Tag Archives: finances

Pay yourself first

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I took the last two days off from work because I caught some bug (not Wuhan Flu) and didn’t want to wind up knocking out half the people at work by giving it to them. I very seldom take Paid Time Off (PTO) so I’ve accrued a hundred or so hours of PTO that I can use. And I accrue another five hours every pay period. SO…taking yesterday and today off.

One of the things I did with the time was update my personal finance stuff. I’ve been using the same budget and spending plan since 2017. Hey, if it works, it works. But I needed to clean it up and streamline it a bit to reflect that I earn a bit more money now than I did seven years ago.

Succinctly, I live on about 45% of my income. The rest is immediately whisked off to various little hides. 15% goes into retirement investing, %15 goes into savings, %10 goes into an emergency fund, 10% goes into land fund, and %5 goes into my HSA. I very much understand that this is quite a departure from how most people live. Because of the way I live, I have a pretty small amount of living expenses. I don’t have a house payment, car payment, student loan payment, credit card payment, kids, or anything like that. My property rental covers my property taxes and insurance. My actual out-of-pocket living expenses are about $675 a month. That 45% of my paycheck covers that nut pretty quickly and leaves me a bunch left over for pretty much whatever I want. I don’t have the latest and greatest, and I’m using a ten year old computer (mostly for sentimental reasons), but ‘keeping up with the Joneses’ was never a thing with me.

What’s interesting, though, is that I have learned (the hard way) what the expression ‘pay yourself first’ means. I know most of us here are old-timers who have made way, way too many trips around the sun but for the younger crowd who maybe never had someone explain it to them, now might be a good time.

When I was younger, I had always heard the expression ‘pay yourself first’ when it came to money. I had no idea what that  meant. I just got my paycheck, doesn’t that mean I got paid? Pay myself what?

You are the main character in your life’s story. No one, and nothing, is more important than you. Ford financing, the electric company, Krogers, the local ISP, and the kid who mows your lawn are not  more important than you. When you get your paycheck (or any other income…be it lottery winnings, a gift, or $20 found in your winter coat pocket) the first person on the list of ‘where does this money go’ is you. You pull out the money that is earmarked for your savings, your investment, your ‘just in case’. Once that money is pulled out and safely stowed, then everyone else gets paid. That’s it.

Why is it so important? Because, as I have repeatedly hammered into the blogosphere, you will need $50 bills far more often in life than you will need .50 BMG. You will have job losses, personal losses, medical issues, sick kids, bad transmissions, leaky water heaters, broken pipes, emergency travel needs, desperate loved ones, and a million other emergencies that will magically be downgraded to ‘inconveniences’ because you were able to just Write. A. Check.

It doesn’t matter how much you earn…calculate a dollar value or a percentage value and that’s the amount you take off the top, first thing, every time. Large amount or small amount, doesn’t matter as long as its something. To paraphrase Shepherd Book: “I don’t care how much you save, just save it.”

Ten years ago I made so little money it was ridiculous, and that lack of earning wound up costing me a lot . When my head cleared, I looked for a career path that would provide better for me, I worked my way though the necessary education, and now I do okay for myself. I’m not rich, and I still make less than many people, (but my net worth, on the other hand….) but at the end of the month I have money in the bank, a roof over my head, food in the fridge, hot water in the pipes, and the security of knowing I have the financial resources to cover emergencies.

Part of preparedness includes being prepared in case the world doesn’t end. That starts with paying yourself first.

Redirecting resources

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Here’s an interesting thought for you to bounce around in your noggin: if you no longer had to direct any of your resources towards the firearms aspect of preparedness (that means guns, parts, optics, ammo,  holsters, etc.), where would you direct those resources and how would that impact your timetable of being prepared in those other fields?I ask because I may have hit the point where it’s just downright fiscally ridiculous to buy any more guns specifically for the sake of being prepared. I mean, I have, literally, dozens of AR-15’s, and the number of Glocks (and PSA clones) is right up there too. I mean, extra ammo is always a good idea, but realistically I can afford to shunt all the financial resources that have been directed on gunstuff into a new direction. I just need to examine what direction that should be.

Obviously the most glaring choice of a new target would be my land fund. Im getting older and I feel no closer to getting my Chunk Of Nowhere. But there’s also an appeal to beefing up the supply of gold and silver. Or, I suppose, a more resilient vehicle. Funny how theres never a shortage of things to spend money on, isn’t it?

