If you are short on time and want a quick list of tips, click here for Ten Free Things You Can Do Right Now. Otherwise, read on:
How to Prepare When Times Are Already Tight
Here at PeakProsperity.com, I manage correspondence and respond to most incoming email from users, among other things. We sometimes hear from people who complain that our site is not relevant to their situation because they have no extra funds to invest or put toward preparedness.
Let me be the first to say that there is something here at PeakProsperity.com for everyone, and there absolutely are meaningful ways to improve your situation and outlook even if you don’t have “extra money.” The good news is that there is still time, and with a little creativity and awareness, you can also be among those who feel more securely prepared for the very different future that we are facing.
My husband and I have four children who are not yet teenagers, and we live a relatively frugal but comfortable life. We have managed to keep afloat even through financial ups and downs, but like many Americans and others around the world, we live roughly paycheck-to-paycheck. If something unexpected comes up, we rob Peter to pay Paul (as my mother used to say), and then the next month we rob Paul to pay Peter. It’s not ideal, but it is real. Sound familiar?
The reality is that the next twenty years are going to be very unlike the last twenty years. Systems and practices that we currently take for granted are likely to change. Awareness of our predicament, flexible expectations, and a willingness to creatively meet any challenge are fundamental preparedness “tools” that everyone can and should begin with. You are reading this article, and that is a helpful step. Do not let a lack of financial resources become an excuse for not taking meaningful action.
Assess your needs, think creatively, make backup plans, and be flexible.
The very first thing you should do is work through the Self-Assessment worksheet on our site. Some people find that it is especially helpful to do this worksheet with others. It is well worth working through in detail, but if you are reading a printout of this article and do not have access to the Self-Assessment, here is an abbreviated version:
Think of all of the areas of your life in which you and your family have needs. This might reasonably include shelter, food/water, warmth/coolth, sanitation, hygiene, medical care, stress management, meaningful relationships, and entertainment. Your personal list may include other things as well.
Next, think of how each of those needs is currently met. For example, perhaps you live in a cold climate and heat your home using oil during the winter. Or perhaps you live in the city and your drinking water and sanitation needs are met through public utilities. Perhaps your tried-and-true method of stress management is to watch sports on TV. The most important aspect of this exercise is to become consciously aware of the systems that help us get our needs met. We rely on these systems, often without even thinking about it.
And now comes the creative part. Take a look at each category, one by one, and imagine what your situation would be like if the usual method for meeting that need became unavailable.
This is not meant to cause anyone panic, though you might feel unsettled thinking about how much you take your preferred solutions for granted. Instead, this is an opportunity, because here is where you come up with a backup plan and reassure yourself that you can get your needs met even if your usual method fails.
Perhaps you are already further down this road than you realized. Perhaps you have already dealt with a layoff or intermittent income gaps and have had to figure out how to make ends meet. Perhaps you have dealt with utility shutoffs or extended power outages and have had to find a way to cope without easy light or heat/air conditioning (or, if you live rurally, running water and flush toilets) during that time. Perhaps you have already lost your home to foreclosure and have had to sort out an alternative living situation. Perhaps you have found yourself with a medical emergency but no insurance and no funds to cover medical care.
These kinds of situations are not as uncommon as the mainstream media would have us believe, and it is likely that such challenges will affect more and more people in the coming years. If you have already had some practice at thinking creatively under challenging circumstances, you have gained valuable experience that has probably already convinced you that it helps to have a plan in place beforehand.
Here at PeakProsperity.com, we talk a lot about increasing personal, household, and community resilience. Simply having a workable backup plan (“Plan B”), no matter how creative or unconventional it needs to be in your situation, brings valuable resilience to your life. If Plan A doesn’t work out, you can lean back on Plan B, but if you haven’t yet developed Plan B when Plan A fails, your situation is significantly more fragile.
What should I do?
Over the past few years, Chris has repeatedly offered some very specific suggestions to his longtime readers, some – but by no means all – of whom are wealthy investors. But his recommendations can also be reinterpreted for people with leaner financial resources.
The following are my adaptations of Chris’ common advice (in italics) to fit situations where money is scarce and time/creativity are perhaps more abundant:
“Buy gold and silver.”
Assess your resources. Do you happen to have a coin collection from when you were a kid? If you do, have you checked to see if there are any silver nickels or dimes? Do you happen to have any gold or silver jewelry? In times past, wedding rings were an easily portable store of wealth. Your collection might be small, and you might not have any plans to liquidate these items, but it can be psychologically reassuring to know that you have something of value to liquidate if you get desperate.
