The War Budget

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Good judgement comes from experience, and experience? That comes from bad judgement.  If you suffer a job loss, catastrophic event, divorce/death of a spouse, major medical episode, or any number of financial EOTWAWKI events, you’re already at a disadvantage because your head is in a bad place and you’re probably in no shape to make short-term tactical financial decisions. Why would you be? Caught in the moment, your major thought is survival..keeping the lights on and not starving.

We wargame and make plans for the end of the world, right? We have maps, escape routes, stashes of gear, emergency communication protocols, etc. But, as I’ve said over and over, you’ll have a bunch of small personal EOTWAWKI events that are resolved with $50 bills long before you have the EOTWAWKI event that is resolved with .50 BMG.

So, it would stand to reason, that if youre going to be so prepared that you have contingency plans for the apocalypse, perhaps it might be a good idea to have plans for those personal apocalypses as well.

I learned the hard way that when youre suddenly in a financial hardship and you don’t know where the next dollar is coming from, thats the worst time to suddenly write a budget or spending plan. Dude, you need to have that duck already in the row so that when you get that big pink slip or your income takes a headshot you simply open up the folder to the plan and you follow it.

For me, thats what I call ‘the war budget’. I try to live on a budget, which I have always recommended you do, and I have created and maintained a separate budget just for a crisis like the one I described. When my personal financial situation suddenly drops into chaos, I can open a folder, pull out the War Budget, and know that a lot of time and thought went into it and that if I follow it I’ll have the best chance of muddling through.

The War Budget is simply my regular budget stripped down to the essentials and with all the fat trimmed out. Retirement contributions on hold, dining out eliminated, investing on hold, services like cable and the like are reduced…the goal is to establish the minimum dollar amount needed to keep me in the fight.

This isn’t something you can just come up with in ten minutes as youre driving home from what used to be your job or business. You just won’t have your head in the game enough at that moment to be making clearheaded decisions…this is why you have to come up with this plan beforehand when you’ve got time to think it through. The first step, of course, is to have a regular budget that youre working with that you can start going through and editing. Food budget? Cut it and dip into your short-term food storage.Fuel budget? Trim it…your driving to job interviews and not  much else. Cable television? It’s outta here. Buying gold? On hold. Roth contribution? On hold. HSA contributions? On hold. Vacation? Forget about it. Its time to regroup, refocus, reorient, and re-engage.

The War Budget works best, unsurprisingly, when you’ve made other preparations for this sort of thing a part of your life when times are good. You have enough food in the cabinets and freezer that cutting back the grocery budget doesnt mean eating any less. You’ve created an emergency fund that can cover your bare minimum expenses for the amount of time you project it’ll take for you to get back on your feet. You’re a survivalist, you should have been preparing all along.

I look at my normal budget and compare it to the War Budget and see that it’s a reduction of about 20-25% in most things, and the outright elimination of others. But that number at the bottom of the column is the one I live and die by. Take the emergency fund, divide it by the amount in the War Budget, and thats how many months you have to get your feet back under you.

Obviously, once we’re back on our feet the plan is to replenish what we used, add to it, and create a state of even more resilience. That’s how this is supposed to work. But here’s the important takeaway from this post: when you are in the midst of the crisis is not the time to plan how youre going to survive it. In the midst of the crisis you’ll have the ‘fog of war’ clouding your judgement…you won’t see the things you need to see. This is why you need to have a plan ready to go that is well thought out, periodically revisited and updated, and … most importantly…trusted. When you stagger home shell-shocked and thinking “Now what am I going to do?”, what you want is to have the confidence and faith that you’ve got something in place that has already done all the thinking for you. Something where if you just ‘follow the plan’ you’ll be fine. Hence…the War Budget.

But remember, guys….the War Budget is a budget of resources..money. And for any budget to work, you have to have those resources that need budgeting to begin with. Without a an emergency fund, the War Budget is almost useless. And without the War Budget, the emergency fund is in danger. When crunch time hits, you can’t just spend indiscriminately…you need to make the most of the resources you have. So…War Budget.

