your area (folks along the Las Madres fault keep in mind the possibility of an earthquake) then prepare accordingly.
~ Economic failure: This could be anything from a sudden job loss to worldwide economic collapse.
~ Bio-hazard outbreak: Bird flu or whatever pandemic they are predicting this year.
~ Violent social / political unrest: Rioting and looting is usually combined with one of the disasters above but can also occur on its own such as 9/11 or any other terrorist attack.
Sometimes the problem is localized and sometimes it is broader.I personally believe the goal would be to survive the more likely disasters although the ideal would be to thrive, as well. Thriving is just gravy, though.
Let's get started.
~ Local, short-term disaster: This could be anything from your house catching on fire to a 3-day power outage to a neighborhood manufacturing facility suddenly spewing toxic chemicals.
~ Weather related disaster: You know ... the usual ... earthquake, snowstorm, ice storm, hurricane, tornado, flood, volcano eruption, sink hole, et al. Identify the most likely to occur in your area (folks along the Las Madres fault keep in mind the possibility of an earthquake) then prepare accordingly.
~ Economic failure: This could be anything from a sudden job loss to worldwide economic collapse.
~ Bio-hazard outbreak: Bird flu or whatever pandemic they are predicting this year.
~ Violent social / political unrest: Rioting and looting is usually combined with one of the disasters above but can also occur on its own such as 9/11 or any other terrorist attack.
Sometimes the problem is localized and sometimes it is broader.I personally believe the goal would be to survive the more likely disasters although the ideal would be to thrive, as well. Thriving is just gravy, though.
Let's get started.
The Foundation Club
I'm reading a book that was written in 2006 and it is scary how accurate the author has predicted some of the government actions such as bank and mortgage company bailouts, and increased spending in programs to stimulate the economy. (Old adage: You can't borrow your way out of debt.)
The book also predicts rapidly rising inflation which I agree will probably happen this year. So while I'm hoping we will never see riots in the cities, nor do I think we'll have to 'bug-out' to a safe house, as are predicted in the book, it does occur to me that it doesn't hurt to prepare a little bit for difficult economic times.
The first step would be to form a preparedness club. It is preferred to do this in real life, but we can also motivate each other on-line, if there is interest. I propose we name it "The Foundation Club" merely because that is where I'd like to focus - not on Y2K survivalist techniques - but on strengthening our basic lifestyle and economic foundations with a focus on resources, not just money, and a nuts-and-bolts approach to physical preparedness (emergency evacuation kits, etc.)
The book also predicts rapidly rising inflation which I agree will probably happen this year. So while I'm hoping we will never see riots in the cities, nor do I think we'll have to 'bug-out' to a safe house, as are predicted in the book, it does occur to me that it doesn't hurt to prepare a little bit for difficult economic times.
The first step would be to form a preparedness club. It is preferred to do this in real life, but we can also motivate each other on-line, if there is interest. I propose we name it "The Foundation Club" merely because that is where I'd like to focus - not on Y2K survivalist techniques - but on strengthening our basic lifestyle and economic foundations with a focus on resources, not just money, and a nuts-and-bolts approach to physical preparedness (emergency evacuation kits, etc.)
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