Knowledge alone doesn’t get you prepared. It just doesn’t. Taking action gets you prepared. When a crises comes, it won’t matter how many articles you have read if you haven’t taken action. There is one thing that will allow you to take action and make most of your physical preparations. Surprisingly enough, that one thing is seems to be skipped over in conversations of survival and preparedness. I think that’s a mistake. So what is the one thing that unlocks your ability to prepare?

Money.

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Yes, money. You need money. I’m not talking about silver, bullets, beans, or anything else that can be used as tradeables in a collapsed society. You need money now, in stacks of spendable c-notes.

Firearms and ammunition cost money. Land costs money. Chainsaws for building your log cabin from scratch cost money. Bulk wheat, rice and beans for food storage cost money. Extra clothes cost money. Gardening tools cost money. Reference materials cost money (as the Internet may not always be with you). First Aid and emergency training costs money. That awesome water filter you’ve always wanted costs money. Even canning fruit is going to cost you money to get set up. Money, money, money, money, money. It all takes money and the expenses of preparation add up pretty quickly.

If you’re like the rest of us, money is tight. You feel like you simply can’t afford to prepare, or at least you can’t afford to prepare like you want. But let’s face it, what you really can’t afford is to be unprepared!

Maybe you would prepare more, rather than just read about getting prepared, if you just had a little extra cash. Unfortunately, your options for getting more money are rather limited.

So, you can:

  1. Steal what you need.
  2. Inherit a windfall.
  3. Win the lottery.
  4. Go into debt.
  5. Earn more money.
  6. Manage what you have better.

Stealing is not an acceptable solution. You can schmooze all the old rich folks you want, but unless you already have wealthy family, don’t count on a big inheritance. And of course money spent on lottery tickets is just money wasted.

You can get loans, but there are some some issues with going into debt. Owing someone money is giving them power over you. You don’t really own anything you buy with a loan until you’ve paid it off. There is also the probability of going too far into debt. What if you have to head for the hills the day after your SUV has been repossessed?

As the payday loan place giveth, the payday loan place taketh away. I believe going into debt is a poor way to get prepared, and may even make you less prepared.

Next up is earning more money. When the opportunity arises, you need to be ready. Of course, being able to earn more money usually requires one of two things – you learn to work better at what you’re doing, or you learn more profitable skills. Earning more money also comes with a built-in trap. When most folks get a raise or a better job, they merely start spending more money on the same old wasteful stuff. So even if you manage to start earning more, you’ll probably need to next idea.

Now we come to the last option, to manage the money you have better. This one you can do. This will put food on the table and a wood burning stove in the corner. If you get your finances in order, you can start preparing the way you want to. The only problem with this is that most folks aren’t willing to put forth the effort.

Why aren’t people willing to do this?

Maybe the idea of great calamity doesn’t seem real enough. Maybe we get comfortable with the simplicity of going to the store and getting whatever we want, whenever we want. Its easy to act as if things are never going to change. If it’s not in your head that disaster really could happen, then you will not prepare. So let’s talk about something that is very easy to believe, something that happens everyday.

Job loss.

People lose jobs all the time. You could lose yours tomorrow. And for whatever the spite, rage or disgust you have against the welfare state, when the day comes that you’re jobless, hungry and cold, you’ll be lining up for free government cheese.

Unless you’re prepared.

The good thing is that getting your financial ducks in a row allows you to prepare not only for personal crises such as job loss and serious long-term illness but for major national crises as well.

Here’s a few steps that may help you manage your money better.

  1. Think through your situation – You need to know where you really stand, and know what you want to accomplish. Take one piece of paper and list all your monthly debt payments, utilities costs and current other monthly obligations. On another piece of paper, list all of your income sources and how much they pay you per month. On another piece of paper, list what you owe for each of your debts. On a last piece of paper, write down all the things you need to save money for (emergency fund, water filter, kerosene lantern, etc). You’ll use these lists in the other steps.

  2. Track your spending – You need to have a record of every penny you spend. You need to know how much you really spend on that car, how much you waste on bank overdraft fees, and exactly how much money is sunk into video games every month. You will not and cannot make any financial progress until you know exactly where your money is going. You can keep track of this with pen and paper, but it is sometimes easier to see what is going on when you use a computer to help.

