Living in dangerous times

In dangerous times, try to be in a position where a reduction in income will do a minimum of serious damage -
Live conservatively, put any savings into an appropriate investment. The worst of all is stocks - they have a nasty way of disappearing completely. Some kinds of paper are better than others. But nobody in our family has so much money they have to invest in someone else's' business. Bank deposits are safe to the extent of insurance provided by the Federal Deposit Insurance Corporation, the government agency (unless the government goes broke). The problem with money savings is that in hard times it is almost certain to decline in value.

Some good investments are developing salable skills, developing your own business (selling something people will always need such as food, firewood, skills such as mechanics, house repair, etc .); buying items for resale in the near future (if you have the skills), but don't get over extended. Look for ways to make money on the side consistent with your life style.

The most important, and first investment anyone should make, is in a modest home. Rent is a bottomless pit you throw money into. Ideally, the payments should be well within your ability to pay. Pay off as quickly as possible. That way you are at risk for less time, and you don't loose as much money to interest. Fixing up an older house is a great idea, if you have the ability. If your occupation requires you to move, get something that can be resold easily.

Cars are a great sink for money. Own as few as will meet your family needs. Own one status car if you have to, but keep the others small and cheap. This saves gasoline, insurance, tires, etc. You are doing well by riding a bicycle if the distance to travel is short. This also great for your health.

Your occupation off farm, if necessary, should be something dependable, something that will be required even in bad times. Some government jobs meet this standard. Teaching is a good example. Of course, the salary may be reduced, but a job is better than no job. Some kinds of companies produce goods or services that are always needed. Groceries, health services, hardware, (but not clothes), public transportation (not airlines), etc. meet this criterion. You have to think about your individual situation, though. Think about the stability of a particular industry in which your skills are to be used. A computer programmer would find some jobs stable and others not. Hourly labor is very subject to changes, very unstable.

Don't use credit card borrowing. This is really important. If you have a credit card pay it off each time before interest becomes due. Interest on credit cards is sinfully high, and late payment or non-performance charges will eat you alive. For large items get a bank loan. Credit cards and too many big loans are the principal cause of bankruptcy at the present time, and any little nip up in interest rates, or downturn in the economy where people get laid off causes an upturn in bankruptcy.

Both husband and wife should have some insurance. The surviving spouse will miss them not only physically and emotionally, but financially, also. Term is best. Investment by the insurance route is secure, but it has a low payoff, frequently less than inflation.

Two incomes in the family help stability. You need benefits - medical, dental, etc. Getting them by one spouse is important, both is better.

Work hard to keep your marriage stable. Divorce is a disaster in many ways, financial not the least. For farm people it means “kiss the farm goodbye” in all too many cases. Get help from a pastor or councilor if you need to.

There are a lot of obvious things that you do already: avoid addictions (alcohol, drugs, cigarettes, gambling, expensive vacations, etc.), buy sturdy but inexpensive clothes and household items, look for bargains, don't buy until you can pay for things. Don't borrow from loan sharks. Don't put a mortgage on your home to pay other bills, or worse, to finance consumer spending. Better to have ratty clothes, an empty and cold house than no house at all.

It is absolutely painful to think about these things and make decisions, particularly when it requires withholding part of your income you are used to enjoying. People seldom bother to think about money and how to get it, nor was I taught to, but the older I get the more I realize all these things are within the range of rational analysis. Not one person in twenty does it until forced to. Many of the others get burned, some badly.