Category Archives: Self-Reliance

Articles, commentary, and information on becoming more self reliant.

My self-reliance project

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These last few weeks I have been struggling a bit with life in general. This weekend I spent some time soul-searching, scripture-searching, and just generally thinking. It occurred to me that self-reliance is more than just getting your finances and food storage in order. There is spiritual, emotional, and social self-reliance as well. And it occurred to me that in many ways I still have a long way to go toward being self-reliant.

So I’m going to start a project. Within a year I want to have a thoroughly mapped-out plan for personal self-reliance, and I want to have made significant progress in each area.

To kick it all off, I’m going back to the source. Well, one of them, anyway. Today I checked out Thoreau’s “Walden” from the library. It should be a good starting point, anyway.

So stay tuned. I’ll be posting more soon as I contemplate just what I’m getting myself in for here.

 

Tax refunds are not a savings plan

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When I was in college I would get a decent chunk of money back every year as a tax refund. I would call it my “Government Savings Program”. That was until my brother explained it to me. I was giving the government an interest-free loan for up to a year using money that I could actually be earning interest on. My perspective changed after that.

Don’t get me wrong. I am in no way anti-taxes. I prefer a government to no government, and there are quite a few services I enjoy. I’m willing to pay for those, even if I don’t always agree with everything my taxes get spent on. It’s the price we pay for living in a country where we are free to complain about, protest, or even seek to overturn government taxation. I could post in this blog that I think taxes are criminal, and all politicians should be shot–and I won’t be noticed, let alone arrested, beaten, and/or shot.

However, there is no reason why we should float the government a large loan every year just so we can feel good about the sudden influx of capital every April/May. The reality is that we could have been using that money ourselves for a variety of good causes, such as stimulating the economy for real, not just on paper. All it takes is a little bit of bookkeeping and discipline on our part.

Your W-2 form allows you to claim deductions that reduce the amount your employer withholds from your paycheck for taxes. If you find you are getting more than $1000 back from the Federal Government each year you may try increasing the number of deductions you claim by one or two. The goal is to get as close to zero refund as you can, though a few hundred dollars over or under certainly isn’t a problem.

Then note the amount difference in your paychecks. This amount, if you are already living within your budget, is extra cash flow that can be used for a variety of things, such as savings, investments, or funding some of your self-reliance projects such as building up a reasonable reserve of food, building a 72-hour kit, or laying up a supply of firewood.

It is worth noting, however, that the federal government and the state government tax at different rates. For example, even though I get close to a $1000 refund each year from the US Treasury, at least half of that goes into paying the amount of state tax I owe. I don’t adjust my W-2 further because the difference between federal and state taxes are pretty closely balanced. I use one to pay the other and walk away a few hundred dollars left over.

I’m sure most of us have said–or at least thought–that we could use our tax money at least as well as the government does. Well, if your yearly refund is larger than it should be, here is your chance to prove it.

 

Managing money requires visibility

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Many people will tell you the first step in managing your money is to create a budget. While I do believe budgets to be important, for many people the first step is something much more basic: getting in the habit of tracking your money.

This is not as easy as it sounds. In our highly-competitive society, there are more options for anything than we really need or know what to do with. For example, consider all the different options for simply paying for a purchase:

  • Cash
  • Check
  • Credit card
  • Debit card
  • Money order
  • Gift card
  • Credit
  • Electronic Funds Transfer
  • PayPal

I’m sure there are more, but you get the idea. Most of us use at least three of those options. I personally use all but two between my personal spending and my business. With so many different ways to buy something, each with a different means and rate of tracking, it can become very easy to at least temporarily forget where your money has gone.

It can be very easy, for example, to charge something on your credit card and then forget you’ve made that purchase until the statement comes up to a month later. It can be nearly impossible to stick to a budget if you spend money in a certain category, forget you spent is, and then spend that money again thinking you still have it available. When the bill comes you will likely find yourself surprised and over budget.

So what is the solution? Well, there are two, actually, that work together: Simplify and Track

Simplify: Do you really need all those different payment methods? Do you really need, for example, to have your savings account at one bank and your checking account at another? Do you need to use three different credit cards? Do you really need to use both checks and a debit card? Look for ways you can reduce the number of “Outgoing Streams” you use. While I did admit to using nearly all of the payment methods listed above, there are only two I use with any regularity.

