Practical Paranoia, part 4
Wow, a month and a half late. Can you say, "not at the top of my priority list?" For those of you reading regularly, my apologies, and then off to the show.
As it's been a while let's make a quick summary. I think there are three "chicken little" scenarios that are in the realms of possibility for the US within the next year or so. These are peak oil, the popping of the housing bubble, and economic doldrums. This series was a brief discussion, then each was to have a bit of a general "so if I think it's coming, what should I do" topic. Because it's one thing to see the train coming, and it's another to get out of the way. (And yet a third if you figure out how to successfully sell tickets, but I'm going to try to do that in a later post.) This, number four, is "economic doldrums". I've made it a bit of a catchall - recession, depression, with overly strong inflation or deflation contributing. It's the fact I'm trying to cover both these last that's given me my delays. On with the show.
The major thing about an economic doldurm is that money needs to stretch further than what it used to need. So the major planning is to do one of two things: planning for more available money; planning for stretching what you've got.
So, how to we plan to have more available money? Two ways, actually. One is to set aside savings NOW for spending LATER. This is very hard for most of us - we want our toys, and we want our nights out and we want our clothes and... It's a given that most of us in the US spend everything we get up front. I'll return to this because I've some suggested solutions, but I want to mention the other way. The other way is to plan a second source of income. er - not only monetary income, but sources of goods and services. For almost everyone this will feel like (and for all intents and purposes will BE) another job. For those already working two or three jobs this isn't going to help - not directly, anyway. For the rest of us, think of what you've got. For example, I'm a librarian, and I do computer work at the library for the library. I can use those skills for bonuses: I can fix and modify computers; I can teach people to use computers (both the basics, and how to do what we call 'information literacy'); I can teach people how to effectively use the library (though this may require going to the library and may slide right back into the risk of conflict of interest). Additionally, I can: tutor (English and Math obviously, US history, US government/civics); grow and trade herbs and veggies; prepare food (cook it, make pre-cooked meals for eating during the week, etc); drive passengers; and several other things. Worth noting is that some of these require licenses. Others are borderline about needing licenses. And the etc shows that I've other skills as well. I'm a good teacher, too, so many of the skills can be taught instead of doing - something that can be worth a fair amount of barter as well, but which can eventually lead to being 'out of work due to competition'. Perhaps it's obvious that I'm prepared to earn more money. I'll lose free time, but I won't go broke.
I want to return to how to save money - it's a failing I've observed a lot. The problem appears to be pretty simple for most of us: it's just too easy to access and spend our money. This includes credit cards - even though we may have locked away part of the money, we can surrogate spend with the credit card and then pay out of our locked funds. Still, locked funds are a start, so let's go there first.
You need the assistance of your financial institution - bank or savings and loan. Basically, you will have them AUTOMATICALLY draw a portion of your payroll check into a savings account of some sort - an account which you've made just a bit more difficult to withdraw. At the least, no checks and no ATM/debit card on that account. For a higher level of difficulty, require a bank officer co-signature on the withdrawal slip. To push it a step higher yet, set it in some sort of fund that requires AT LEAST a day to move into your hands. No, not a CD as those have a fixed duration and you can't get it if you need it - though using this autodraw for CDs is another good option for investment that I recommend, it should be second to establishing savings.
Now either way you've got a bit more money available - either stuff set aside, or the ability to get more, or both. It's there if things go south. But as I said there's another option: doing without.
I really recommend taking time now to figure out what you can do without, and how you're going to keep from going mad while doing so. Eating out is enjoyable on many levels. Internet access, cable TV, DVD purchase and rental - all are things that may have to leave your budget. Be careful, of course, to identify what you'll need. For example, at least part of my 'moneymakers' are connected to my computer, which includes my internet access. Cutting that access would remove that source of income, so it's got to remain (but with the intent of the cost being recouped in other income). Don't be unrealistic - for example, while I like to read books you may not, and saying you'll start reading (or taking classes or anything else you've not done before) even though you don't really like it much means you'll be, well, you're going to have a hard time getting through it all. So in your things to do include just how you're going to have human contact. Not just work (or second job) but people with whom you can socialize just because you enjoy their company.
So the basics of coping are to determine what you can do to cover the shortages - more income, less expense. Boring, really.
Next session, though, I want to play a bit of mix and match and a touch of speculation. Because I suspect that not only can you get by, but if you're imaginative and can spot the subtle cues you can actually get ahead.