I’ve had a couple episodes in my past where I had no idea where the next dollar was coming from, and I seriously had doubts there’d be electricity in my home in the morning. Those experiences sucked, but they brought about the good judgement I exercise now in regards to being prepared for the personal EOTWAWKIs. If I were to lose my job tomorrow, I could operate for a rather comfortable amount of time on the War Budget and my emergency fund. Having the emergency fund is crucial, but so is having a plan on how best to maximize when that emergency hits.

You do you, of course.

 

14 thoughts on “The War Budget”

  1. I’ve had to ‘war budget’ a few times in the last 40-50 years but always made it through and overall did ok. So, retired and just coasting along and tucking away a penny or two just in case when the wife gets sick and six months late is gone. That was not a war budget – it was one month at a time and an ongoing and changing fight to stay ahead, work the ‘system’ and preserve what ever I could. Having been prudent in retirement there was a good chunk of wiggle room in the month to month and I was able to make it all work and not loose what we had built and earned.

    The smart thing was we did do a sick/death plan and while, like most plans, didn’t survive contact with the enemy it was enough structure that I could use to make it through. The key factor in my version is we got old, knew it and did the ‘death file’ stuff so it couldn’t kill both of us if one passed. That kind of planning (especially for seniors) is really important and often missed – we all age out so, best plan for it too. Don’t forget, where and to who is all the left over “stuff” going?

  3. Well said sir! Been thru a rough one earlier in life alone raising teenagers by myself thru high school and college. Had to get them on their way in life and fortunately I am a beef farmer so it was a tad better than Ramen and spaghetti every night but it worked!
    Thank goodness for guys like Dave Ramsey I admire the hard work he does teaching people grit and determination.

    • Ramsey may be ok for some of his debt baby steps. But beyond that I think his take on finance is overly simplistic and pretty dubious. Lot of cult red flags with him.

      • Half of family problems come from poor money management. I like his tough love approach people need to hear more of that. I’m not sure where the cult thing comes from I’ve listened to his shows he sounds more like an unadmitted prepper. Heard he recently hosted a group of 1,000 people at his compound recently in Tennessee.

  4. Had some rough patches in 45 years of adulthood. Lost ground but kept working with my wife who also grew up knowing financial stress.
    About to retire very comfortably, unless it all falls apart. Then it is SPAM, beans and rice from the bins in the basement.

  5. In 2014, I had to have a heart valve replaced. This required time off from work (5 weeks) for the recovery. Doctor bills – hospital bills – lab bills all at once. Plus the everyday utilities bills we all have. Thank God my vehicles and house were paid in full already – I don’t think I could have made it without those done. I had to ‘pie slice’ my payments, two weeks for one, then two weeks later another and two weeks later another party. It took almost eight months to pull it off. That was when it became very important to have finances already in hand for these emergencies.

    I figure if a collapse happened suddenly, it would be crazy to wait until it happens before I go to the bank and cash out major sources. Others would be doing the same and a crowd of people waiting for their money (which may or may not happen) is a huge waste of time.

    So I keep at least $8,000 – $10,000 in my possession just in case I only have time to scoot right now. I figure plenty of others will be pricing their stuff at scalper level so paying $20 per gallon of gas might be required. Food and water – much better to have already in hand.

  6. So having been both a Boy Scout and having grandparents that experienced the depression, we have always had a preparedness bent. So fortunately every life issue we’ve experienced, medical, job loss etc. was essentially absorbed by the food/cash stash we’ve always had on hand. To Zero’s point, we’ve never needed any of the ammo stash. However, feeling confident in our current level of preparedness (which is to say, no more confidence than anyone else) instead of investing in more gold and silver (and lead and brass), I’ve started buying up old tools. I’ve got enough rifles to arm up my neighbors, so now I’m stockpiling wrenches, screwdrivers, sockets, files, punches, hammers, shovels, rakes, axes, mauls etc.

    • You probably already do this as well. but would add stockpiling hardware to go with the tools. Well organized collection of fasteners, basic building supply of materials. That sort of thing.

  7. I second Anonymous.

    Simply put…you can’t do something with nothing.

    Don’t forget knowledge, practice and experience not to mention, a little luck.

  8. Remember to not put all eggs( supplies) in one basket have at least a minimal supply cached elsewhere. Lived through two house fires and nothing like shoveling everything into a dumpster to bring home the point of redundancy

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