However, be sure to steer clear of late-night TV promoters and other such entrepreneurs who offer to buy gold jewelry; most pay low rates and we cannot recommend going this route. Go to your local coin shop instead – or more than one, until you find one you are comfortable with – and get to know the dealer, so that if you have a need to sell jewelry or coins for cash, you have already built that relationship and feel comfortable doing business there.
Perhaps you have other items – antique furniture, heirlooms, artwork – that could be sold to a reputable buyer and “turned into” a small stash of silver coins or gold. Perhaps you own nothing of value, but that’s okay. Buying gold and silver makes sense for people who have extra money and need to store it, but there are plenty of other important ways to prepare without precious metals or other items of monetary value. It’s a satisfying backup to have, but there are other ways to navigate a currency crisis.
“Keep cash out of the bank, preferably three months’ worth.”
Use cash. Three month’s worth of living expenses can seem out of reach if you are having a hard time making ends meet during the month you’re in right now. The reason for this recommendation is to ensure that you can continue to buy necessities and pay essential bills even if there is a bank holiday or shutdown. Consider that in case of a bank holiday, payment processing is also likely to be put on hold while the banks are not functioning. So it might help to think, instead, of trying to stash enough cash or supplies to cover bare-bones food, medical, and fuel needs if the bank system shut down and businesses were unable to accept credit/debit/check payments.
But even that is not possible for some people. If you don’t have cash available to set aside specifically for this purpose, simply do what you can to keep cash flowing within reach as often as possible. Try moving from a debit or check system of handling your money to a cash system. This means cashing your paycheck and keeping that cash physically on hand, instead of in your checking/debit account. If there is a banking holiday and the banks are shut down for days or weeks, you will not be able to access your money if it is in the bank. But if you have any amount of cash in your wallet, even if it is earmarked for later expenses, you retain the ability to procure food/gas/medical supplies by reprioritizing those dollars during an emergency.
For some, this might mean cashing a Friday paycheck, having a relatively full wallet until Monday, buying groceries with that money on Tuesday, buying gas on Wednesday or Thursday, and having an empty wallet for as short a time as possible until payday rolls around again on Friday. You might still need to use checks or debit to pay bills, but you might find a creative way to cycle that money out of your bank account and back into it through regular withdrawals and deposits. In a crisis, even $20 in your wallet can be significantly useful. Some people use an “envelope system” in which their budget is represented by envelopes, and on payday they allocate their cash into piles based on the categories of their budget. Budget. Which brings up another important point.
“Get out of debt.”
Practice austerity. Do not take on any new debt. To do this, you may need to practice austerity. (If only our government leaders were hip to this idea…) The only way toward getting out of debt when you are already struggling to pay it down is to not add more to your debt load. For those of us who grew up in our easy-credit culture, this might feel like a revolutionary change. If you haven’t already done so, consider taking the plunge and keeping close track of how your money is spent, down to the penny, for a week or a month. This will help you see clearly where your money is going and identify any places where you can cut back. Make a budget and stay within it. If your budget exceeds your income, find some way to trim down your budget. Be vigilant. If your income is unpredictable, you will need to be even more careful about thoughtfully allocating what money you have when you have it.
Debt is a fact of life for many people, and for the typical American family, it is not something easily dissolved. Pay more than the minimum if you can. Refinance to a lower interest rate on your mortgage if you have that option. You might call your creditors and ask about renegotiating your payment terms (it doesn’t hurt to ask persistently, even if the first person you talk to is obligated by their employer’s protocol to say no.) Some people have had success with a “debt snowball” approach. There are numerous online resources available on this topic. Try not to get mired in thinking of debt as a failure; simply manage it and do all you can to move on without adding to it.
And yes, I know full well that you can’t squeeze money out of rocks, or grow it on trees, or whatever. My experience has shown me that even when you think you can’t possibly cut back your budget any further, a change in expectations is often the key to helping you find new possibilities for stretching your resources. Changing expectations is a whole separate topic to address another time, but for now let me just say that keeping an open mind about how your needs and your family’s needs get met can help open up new options for flexibility in your budget.
“Enroll at PeakProsperity.com.”
Keep informed. Now, I am firmly convinced that an enrollment at CM.com is worth the money, if you have it to spare. Chris and his team work very hard to provide significant added value for those who are able to enroll. But if you cannot afford to buy an enrollment here at PeakProsperity.com, there is still lots to gain from reading the free material that we offer. We remain highly committed to keeping the entire Crash Course free and available to everyone, along with some of the other basic but important features of PeakProsperity.com, including the forums (which are a virtual gold mine of information and support), Chris’ public blog, the What Should I Do? series, and a number of free past Martenson Reports. It is our strong intent that CM.com will continue to be a useful resource even for those who cannot afford to enroll.