Look for ways to simplify. Use only one credit card if you can. Put all your accounts together at a single bank. Choose to use either your debit card or your checkbook exclusively. If you find it difficult to choose between some options, always select the one that is easier to track.

Track: Develop a habit of gathering evidence of every purchase you make. Hold on to receipts. Write down all checks you write in your check register. Check your credit cards and/or bank accounts online at least twice a month. Keep a running total of all your accounts and expenditures in a single place and consolidate all your records into that Single Source of Information (SSI) at least twice a month.

I use Quicken as my SSI, but anything will do, so long as it is simple and you’ll use it. I keep the books for my homeowners association in a paper ledger, for example. because it’s simple and portable (for taking it to meetings for the members to audit the books). I consolidate my records three times a month; mid-month, just before month-end, and after month-end when my bank statement comes. Others may need less often than that, and some may need more, but I’d recommend no less than twice a month or you’ll miss making important payments.

Once you Simplify and Track you’re in good shape for devising a budget and getting your finances under control. You can’t control what you can’t see and understand. If you don’t develop the discipline to at least track your money you’ll never be able to develop the discipline to create and stick to a budget. Tracking your money is the foundation to every other step that leads to financial self-reliance and, potentially, independence.

Survival Tips from Popular Mechanics

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The weekend’s earthquake in Chile, following so closely on the heals of the Haiti quake and a lesser publicized quake in Japan, really emphasizes the importance of emergency preparedness. Popular Mechanics has been tackling this issue for awhile now, and has prepared a special section full of interesting articles. Go there to learn how to Survive Anything.

Glenn Reynolds, one of my favorite bloggers, has long been an advocate for emergency preparedness as well, and recently wrote this piece for Popular Mechanics.

 

Chilean earthquake creates fear of shortages

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A whopper of an earthquake in Chile has people lining up to buy gas in Hawaii. Twitpic here. I guess the resultant tsunami warning has people fearing the shipment of gasoline may be impacted, creating shortages. And of course, as in most cases, the fear of shortages creates the shortage. Perhaps this post wasn’t as radical as I sometimes think.

 

It’s 10:00. Do you know where your personal records are?

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Keeping track of personal records is one area that is very important, but usually overlooked. Nothing makes this more clear than a house fire, but anyone who has ever applied for a mortgage has also experienced the panic that comes from not being able to find key papers that were “right there, I know it!” Or has even gone to the emergency room with a minor injury and had to admit you don’t remember when your last tetanus booster was.

Perhaps the most important step in preparing for emergencies is to locate the most critical documents and put them together in a single, easy to grab repository–a binder or small box, perhaps. This way you know what to grab if you ever need to evacuate your home in an emergency. But good management of personal records goes way beyond dealing with personal disasters. It’s an ongoing process that takes some time and effort to begin with, but becomes almost effortless the more you get into it.

Managing (including risk management of) personal records is a favorite topic of mine. I’m starting a series discussing it in more detail over at Taxidrivermom’s collaborative blog, The Knot in the Rope. Rather than post in two places, I’ll post each installment there, and link to it from here. Meanwhile, check out Knot in the Rope. It’s got a little of everything if you’re interested in personal preparedness and self-reliance.

 

Frugality, financial compatibility, and the silver lining of unemployment

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One of the smartest financial decisions I ever made was marrying my wife. I’m a reasonably frugal guy, but she is great at it. I think it comes from living in Estonia under the Soviet Union for awhile. They didn’t have much, so everyone got used to getting by on very little. As a result she’s never been one to spend extravagantly.

When we got married I wasn’t making much money. It seemed like a lot at first because it was the first time I’d ever been on salary instead of wages, so thinking “lump-sum” made it sound so much greater than it really was. At any rate, when we got married things were a bit tight. We’d just barely squeaked our way into a home loan to buy my brother’s house, and it seemed like we were one major appliance failure away from financial ruin. Yet because we were frugal we got by, and even absorbed a few lesser financial problems.

In time, however, my income started rising. And that’s where my wife really helped out. My first instinct was to increase our budget to match our increased income. We could afford to live a little better now, I figured. But she was firm, insisting that we instead put that money into savings. I grudgingly went along with it at first, but after awhile I got a bit excited to see how much we were putting away and how we could endure minor setbacks more easily.

