men in food line
How to Prepare for Financial Disaster

Rational Prepping: Part 1, Financial

men in food line
How to Prepare for Financial Disaster

I read an article this week about how preppers are “crazy”. The article’s point was that many people are going overboard, spending gazillions of dollars on prepping for Armageddon-type events and circumstances. I get the author’s point: there are indeed some preppers out there – probably more than we know – who aren’t “rational prepping” by any stretch of the imagination. The stories are available everywhere; stories of people who are so full of fear that they’re preparing in ways that are more about fear than about logic.

I read about one guy who’s storing up millions of dollars of nickels because he believes it’s a safe metal to invest in. And then there’s this story about the multi-million dollar underground condo bunkers, complete with a full gym and state of the art security team. With all of these stories floating around online, I can see how people would brush aside the prepping community as a bunch of nutcases. But not all preppers are wasting their entire life savings on precautionary measures for Armageddon-type events that may or may not come.

The majority of preppers are what we like to call rational preppers. By that I mean that they are prepping quite logically for events that have been shown to occur – and to bring financial, physical and emotional disaster – on a regular basis. I like to think we’re that kind of a prepping family. And I know other prepping families that have either experienced first hand the need to be prepared, or who live closely with others who found their prepping well worth the effort.

Great Deal of the Week:

In that vein, I want to talk a bit today about “rational prepping” and what that looks like. Given the expanse of info I’m sharing, I’ll be breaking this info into three posts. You won’t find links to underground bunkers for sale here, or links to nuclear safety suits. Instead, you’ll find helpful information for real-life disasters that happen to people each and every day, and you’ll find tips for preparing yourselves for those types of real-life disasters.

Financial or Economic Meltdown Prepping

A financial meltdown can occur on a “local” level or a “global” level. By “local”, I mean that a meltdown can happen in your own home/family via an unexpected joy layoff or a massive medical or home repair bill. This Marketwatch story shares that an astonishing 62% of Americans have no emergency savings. That type of a non-savings situation puts people at risk of a serious problem should a job layoff grace their doors. It also puts them at risk of a slow financial death as they nickel and dime their way into what could easily turn into a situation where bills can’t be paid. I know, because that’s exactly how we got into unsustainable debt.

Our friend Brian from over at Debt Discipline fell prey to the same problem. He had his wake-up call when all of their credit cards were maxed out (to the tune of 109k), no one would give him more credit, and he needed cash. Luckily for Brian, his wake-up call threw him and his family into serious action, and through serious discipline they dumped the entire debt load in 4.5 years.

The reason that practicing financial preparedness isn’t irrational is because financial emergencies are quite real and frequent in today’s world. Jobs do get loss, massive bills do come, and it’s evident from reading the news that a national or global economic meltdown isn’t really all that unrealistic. We saw it in Cyprus, and we saw it in Greece. America is not immune from those types of situations, not with nearly 19 trillion in government debt, and 11 trillion in personal debt. Anyone who thinks our country can sustain itself without risk with those types of debt numbers is living in a fantasy world.

So, how can you practice rational prepping for financial purposes?

Pay off Your Debt

I’m telling you, friends, your debt IS an emergency. Your debt keeps you in bondage to your job and to your lenders. Those two forces will call the shots in your life until your debt is paid off. If that’s okay with you, all is well in your world, but I speak firsthand when I tell you that when your employer decides they no longer need you, it’s a scary thing to face your creditors with no foreseeable income. Some people even talk of debtors’ prison returning to the forefront. Whether or not that’s true, I don’t know, but it’s not a chance I wan’t to take with our family.

Here at The Frugal Farmer, we have LOTS of resources on how to start your own journey to debt freedom. Check them out today by clicking here, and make a plan to dump your debt for good.

Suggested Reading: How and Why You Should Get Out of Debt: Intro

                              How and Why You Should Get Out of Debt: Part 1

                              How and Why You Should Get Out of Debt: Part 2

                              How and Why You Should Get Out of Debt: Part 3

 Decrease Your Basic Living Expenses

Or at least have a plan to do so. Determine your bare bones or desperate measures budget and make a plan whereby you can implement it quickly if need be. Find out what you really need to live on, and have a plan in place to cut the rest.

Increase Your Savings

Start working to build up an emergency fund that will have enough money of at least 6 months’ worth of expenses. Debt payoff takes priority over savings, but be sure to have at least a grand put away while you’re working on debt payoff. When the debts are gone, kick tail on building up your e-fund.

Worried about a run on the banks and a lack of access to your cash? Put some money in a secured safe at your home. But don’t tell anyone. A huge part of successful, rational prepping is keeping quiet about what you have and where it’s located. Smart preppers don’t brag about their prepping plan, and they don’t share it with anyone they don’t trust 110%. And that list should be very, very small. People do irrational things when they’re scared – even people who would normally never do irrational things.

Stock Up on Supplies

One of the reason’s our friend Lance’s neighbors survived their layoffs so successfully is because they had 6 months of food and toiletries stocked up in their homes. Imagine how much money you would NOT have to spend if you had 6 months’ worth of food, toilet paper and toothpaste in your home. This would reduce your monthly income requirements substantially.

Rational preppers make a 3, 6 or 12 month stockpile of foods and toiletries they use on a regular basis, and they rotate out and replace those products, just like the grocery stores do, so that they never run the risk of being stuck with 6 months’ worth of expired foods.

Suggested Reading: 10 Tips for Smart Long-Term Food Storage

                               Stockpiling Basics: How to Stockpile on a Budget

Well, friends, that should keep you entertained for now. Next time, we’ll publish part 2 of this three-part series. Until then, work on formulating your plan for rational prepping.

10 comments

  1. Mr. SSC says:

    I definitely agree with “rational prepping.” Some of the people featured on the prepper shows are kind of out there, but then no one would tune in if they were “normal” about it. 🙂
    I still get antsy thinking about layoffs, but I get reminded that we could even further decrease our monthly spending quite a bit, and in short order too. Not having a crushing amount of debt is key to being able to do that. I say no debt, but we do have a car note, and the mortgage, but beyond those two, we don’t have debt. The plan would be to pay the car off if , lol.

    Then, we could go a couple of ways with our life trajectory from there, but the biggest point is that we would be well set up if it happened.

    • Laurie says:

      You guys are the perfect examples of rational preppers, Mr. SSC. Smart preparedness is the key. I cannot wait until we are done with paying off debt so that piece of our puzzle will be firmly in place.

  2. I think the biggest prepping I would do would be financial, like you said. I have put myself in a very precarious place in the past and have no desire to ever repeat that. I’ve never had a stash of cash at my place, but I think you might be on to something there. Nothing HUGE, but something. Our biggest threat here is earthquakes, and who knows if ATM’s will be working in that case. OF course I would imagine a lot of stores wouldn’t be open anyway but…
    I also have some room not to stockpile, so I might do a little bit of that in case of an emergency. Nothing crazy, but just enough to be prepared.

  3. I’m glad I went back and read this. We’re saving up our big emergency fund right now, and although I know logically that it’s a good idea, I’m really lacking in that long-term steady patience to save it. I needed to be reminded of the ever-present possibility of what you call a “local financial meltdown”. Our family struggled with loss of income once for a prolonged period of time. There are no guarantees that we won’t again. An e-fund would truly make all the difference. Thanks!

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