“Stay out of conventional investment vehicles. Store some of your wealth outside the fiat currency system.”
Invest in things you need or anticipate needing. Okay, so here we run into that pesky “W” word – wealth. Many of us were brought up believing that wealth doesn’t happen to “people like us.” But wealth doesn’t necessarily mean owning financial holdings or precious metals or real estate. Chances are you have more options for wealth than you realize.
If you have any extra wiggle room in your budget, turn it into durable things that you need right now or believe you will need in the future. This might include things that help you with your Plan B – replacements for household tools that are “on their last legs” even if they do not quite yet need it, or warm clothing/shoes for children to grow into (jackets, waterproof boots, underwear/socks), or gadgets and devices that will increase your food resilience (gardening tools, canning supplies, water filter), or improvements/repairs to make your home more sturdy and functional (weather-stripping, a new window), or items that will enable you to decrease reliance on oil (a bicycle or a bike trailer, warmer bedding and clothing to enable you to turn down the heat in winter). Things that will increase your personal resilience – your ability to cope with the changes that we face in the long run – constitute an important form of wealth.
The possibilities here are endless, but with your self-assessment in hand, you can hone in on the few items that will enable the greatest increase in your personal resilience. Do the best you can to put your money into things that will last for as long as you need them and not require replacement. This might mean spending more for a more durable version when you purchase an item, if you have that option. Not only is it cheaper in the long run to buy one of something instead of two, you may not be able to acquire a second replacement down the road.
If you don’t have any wiggle room, don’t waste time worrying about it – begin networking for what you need. Start by identifying what you want to acquire, so that you will a) be able to quickly recognize it as useful when it comes your way, and b) be able to ask clearly for what you need if someone asks. I find it helpful to maintain a wish list. Every now and then I let my friends know what I’m looking for in case they happen to come across it or have an extra one to offer. (And in the spirit of reciprocity, I offer up things that I don’t need but that others might find useful.) If you have Internet access and transportation, Freecycle and Craigslist can be great resources. Some localities have “swap shops” where you can leave useful things and take what you need. Some community papers have free classifieds. With a little research you can figure out what networking options are available to you.
In case you are discouraged by this prospect of networking instead of throwing easy cash at things, let me share a list of items that I have gotten for free through networking, Freecycle, and our local swap shop: a nice working woodstove, outdoor grill, treadle sewing machine, dehydrator, water-bath canning supplies, canning jars, exercise equipment, swing set, picnic table, food mill, gardening tools and supplies, 5-gallon storage buckets with lids, down comforters, bike trailer, violin, mandolin, oil lamps, coolers, insulated water dispenser, ½-gallon and 1-gallon glass storage jars, most of our furniture, kids’ bikes and scooters, animal cages and supplies, bushel baskets, cast iron cookware, durable storage containers, wool blankets, cloth diapers and covers, and most of my kids’ clothing since birth. I would never have been able to come up with cash to purchase that impressive list of items.
“Invest in improving your house’s energy efficiency.”
Weatherize. So you can’t afford to change your heating system, insulate your walls, replace leaky windows, or install weather-stripping around your doors and windows? Not so fast; many states (still, for now at least) have income-based weatherization programs with funding for these sorts of improvements. You might qualify for a new furnace or woodstove, or blown-in insulation, or key window/door replacements, or you might get help with installing some other improvement that would otherwise be financially out of reach for you. In my state, qualified renters can even have these improvements done to their units with their landlord’s permission.
If you don’t qualify for your state program, or your state doesn’t have such a program, you may still be able to get a free energy audit to help identify what inexpensive improvements to your home will have the most effect. If you simply do not have the capacity for any improvements, consider creative ways to close off less-critical areas of your home, such as bedrooms, so that you are only heating the key living areas (and the areas where pipes would be in danger of freezing if they are not sufficiently heated).
What else should I do?
And now for some other suggestions that are in line with Chris’ recommendations:
Secure your income.
Perhaps you’re thinking, “Yeah, right – secure? Income?” But I think this is an important thing for us all to think about, particularly those of us whose lives would be, or perhaps have already been, seriously compromised with a loss of income (and that may well be most or all of us). Without income, bills and debt cannot be paid, food and gas and medical care cannot be purchased, and housing may not be affordable. Income is a necessary fact of life for most of us, and as the economy slows, income opportunities are likely to shrink. So what do we do?
If you are currently employed, how secure is your job? By that I mean, how directly does your work support the basic needs of others? Is the product of your work sold and purchased locally, or is it shipped and used far away? Does the product or service that your employer offers fall into the category of “necessity” — or “luxury”?
