A lot of my thinking recently has been about preparing for realistic scenarios (1,2,3, 4) . Maybe it is just that the last couple years have been pretty nuts but I have been thinking financial preparedness is far under rated. As Chief Instructor said "money gives you options."
Now I wonder..........
Are you better off having a few hundred bucks in an envelope or a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3? We all talk about how it is essential to acquire a good basic 4 (centerfire rifle, pistol, shotgun, .22) or more with lots and lots of mags and cases upon cases of ammo. However would you be better off having, say a defensive pistol and a pump shotgun (plus maybe a .22 but they are so cheap) and a wad of cash? I like guns. In particular I enjoy semi automatic magazine fed military pattern rifles. It seems like you don't get legitimate survivalist/ preparedness credits unless you have a safe/ closet with a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3 to brag about in posts, forums and comments sections. However if there are even semi common situations where a person in America needs a rifle for defensive purposes I have not heard about them. I can not thing of a single situation of a normal citizen having a 150 meter standoff rifle fight with psychotic murderers, gang bangers, meth heads or home invaders.
Don't get me wrong, I think having a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3 just in case you do have to fight off the people from the next block who are trying to steal your cereal is great. I am just not so sure that, considering what sort of situations are most likely to happen, and given the choice between the two you would not be better off with several hundred bucks in an envelope instead of a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3. As covered above the genuine defensive need for a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3 is questionable. However there is a real chance that when the power is out you might need to buy something. Maybe you have some sort of a crazy banking situation.There could even be a banking holiday and it sure would be nice to have a few hundred bucks in mixed bills lying around.
Taking that same train of thought a bit further. Are you better off having an honest years food storage for your family (a very worthy goal) or a solid emergency fund? Having a lot of food is a good thing. It lets you know your family will be able to eat for a long time without resupply. If need be you can just not go to the grocery store for a long time if money is short. However when was the last time large groups of people were totally unable to purchase/ barter for any food for a whole year? Sure it has happened now and then over relatively recent history throughout the world. Unlikely but possible.
However what are the chances that you will have a significant emergency like a sudden job loss or your house burning down or need for a lawyer or a major injury? I would say a lot higher than that you will not be able to get food from any source for a year. Sure if you don't need to go to the grocery store (because you are eating out of your food storage) for a long time that would drop your expenses some but the bank/ landlord will not accept bags of wheat as payment nor will the gas station accept canned chili. A legitimate argument could be made that you are far more likely to need a solid amount of money set away then enough rice, flour and beans for a whole year.
I am not saying that it is not prudent to have a quality defensive rifle like a Mini14/AR-15/AK-47/FN-FAL/M1A/HK G3 or that you shouldn't have stashing a whole lot of food be a priority. Being able to defend yourself if all of a sudden your neighborhood looks like Mogadishu or feed your family if that absolutely unlikely wheat rust/ 9 month pandemic quarantine/ full on Mad Max scenario are great goals. However doesn't it make sense to work from more realistic threats like needing to buy something when our typical very fragile banking system isn't working, or having a solid emergency fund set aside.
As for how to measure all this stuff up and choose where to put our resources (time and money) the word that jumps out at me is proportion. Work from most likely scenarios such as a home invasion, or whatnot to less likely ones. Maybe get a month or two worth of food as well as say, a pistol and a shotgun plus a few hundred bucks in cash. Then work towards more ambitious goals like acquiring a good rifle, setting aside a solid emergency fund and stash some more chow. Later on go crazy stashing away a lot of food. While some of these thoughts may or may not turn into a full post later the relatively current economic mess (and problems it has caused people) has shown me that we are far more vulnerable to financial problems and emergencies than other stuff we generally prioritize higher.
Thoughts?
Subscribe to:
Post Comments (Atom)
![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif)
![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_4.gif)
Posts
10 comments:
Using basic risk analysis- what is the risk associated with this wad of cash being rendered worthless through hyperinflation or economic meltdown versus any other risk scenario where tangible assets would be considered more useful or currency in and of themselves.
Having some savings to fall back on does not necessarily mean "cash savings" in dollars- think of your investment potential over multiple scenarios. My 2 cents and probably worth as much
I tend to agree with this proposition...
I'd say we're in the 80th percentile or higher society-wide for physical preps but much higher than that as far as personal finance and personal documentation preps go.
If an earthquake hits our city (the worst case scenario I can think of for my area) we'll both almost certainly be out of the house working (military/city employee), not bunkered down waiting for the zombie hordes to come. It would have to take a massive, sudden breakdown before either of us would be released from our posts. So I put a bit of dough towards each of the major categories every month -- focusing on "dual use" stuff that we can use in every day life too -- and we slowly improve the situation there while maintaining a stable economic position.