Even when you factor in Primary, Auxiliary, Contingency, Extra, and Redundant levels of arms I’m still pegging the needle. Magazines? Literally in the thousands. Ammo? Well, the fire marshal would probably have nightmares if he knew.

Didn’t happen overnight, although it did pick up quite a bit in these last few years as my career path changed. But, still, I’ve got over thirty years of accumulating and accumulating to fall back on. With the addition of the Barrett I’ve pretty much checked all the boxes on the Post-Apocalypse Party Pak checklist.

I have some numbers in my head about what I’d like to have available to me in terms of precious metals and I can probably make that a reality in less than a year if I really throw everything at it. But at the same time, dang it, Zero wants that ground. I think what I’m gonna have to do is split it 50/50. Whatever I spend on PM’s, I put an equal amount in the land fund. And vice versa.

But the question remains: if you ‘finished off’ (although we all know youre never really finished) the gun aspect of your preperations, where would you refocus the resources and how would it change your timetable?

Living on 55%

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Every month I have a budget that I use. It doesn’t really change from month to month in terms of who gets paid, but the amounts differ for some things. I pay the exact same amount for utilities every month, regardless of what the bill actually says, so i usually have a small credit balance with them. I like the predictability of knowing I’m paying the same thing every month. It makes planning a lot easier and builds up a little cushion in case things fly off the rails.

But…some things I pay a percentage, rather than a fixed amount. Every paycheck I put 10% into savings, 15% into my retirement, 5% into my HSA, 10% into my emergency fund, and 5% into my Piece O’ Nowhere fund. That means that 45% of my (after tax) paycheck is gone …whoosh!…before I even see the cash. Or, in other words, I’m living on 55% of what I make. And, trust me on this, I don’t make a lot. In fact, according to various sources on the interweb, I make well below the average median American income. Way below. So how can I live on 55% of my paycheck?

Well, it isn’t an existence of big-screens, $5 latte’s, new cars every four years, and trips abroad ‘because I deserve them’. I have a paid-for house, paid-for truck, no medical/student/creditcard debt, and I live within my means. I eat leftovers, I eat out once a week, I use the same computer for years at a time, I take the high deductibles on insurance, I shop around, and I am content with ‘good enough’ most of the time. The only luxuries I really indulge in are guns.

As a result of all this, I get to feel fairly secure. And it’s that feeling of security that makes it worth the effort. Althoguh, to be fair, after a while it doesn’t seem like an effort at all. I’ll walk through CostCo and, yeah, that 84″ high definition TV sure looks good…but then I ask myself which I would rather have when I break a leg or lose a job…the TV or the couple grand in cash? Then it becomes an easier choice and a small TV doesn’t seem like such a bad thing.

The economic craziness we’re in (thanks Joe!) is a lot easier to weather when you’ve got something set aside for just these sorts of emergencies. Can everyone do it? No…there are plenty of people who have come late to the financial responsibility party and are bringing in baggage….mortgages, car payments, student loan debt, etc. Its like starting a race with lead weights tied to your feet. But, you know what, even with lead weight tied to your feet you can still run faster than if you didnt try running at all.

I don’t like telling anyone what to do, youre a sovereign individual…you do you, buddy. But, I can only tell you what”s worked for me and you can decide if thats something that might work for you. I’ve been living on a budget, and not a very tight one, for almost twenty years and it’s made my life a lot easier than it would have been if I didn’t have it. You can go back in the blog and see where water heaters have puked and alternators have died and it never amounted to more than a minor hiccup in my life. Wasn’t always that way, I promise you.

I know, I know….this is a blog about preparedness, not personal finance. But the thing is, personal finance is part of preparedness. If youre the kinda guy (or gal) who keeps a spreadsheet of how much food, motor oil, and ammo they keep on hand then you shouldbe just as diligent about knowing where each dollar you make is going to go. Thats all a budget is…it’s a plan for what youre going to do with the resources you have. You make $3,000 per month? Write down how youre going to spend all $3,000 next month. Spend it all on paper until zero remains. Then stick to that budget as best you can. Next month, tweak it a bit. Next month, a bit more. Pretty soon you’ll know exactly what you need to allocate and where.

2023 promises to be no better than the last two years, so getting your ducks in a row regarding money…while you still have some….is probably not a terrible idea.