If you are in a luxury industry, or a field where you do not produce or repair things that people need locally, it’s time to start re-visioning your place in the workforce. This doesn’t mean that you should panic and quit your job. But you can dig deep, assess your skills, and think about how you could make the transition to a more basic and necessary kind of work. As I am sure I don’t need to tell you, the job market is tight. The more time you have in advance to thoughtfully plan and prepare for your job move, reassess your credentials and start developing connections and experience in your target field, the better your chances will be to find that kind of work when the time comes.
If you are currently receiving income assistance, whether in the form of welfare or unemployment pay or retirement benefits or other forms of so-called “entitlement” income, consider it likely that this income will cease at some point. This is not cause for panic; it’s cause for empowerment. You have time right now to make a Plan B. If you are reliant on unemployment benefits, and those benefits cease before you find a new job, what will you do? If you are retired and your pension is reduced or fails, what will you do? How will you minimize your expenses?
Think it through. Make a plan. Will you need to move in with relatives? Talk with them about this now. Hopefully it will not come to pass, but if it does, you will already have a plan in place.
Secure your wealth.
What is wealth? Well, if you don’t have money, and you don’t have investments, what is left? Plenty! You are richer than you think – your wealth is present in your relationships, your skills, and your stuff.
Build relationships and community.
Invest yourself in keeping your relationships healthy and strong. Cultivate friendships with people who seem like the type to help out and ask for help in a reciprocal way. Work on communication and listening skills, and develop patience with people who are still struggling in these areas. The good people in your life are a potentially priceless resource – treat them as such.
Are you a member of a community group that reflects your values, such as a church or service group, or is there one near you that you might consider joining? In our area, there is a volunteer group called “Post Oil Solutions” that meets to discuss topics that relate to the changes coming our way. Some areas have Transition Towns groups that meet regularly. Maybe your town has an opening on the planning board or some other area of service that would allow you to get to know the locals and make a meaningful contribution to your town.
To read more on this topic, see Sager XX’s recent article on our site, A Case Study in Creating Community. I especially love his idea of hosting an open monthly potluck and seeing who shows up. Hosting a potluck can be very simple – simply pick a date, spread the word, tidy up your space, and provide drinking water and a potluck contribution of your own. You can even ask people to bring their own dishes and utensils if necessary. The people who come and the connections they make with each other will almost certainly make up for any deficiency in venue or menu (I have been at dinner potlucks where we had only dessert, and college potlucks where there were nothing but bagels – and we all had a good time anyway, which was the point.)
Learn and share useful skills.
This point is especially applicable to those who have surplus time. So if you’re out of work, this one’s for you. Think about what sorts of things will be useful in a world with decreased prosperity. Do you like to fix things? Do you like to grow things? Do you like to help people out in a particular way? Are you good with animals? Do you have a mind for strategic planning? Are you already minimally conversant in a local second language? Do you have an inner artist, weaver, soapmaker, builder, forager, knitter, woodworker, seamstress, doula, baker, quilter, metalworker, mechanic, carver, gardener, translator, counselor? How can you apply these interest or skills in a practical way? What useful things have you always wanted to learn how to make or do?
Whatever your interests, think of how they could be applicable in a world where barter is common and money is scarce. Cultivate the ability to “make something out of nothing.” Perhaps you already live in a world like this, and perhaps developing new skills will give you a leg up that can be useful now. Some communities already have time trade or barter boards, where you can offer help in one area and gain help in another. The Internet and the public library system are currently very rich resources for finding information on how to do new things, and it’s possible that with a little outreach you might find one or more local mentors, or perhaps you could even mentor someone else in a skill that you already have. In a world with less disposable income and diminishing natural resources, we will all need to learn to “make do” with what we have, and useful skills will play an important role.
Practice good stewardship of your stuff.
Take care of the things you have. Assume that you might not be able to replace the things you own, care for them accordingly, and repair them as needed. If you can, consider investing a small amount of money into some useful materials to help you fix things…superglue, wood glue, duct tape, electrical tape, furniture clamps, screwdriver, needles/thread for clothing and upholstery, clear nail polish, hot glue gun, staple gun, etc. If your budget is tight and you can’t afford to replace things, perhaps you could still afford the materials to repair those items, and then you’ll have those materials on hand for the next things that need repair.
Be thoughtful about how you store your things. Learn about how to prevent mold and pest damage to items in storage. Local restaurants and delis are good places to ask for free five-gallon buckets with snap-on lids. These are waterproof and relatively pest-proof, and can be used to store food or other items. If you can scrounge or invest in waterproof, pest-resistant containers, your stuff will be less likely to need replacement and you’ll save money in the long run.