As it's been a while let's make a quick summary. I think there are three "chicken little" scenarios that are in the realms of possibility for the US within the next year or so. These are peak oil, the popping of the housing bubble, and economic doldrums. This series was a brief discussion, then each was to have a bit of a general "so if I think it's coming, what should I do" topic. Because it's one thing to see the train coming, and it's another to get out of the way. (And yet a third if you figure out how to successfully sell tickets, but I'm going to try to do that in a later post.) This, number four, is "economic doldrums". I've made it a bit of a catchall - recession, depression, with overly strong inflation or deflation contributing. It's the fact I'm trying to cover both these last that's given me my delays. On with the show.
The major thing about an economic doldurm is that money needs to stretch further than what it used to need. So the major planning is to do one of two things: planning for more available money; planning for stretching what you've got.
So, how to we plan to have more available money? Two ways, actually. One is to set aside savings NOW for spending LATER. This is very hard for most of us - we want our toys, and we want our nights out and we want our clothes and... It's a given that most of us in the US spend everything we get up front. I'll return to this because I've some suggested solutions, but I want to mention the other way. The other way is to plan a second source of income. er - not only monetary income, but sources of goods and services. For almost everyone this will feel like (and for all intents and purposes will BE) another job. For those already working two or three jobs this isn't going to help - not directly, anyway. For the rest of us, think of what you've got. For example, I'm a librarian, and I do computer work at the library for the library. I can use those skills for bonuses: I can fix and modify computers; I can teach people to use computers (both the basics, and how to do what we call 'information literacy'); I can teach people how to effectively use the library (though this may require going to the library and may slide right back into the risk of conflict of interest). Additionally, I can: tutor (English and Math obviously, US history, US government/civics); grow and trade herbs and veggies; prepare food (cook it, make pre-cooked meals for eating during the week, etc); drive passengers; and several other things. Worth noting is that some of these require licenses. Others are borderline about needing licenses. And the etc shows that I've other skills as well. I'm a good teacher, too, so many of the skills can be taught instead of doing - something that can be worth a fair amount of barter as well, but which can eventually lead to being 'out of work due to competition'. Perhaps it's obvious that I'm prepared to earn more money. I'll lose free time, but I won't go broke.
I want to return to how to save money - it's a failing I've observed a lot. The problem appears to be pretty simple for most of us: it's just too easy to access and spend our money. This includes credit cards - even though we may have locked away part of the money, we can surrogate spend with the credit card and then pay out of our locked funds. Still, locked funds are a start, so let's go there first.
You need the assistance of your financial institution - bank or savings and loan. Basically, you will have them AUTOMATICALLY draw a portion of your payroll check into a savings account of some sort - an account which you've made just a bit more difficult to withdraw. At the least, no checks and no ATM/debit card on that account. For a higher level of difficulty, require a bank officer co-signature on the withdrawal slip. To push it a step higher yet, set it in some sort of fund that requires AT LEAST a day to move into your hands. No, not a CD as those have a fixed duration and you can't get it if you need it - though using this autodraw for CDs is another good option for investment that I recommend, it should be second to establishing savings.
Now either way you've got a bit more money available - either stuff set aside, or the ability to get more, or both. It's there if things go south. But as I said there's another option: doing without.
I really recommend taking time now to figure out what you can do without, and how you're going to keep from going mad while doing so. Eating out is enjoyable on many levels. Internet access, cable TV, DVD purchase and rental - all are things that may have to leave your budget. Be careful, of course, to identify what you'll need. For example, at least part of my 'moneymakers' are connected to my computer, which includes my internet access. Cutting that access would remove that source of income, so it's got to remain (but with the intent of the cost being recouped in other income). Don't be unrealistic - for example, while I like to read books you may not, and saying you'll start reading (or taking classes or anything else you've not done before) even though you don't really like it much means you'll be, well, you're going to have a hard time getting through it all. So in your things to do include just how you're going to have human contact. Not just work (or second job) but people with whom you can socialize just because you enjoy their company.
So the basics of coping are to determine what you can do to cover the shortages - more income, less expense. Boring, really.
Next session, though, I want to play a bit of mix and match and a touch of speculation. Because I suspect that not only can you get by, but if you're imaginative and can spot the subtle cues you can actually get ahead.
posted by Kirk at 11:58 AM
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