When it rains it pours

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I have said it over and over, and I know you guys are tired of hearing it….but it’s Truth: You will need $50 bills far more often than you will need .50 BMG.

I finally(!!) got the water heater issue resolved and it was not cheap. But, thats what a grossly overfunded emergency fund is for. I just jumped on the computer, moved money to my personal account, gave the guy my debit card, and it was a done deal. Finito. Time for a hot shower!

And…just in time for a dental emergency that also is not going to be cheap. Fortunately, I have an overstuffed HSA that I keep for just this sort of thing.

And…my homeowners and auto insurance come due this next month.

Thats a buncha cash outlays to be facing all at once.

Am I stressed? Am I concerned? Am I worried?

No.

I’m not even giving it a second thought. Know why? Because every single paycheck I put a percentage into my emergency fund (water heater fix), into my HSA (dental fix), and once a month I put a chunk into my insurance account (homeowners and auto), And I do this faithfully, religiously, without fail. Every month, every paycheck.

As a result I wind up with some increased resiliency. Yeah, I’ve got a basement full of guns, food, ammo, and a safe full of silver. But those stashes of cash, for specific types of emergencies/expenses, has streamlined my life a lot more than the cases of 5.56mm have. But…play it safe, have both.

The War Budget

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Years ago, when things took a financial turn into the ditch, I figured I’d try living on a budget. It’s not as constraining as it sounds. You might think “But if I have to live on a budget how will I ever buy a gun?” Uhm…pretty easily, actually…you simply budget $xx each month for gun purchases. It’s not rocket science. My budget is, maybe, 20 items. And thats the budget I try to live on. Follow the plan and everything works out.

Financial resilience… simple, just not easy.

When I make my budget, obviously, I have a pretty good idea of what I need to purchase/spend each month. I know I need to put money away for property taxes, auto insurance, etc, etc. And my budget is predicated on bringing in a certain amount of money every month. Although you can write a budget without knowing how much you’ll have to work with, its a lot easier when you do know how much you’ll have to work with.

So, I have my usual budget. But, what if I lose my job? Or I can’t work? Or, for some reason, my income gets halved…or worse. Theres a plan for that. I call it The War Budget. It’s the budget for when belts need to be tightened, fat trimmed, and resources stretched as long as possible….without starving to death or becoming homeless.

I take my normal budget and start slashing through it… Cable, Spotify, entertainment, dining out, subscriptions, etc….all zeroed out. Grocery budget? Knock 25% off, at least…this is why we keep a lot of food on hand. Gasoline? We’re riding the bike more and traveling less. That sort of thing. It’s the budget that is used on what cash resources are left.

Of course, this means that you have to have something tucked away to fall back on ‘just in case’. After several years of living on a budget that includes setting aside money every month specifically for this sort of thing…I’ve got about six months of living expenses in cash. And, interestingly, another six months worth of living expense in gold and silver. Theoretically, I could have $0 income until this time next year and nothing would have to change. But, of course, I’d be an idiot to have no income and not trim my expenses. Thus…The War Budget. In the frenzied “OMG what am I going to do” mindset that follows when your boss says “Don’t take off your jacket”, the last thing you’re going to be able to do is think clearly enough to come up with a workable financial plan for how to make what you have last until you get back on your feet. This is why I plan the War Budget in advance. I can mope back to the house, flop into a chair disgustedly, have a nice pity party, and basically flip a switch and know how to spend money going forward.

Is it sexy? Is it exciting? No, of course not. But it’s what keeps me from having to carry an armful of beloved guns to a pawn shop three weeks later because the water, electric, and gas bill is due. It’s just another part of preparedness….no different than wargaming how you’re going to get out of your town and to your bugout location. Except this scenario might be a tad more likely to happen before the other one does.

At the moment, my job is pretty secure. But so what? For all I know the building may burn down tomorrow, the .gov may shut it down, the franchise may get bought out by corporate, the boss could get drunk and fire everyone…whatever. No job, even when you work for yourself, is truly secure. You. Just. Don’t. Know.

So, my suggestion, or recommendation, to you is that you might want to wargame a scenario where your income gets cut to $0 for a period of time. What will you continue to spend on? What will you stop spending on? What resources will you set aside for that contingency? It’s worth thinking about because sooner or later, you’re going to find yourself staring down the barrel of a job/revenue loss… especially nowadays. Go jump into Excel and write up your own War Budget. And here’s the most important thing: if youre willing to live on a budget in a time of crisis like that, then be willing to live on a budget when things aren’t in crisis…because that how you wind up being able to be ready for that crisis period.

