Friday, April 7, 2017

Guest Post: If You Find Yourself In A Hole, Stop Digging

by Tim Kies

I remember when I first became interested in the prepping lifestyle, back around 2005. It wasn’t called that back then; it was called the self-sufficiency movement, or the modern simplicity lifestyle, or many other names. Regardless of what we called it, everyone seemed to think that doing what our grandparents took as a normal way of living meant that we were somehow preparing for TEOTWAWKI.

I started trying to follow what the many websites from back then all said: I bought a few extra canned goods each shopping trip; I had a few cases of bottled water in the corner of the room; I even stored some extra gasoline (with stabilizer) in the shed . The only thing that I didn’t do was to have some extra cash on hand,  because the biggest problem that I had -- and that I suspect many preppers have -- is a mountain of debt.

I was earning well over $22 per hour plus overtime, but I never had any money. Instead, I was a typical American with a wallet full of credit cards with balances on them. I paid them every month, but I also used them every month, and so instead of the balances going down they always went up. I had no savings, so if a car broke down, out came another credit card.

I thought I was doing well by putting extra food in the pantry against some future crisis. But the fact is, the crisis was already occurring. Every time I spent $20 on supplies that I didn’t need, I put myself further into debt. If I had used that $20 on a credit card bill, I could have saved money spent on interest and gotten to the debt-free point that much faster.

What finally made me see the light was the realization that we had always had a car payment. Sometimes we traded an older, failing car in for something better while we were still upside-down on our first loan because we just didn’t have the money to fix the older car. I eventually realized that unless I paid it off completely, we would never have a car that lasted longer than its payments. I got mad at myself for the financial mistakes I had always made, and decided to try and get control of my money, especially since I was getting older but not getting ahead.

We scraped together the money from a tax refund, and with some extra overtime I paid off the car. We then sold it and bought a cheap van, later adding another cheap van. both paid for with cash and both with no collision insurance on them. We then began to get rid of our debt by paying off our credit cards and getting rid of them. A year later, instead of being even further in debt, we had actually begun to dig ourselves out of it. 

Then I lost my job. I had been making a very good income for 35 years, and suddenly that was gone. It is one thing to say "If you lose your job today, tomorrow your job will be looking for work", but it is a very different thing when it actually happens. Not only do you find that jobs for people with your skills and at your age are hard to come by, but they also don’t pay as well or give benefits. It soon became obvious to us that we would have no choice but to file for bankruptcy. 

I talked with my bankruptcy lawyer about negotiating with my creditors to reduce the balance and trying to pay my debt off myself. The lawyer was upfront and said that they had people to do that from time to time, but they ended up coming back to him and continuing on to bankruptcy almost without fail. 

We had no valuables to sell, and no decent prospects for making money enough to pay the debt off, so we filed for Chapter 7 where our debt was eliminated straight out. (This is used when you have no assets to sell, like boats, cars, coin collections, etc. and the debt is unsecured, such as credit card loans.) We were able to keep our home, which we still owed money on, but we could have also included that in the bankruptcy if we wanted to walk away from that debt at the cost of being homeless. The worst part of it all was that I had to admit to myself that I had royally screwed up.  You are actually not treated badly by anyone you deal with, except for yourself; the whole thing is simple, pretty straightforward, and painful.

Once we were out of debt, we were faced with the prospect of how to put the pieces of our lives back together. For me, that was getting a job. I eventually found a job at a mobile home park as a maintenance man. Because we were debt free, I was able to work part time. I worked there for two years until I could receive Social Security Disability for pain from a broken back that I acquired 30 years ago in a car accident. With back pay from disability, we were able to buy my wife a newer vehicle. We of course paid cash ($8,000), and this time we are maintaining full coverage insurance on the car since it is worth more than we are willing to risk losing in a crash. When the value of the car drops below $3,000 or so, we will drop full coverage on it and take our chances. 

Now we are completely debt free, so even on a limited income we don’t need as much as we used to just to get by. We have never had a written budget; we just make sure to stay on top of our bills, such as internet, gas and electric, and rent. We basically just learned to live within our means. That doesn’t mean that we can’t do things, like go on vacation or see a movie. It just means that we have a savings account that we use for things like that and we only take money from there. If we have the money in it, we can do something we want to; if not, we won’t, even if we have more than enough money in some other account or in the box in my drawer. But the biggest part of what we are doing now is that we are no longer just drifting along. We are doing things on purpose. 

I still do prepper things; I just think that I have gotten smarter about it. I no longer prep for the collapse of the world, but instead for a week-long power outage or a snowstorm that disrupts delivery of food to local supermarts. I have a fund that I save money in, and only a vague idea of what I am going to use it for. It might be a new gun, or some ammo, or maybe even a kayak, if I saw a great deal on one.

I am no authority on money, debt, or much of anything else. If I had paid attention to how my grandparents lived, I would have been much farther ahead then by simply following the path of least resistance. When they wanted to buy a new couch, or a lamp, they didn’t simply go to a furniture store and plunk down their credit card; they saved up enough money until they could pay cash for it. Not only did they appreciate the thing more, but as I have learned over the course of my life, they didn’t waste money buying the cheap junk that looks good on the showroom floor but doesn’t last as long as the payments on your credit card. They looked at things like that as an investment, and bought quality.

My goal in this is not to have you follow my path. My goal is to get you to think that a dollar spent on a can of beans might better be spent paying down a dollar of debt. It could end up saving you a lot more in the long run, and we ought to be looking at pepping as a long-term goal.

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