I'm always astonished at the number of "preppers" who have inadequate insurance for all their expensive stuff. Most people don't realize that a standard insurance policy (renter's or homeowner's) caps reimbursement for firearms at $1-3K, cash on hand to $200, collectibles/bullion at $200, etc. Additionally, they have no spare copies of their key paper documents. They'll invest tons of time and energy into stacking 5 gallon buckets of food and industrial sized shampoo containers but won't spend $5/month for insurance for their ten thousand dollar firearms collection.
Consider that the most likely "disaster" to occur is a house fire and most people are woefully unprepared for that!
Chris from AK
I agree, cash money or gold/silver is better than a safe full of guns. However, buying guns is a good way to hold money, for they tend not to loose value,but tend to gain value. This is one way at looking at your guns,a sorce of revenue in a ecomonic crises.
I also agree that the occasion of long stand off fire fights is not a foreseeable reality, but a scant one for most people.
Food,water,source of electricty should be priorites,alond with finacal security should be.
Granted,a weapon should be in there somewhere,but not the priority.
Just a thought I'd share.
CP, My understanding of risk analysis is that there are two primary factors.
The severity of a risk and its likelihood. The severity of that situation would be decent as your cash would go down greatly in value or become worthless. However the issue is likelihood. Our economy isn't good but I would say the odds that you might want some cash during a natural disaster or power outage are far higher than that our economy collapses to the point where cash is worthless.
You make an interesting point that savings do not necessarily need to be cash. However as Chief Instructor says "cash gives you options". Precious metals (which swing up and down in value wildly) or guns or whatever could be sold at some point. However if you need $400 right now good luck selling a gun or some PM's in the next 30 minutes at a decent price. Also guns are not in small enough denominations for most normal transactions. How can you give someone $50 worth of a Glock?
Chris, Insuring guns makes sense.
Conservative Scalawag, I have an issue with silver/ gold as a normal form of savings. Their prices often swing up and down wildly. Weapons are great to have and do hold their value though nowhere near as liquid as cash. I think having all of this stuff is great, just that using a balanced approach to get it is prudent.
If one already has a pistol and/or shotgun, has zero savings on hand, and won't be able to save that several hundred dollar for many months if they spend it on a semi-auto rifle, then save the cash. Otherwise I'd recommend buying a rifle, or several.
As already mentioned, hyperinflation could make that several hundred dollars near worthless. A rifle could be sold or traded if needed.
Agreed it's not cash on demand, but if laws change (remember the 90s?) there may not be an option to (legally) obtain the types or rifles described. All it takes is a few wachos with semi-autos in schools, malls, etc. to temporarily sway pubic opinion and give the current congress the green light to go gun ban crazy. Gold/silver won't help there.
If I was that broke, I'd start selling stuff on Craigslist, eBay, etc. since a basic AK can be had for $400, or an SKS for even less.
Suburban Survivalist, I think we fundamentally agree "If one already has a pistol and/or shotgun, has zero savings on hand, and won't be able to save that several hundred dollar for many months if they spend it on a semi-auto rifle, then save the cash. Otherwise I'd recommend buying a rifle, or several."
It isn't that I think having a good rifle is a bad thing, at all. Just that having some cash on hand is probably more useful assuming you already have some defensive weapons.
As for hyperinflation my thoughts are above.
My feelings is that cash and cash equivalents are valuable in direct relationship to the perceived stability of the overall system.
I would tend to think that cash/cash equivalents would decrease in utility as the system continues to destabilize. At a certain point (as yet to be established) a cash hoard becomes effectively useless.
So: Here it is in a nutshell. If you feel that the current economic/political system still has legs, save cash. If you feel it is going to deteriorate, then reduce cash as the prospects for destabilization increaes
Just to clarify, I am certainly not suggesting that you only buy tangible assets or only keep wads of cash in the shoebox under your bed... just like any investment, you play to risks- diversify the portfolio and spread the risks over many investments.
Personally, I think the threat of hyper-inflation or economic collapse is on par with a major disaster (hurricane in the Gulf) in 2010-2012 (probability-wise). I don't have volumes of statistical risk analysis backing up that statement, just a gut feel based on recent economic trend reports published over the last few months.
Anyway- good conversation as always- just decided it was time to begin speaking up on the blogs instead of being a casual observer.
Degringolade, The great thing about cash is that it is readily converted into something else. Far more readily than silver or guns or ammo. If you start getting seriously worried then take the cash and buy some stuff. Until that time the cash is there for whatever more probable needs. A person who is worried about things going bad would not want 10K in a wall safe but a hundred bucks in ones, a hundred in fives and two hundred in twenties would be plenty for a power outage and very helpful during a natural disaster but for most folks if the economy genuinely collapses it would be a tiny loss.
CP, I see where you are going. Having a few hundred bucks, a dozen ounces of silver and maybe a spare pump shotgun or revolver lying around isn't a bad idea. To me proportionality and having your eggs in a lot of baskets are one in the same or at least go together.
Good conversation. Thanks for being a part of it.
Wanted to let you know I have started a small blog (yeah, we need another of those). Might be worth checking out.
http://alaswasteland.blogspot.com
Post a Comment