By the case? Buy the case….Pt IV

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About 18 months ago my local Albertsons had a good sale on pasta and I took advantage of it like Bill Clinton takes advantage of interns. Well, that sale came back and I decided i could use a few(!) cases of rigatoni.

Shopping carts are for amateurs. When the Zero stocks up, he goes deep.

Savings? Well, according to my receipt, what normally would have cost 238.80 came out to sixty bucks. (Got careless, forgot to ask for the 10% case discount.)

The apocalypse will be a fairly carbohydrate-heavy experience what with all the rice and pasta in storage, it seems.

In actuality, this is mostly my desire to have a large amount of day-to-day use items on hand in case some sort of financial donkey punch occurs. When you show up at work one day and your boss says “We’re being bought out by another company. This office will close in three weeks. Good luck.”, you really want to have some of the expensive niggling details (like food) locked down. Also, I just feel calmer and more at peace when I look at the shelves and see boxes and cans of food, racks of toiletries, paper towels, soap, detergent, and all the other consumables that keep my quality of life above that of some Third Worlder.

Wouldn’t it make more sense to stockpile the cash instead of the food if I am worried about such things? Well, yes…except for that part about the fabulous sale. Lets put it this way: You have $60 cash in hand..save it or buy food? If you’re worried about a job loss, for example, and you’ve tied that $60 in food, then you only have that one thing (food) covered. But if you keep the $60 in cash, you can use it to buy food..or fuel..or electricity. So does that mean it makes more sense to stick that $60 in the bank? Nope.. heres why: I didn’t buy $60 worth of food. I bought $240 worth of food and paid $60. Or, put another way, if I stuck that $60 in the bank, when I used it in the future I’d get only $60 worth of food. In this particular case, my purchase power today was 4x what my purchase power would be with that same $60 later.  (Disregarding inflation, which would actually make todays purchase more than 4x the purchasing power.) The more clinically minded of you will say “Wait, we’re drifting into Time Value Of Money country..” Yes. Yes we kinda are.)This doesn’t mean you shouldn’t put money away as part of your preps…it just means that you need to think about things past the obvious. Maybe you already do that..I didn’t used to. Preparedness is really about resource management in regards to risk reduction – we try to get the most for our money when we take steps to protect ourselves from future problems.

Regardless, I’m pleased with todays purchase. It’s more food on the shelf and one less thing I have to worry about acquiring when/if I hit an economic rough patch.

Article – 40% of Americans can’t cover a $400 emergency expense

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Four in ten Americans can’t, according to a new report from the Federal Reserve Board. Those who don’t have the cash on hand say they’d have to cover it by borrowing or selling something.

The bright side? That’s an improvement from half of adults being unable to cover such an expense in 2013. The number has been ticking down each year since.

Speaking as someone who just had an unexpected vehicle expense pop up, I can tell you that I ain’t in that 40%. Are you?

It’s not nearly as sexy, but it is true: you are far more likely to experience an emergency calling for your stash of US greenbacks than you are for an emergency that requires your plate carrier and NVD’s.

Part of preparedness is being prepared for the unsexy stuff: water heater failures, alternators, dead refrigerators, broken pipes, exploding appendixes, and other sundry crises.

It’s no secret that I try to follow the Dave Ramsey stuff….and I’ll be accused of drinking his particular Kool-Aid but..it’s worked well for me. The alternator died and what might have otherwise been an emergency was downgraded to an inconvenience. I just took the money from the emergency fund and threw it at the mechanic. Next day…functioning vehicle. No muss, no fuss.

Now I drop everything and work on topping off my emergency fund back to its normal level.

If you set back food, ammo, fuel, and meds ‘just in case’ then you really shouldn’t have trouble understanding that adding ‘money’ to that list is just as good an idea as the other items. The trick is having the discipline to do it and then forget that the money is there.

My financial goal, in case anyone is interested, is a years worth of money to cover my basic expenses – food, utilities, taxes, etc. It won’t be a huge amount since I can live without luxuries, but having a years worth of expenses tucked away gives me options I might not otherwise have in case theres a job failure or other ‘personal’ end of the world.

No lie, man…get a couple grand tucked away as soon as possible and forget that it’s there. It’s the best thing you can do to give yourself some peace of mind that allows you to worry and work against bigger things.