That became the pattern for the ten years we’ve been together. My income continued to rise, and as we were having kids, our expenses rose, too. But because of our frugality our expenses did not keep pace with my income. We were spending more money, but we were saving more, too.

Am I ever grateful for that savings now–and that frugality. I lost my job nine months ago, and though unemployment insurance helps, we still rely on our savings quite a bit. Our savings has been holding up amazingly well. That’s partly because we were saving so much, but it’s also because we know how to be frugal. The minute I knew my job was going away we went into “bare minimum” mode and were able to cut our budget by about a third. That really helps the savings go farther.

Eventually I will find work again, and then we’ll see the silver lining. Unemployment has helped us identify and eliminate some of the fat from our budget. When my income goes back up again it will be much easier to simply say “no” to letting our budget increase again rather than having to look for ways to cut back once we’ve gotten used to spending more. We can move forward with a much more efficient budget and with any luck rebuild our savings that much faster.

Of course first I have to find work, so our savings may continue to take a hit for awhile, but it’s comforting to know that I’ve got such a strong partner in my wife. It’s a big relief knowing that she’s working just as hard or harder to keep our expenses down right now. We’re under enough strain right now without having to clash over money as well.

Being married to someone I’m financially compatible with is a true blessing.

Keeping sufficient gas in your car

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To continue on the theme of the last post a bit, I believe it was the same person who first taught me about disaster kits who told me that you should always keep at least half a tank of gas in your car at all times. The reasoning, he said, was that in an evacuation you don’t want to have to stop to fill up. Even if you are not in any physical danger at the moment, you could encounter long lines at the gas station of those who do need to gas up.

It’s better, he said, to keep at least half a tank in your car. That way you can drive quite a distance before you really do need to fill up, and that should usually be enough to get you out of the area of danger. Gas stations farther away will not be as busy, as well.

I have always tried to heed this advice, at least most of the time. But thinking back on it, is it really necessary? Is it over-thinking things? Like the disaster kit it’s something that doesn’t really make sense until suddenly it does. But then, how many disasters are going to require that you drive 100 or more miles to escape?

What do you think? Is keeping half a tank of gas in your car a sound practice, or just needless fuss?

Disaster Kits

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Some people may question whether or not you need to stockpile food and supplies enough for long periods of time, but very few will argue that you don’t need a disaster kit. Disaster kits are portable supplies of food, water, clothing, and other essentials to last about 72 hours, or three days. That is usually the amount of time it takes to restore basic services in the event of a disaster.

Disasters can take on many forms. For example, the area where we live is known to have earthquakes. There is also the possibility of severe winter storms. Add to that, we live about a quarter mile from a major road in one direction, a quarter mile from a rail line in the other direction, and about half a mile from a major freeway. We are also not far from several industrial areas. An accident resulting in a chemical or oil spill could easily result in our evacuation.

Of course unless a disaster is very large in scope very few will be in a position where they cannot simply go stay with friends or family. But even then, if you catch them unprepared it may be better to have at least some basic supplies for yourselves.

What goes in a disaster kit? A lot depends on you, but Jodi and Julie over at Food Storage Made Easy have a good page dedicated to the topic of disaster kits. They also discuss different approaches to getting a kit here. The main thing is to get one. We bought small plastic totes and put together a tote for each member of the family. Once a year we go through them and rotate the food and make sure the clothing still fits. We have three children, aged nine and under, so we should probably update our kits more often than that.

Waterproof things when you can. During one recent inspection we found that a can of liquid had rusted through and leaked into one tote, making a stinky, sticky mess. Several other items were ruined by the moisture. If it is absolutely essential that some items be dry (such as matches, candles, or important documents) it’s worth putting them in a sturdy zip-lock bag, or even sealing them in durable plastic with a vacuum sealer.

Another very important factor is location. Disaster kits should be stored where you can get at them quickly during or immediately following an emergency. If you had ten minutes to evacuate, would you be able to get everything you need into your family vehicle in time? Store your kits near the most likely escape route from your home. Ours, for example, are right next to our garage door. I can have them loaded in the back of our mini-van in the time it takes to get all the kids into the van and buckled in.

It’s true that disaster kits take time and money to maintain, but if you ever need them they will be valuable beyond estimation. Just ask anyone in New Orleans during Katrina, the Indonesian tsunami, or the Haiti earthquake. Three days of basic supplies can literally be the difference between life or death.