This stewardship extends to your home, whether or not you own it. Sure, if you are renting, the upkeep of the building is the owner’s responsibility, but if times are tight you might find yourself living there much longer than you had planned, and taking extra care to keep your home in good condition may be something you’ll appreciate later. Don’t let a minor roof leak rot your attic. If you own your house, remember that keeping up with small repairs and maintenance issues often helps to prevent larger issues.
Secure your food, water, and sanitation.
Do what you can to build up a supply of the consumables your family uses, such as staple foods, supplies, and things like toilet paper and soap. Even if you can only procure and stash one extra item at a time, it will add up and will bring you a measure of security.
If you are building a pantry from scratch on a very limited budget, start with basic, cheap food that will simply keep you going through hard times. If you can spend only a few dollars a week, start with rice, dried beans or lentils, and salt. As time goes on, you can expand your pantry to include inexpensive things that are slightly more exciting, like canned tomatoes, raisins, peanut butter, tuna, oatmeal, oil, and baking supplies. One item a week is better than nothing, especially if you store it carefully (dry, dark, cool, and in a bugproof container, unless it is already canned).
Here’s a tip: With grains and legumes, freeze them first before storing in a five-gallon bucket with a lid. Freezing first will prevent the development of bugs in your precious pantry stash. Careful storage will extend the life of your pantry food, even if you can’t afford fancy containers, mylar bags, or oxygen absorbers.
Grow stuff. Start a garden. Or a container garden. Or a pot of herbs on your windowsill. Even if you live in the city where you have nothing but a small window, get a little dirt and a seed and see for yourself what it feels like to grow a bit of your own food. This is one area where practice leads to experience and it can take some trial and error to learn how to nurture a plant in such a way that you can get food from it. You might need to collect pots – plastic food containers will work, with holes punched in the bottom and set on saucers or plastic lids for drainage. You need some decent soil, but even that can sometimes be had for free, as can compost. Again, Freecycle or the local gardening club might be possible sources for soil, compost, seeds, and mentoring. If you have space for a garden, grow as much as you can, learn to preserve what you harvest, and try to do a little more each year.
We live out in the country and rely on a well for our water, but the well pump requires electricity, so it fails when the power is out. If my family relied on city water, I would be concerned about possible interruption or contamination. We store water in one-gallon glass apple juice jars for use in a short-term emergency, but it tastes better filtered. I did find it a priority to save up to purchase a water filter, but there are ways to purify water without using a fancy system.
And where do you find water in an emergency? I know where the closest seasonal streams are in our neighborhood, and two of our neighbors have ponds. We live up in the hills, and I am thinking of ways to create a small pond in our yard to collect seasonal runoff. A rainwater collection barrel could be as simple as a trash barrel or other clean container with a hole cut in the lid for a gutter downspout or a tight screen over the top to keep out bugs and other unwanted things.
As for hot water, a few summers ago when heating oil got up to nearly $5/gallon here, we calculated that we would save almost $700 if we went without hot water for the summer. Solar shower bags are cheap in the camping store; I think we paid about $5 for ours. We also discovered quite by accident that a long black garden hose, coiled in the sun, heats up very hot and contains enough water for a reasonable stop-and-start shower using an adjustable spray nozzle. And we filled a clean black plastic trash can with water and put it in a sunny spot for an easy “solar water heater.” The water in the trash can never got super hot, but it was warm enough to do dishes and wash hands with. We heated water on the stove sometimes, too, and “recycled” bath water for multiple family members when it seemed prudent to do so. We also discovered that an insulated drink cooler with a spigot makes a great push-button “faucet” for instant warm water if kept full right next to the sink. It felt empowering to try out our Plan B for hot water and save money in the process.
As for sanitation, we have a five-gallon camping toilet that is very similar to the Luggable Loo. We keep wood shavings or sawdust in storage and use our sawdust toilet when the power goes out. We have a dedicated compost pile out back behind our shed where the contents get dumped. For more information on this inexpensive and practical type of toilet, see the Humanure Handbook by Joseph C. Jenkins. Here where I live in the mountains of New England, I know a number of families who use this kind of setup as their primary toilet. It would be more challenging to do something like this in the city, and there also may be less of a need for most city dwellers to have this kind of a backup plan, but it’s one of those things that I think of as essential to comfort and sanitation, and therefore a priority even if the chance of needing it is low. This kind of toilet setup would work in a pinch, and you may be able to come up with a creative solution that fits your circumstances even better.
The Bottom Line
Do what you can, wi