    There are myriad software programs to help you do this. There are commercial programs like Quicken, AceMoney, and Microsoft Money.

    There’s also several open source, free programs (see: http://homebank.free.fr/, http://www.gnucash.org/, and http://www.grisbi.org/)

    If you’re comfortable using an online money management program, there’s several more freebies out there, like http://www.mint.com and http://quickenonline.intuit.com.

    Find one that works for you and start using it.

  3. Pay down – Follow a debt paydown calendar. Some folks call this a debt snowball or debt elimination ladder. This is a method to help you pay off those crippling debts and proceed to spending your money on more important things. Here’s how it’s done. You start out by paying bills as normal. If you have a little extra cash every month, you put it to paying down one of your debts (the same one every month). When the first debt is paid off, you immediately start adding what you were paying for that debt to another debt. That second debt now gets paid off faster. Once it is paid off, you roll all that money you were spending into your monthly payments for your third debt. Your payments grow and you pay off your debts much faster.

    There’s two basic ways to choose which bill to pay off next – payoff the smallest debt first, or payoff the highest interest first. Mathematically speaking, if you want to save the maximum amount of money possible (paying the least interest over the long haul) you will never beat paying off the highest interest rate first. However, paying of the smallest debt first does give you a feeling of accomplishment, and therefore may keep you motivated to follow the paydown plan longer. When planning your debt paydown, it helps to write it all down and see how it’s going to work. Here’s a simplified example: http://www.realselfreliance.com/paydown.pdf. You already made a list of your debts in step 1, so this should be easy.

    Rather than put all the money into paying off the next debt, you can begin to purchase things off “stuff you need” list you made in step 1. You just need to make sure that money goes somewhere useful, and doesn’t just get wasted.

  4. Automate – Now go down the list of monthly expenses that you made in Step 1, and see if you can hook up an automatic payment plan for each of them. A great deal of utility companies already have a way to do this. For the companies that don’t have a built-in payment automation system, you can probably set things up with your bank to print and send a check every month.

    After you get your monthly bills automated, it’s a good idea to automate some savings, too. It is much easier to have a savings account somewhere that transfers money from your checking account once a month automatically than to remember to make that deposit. There are a several banks that make this kind of automation easy, such as Ing Direct (http://www.ingdirect.com) and FNBO Direct (http://www.fnbodirect.com).

    Automating your finances make your life easier, removes the stress of having to remember what bills are due when, and it guarantees that you’ll have money put aside for when you need it, whether it’s for an emergency or an AK.

  5. Improve – As you continue to track your spending, you’ll see where you can make changes. Keep adjusting your spending habits until you get where you need to be. Here’s some ideas for spending improvements:

    • “Latte factors”: In his book “The Automatic Millionaire,” David Bach describes expenses he calls “latte factors.” These are small daily expenses that add up. The example he uses is that $5 daily latte. If you can find a way to live without that latte, you immediately free up $150 a month to pay down debts or buy First Aid supplies.
    • Revisit your monthly non-essential expenses. Look at your record (that you started keeping in step 2) and see where the most waste is happening. Do you really need those extra 250 channels that you don’t watch on your cable? Do you need cable at all? How much do you spend eating out? Do you ever use the gym membership you’re paying for? 
    • Negotiate a lower rate. If you are in a world of credit card hurt, call your credit card company, explain you’re having trouble making your payments, and ask for a lower rate. Don’t be afraid to ask for a supervisor. Don’t be rude, but be persistent. Quite often, they will indeed lower your rate by a couple of points, possibly saving you hundreds of dollars in interest over the long run. For more info and ideas on doing this, check out: http://www.thesimpledollar.com/2007/09/03/the-one-hour-project-reduce-the-interest-rate-on-your-credit-cards/
    • Start doing some stuff yourself. This will force you to build your skill set. It will quite often save you money. You can fix your own toilet for pennies on the late-night-emergency-repairman-dollar. You can learn to make your own laundry soap and save $100 a year or so.
    • Lower your utilities. Make sure your doors and windows are well sealed. Wrap your water heater in an insulating blanket. Many gas companies have huge rebates on getting your house better insulated.

    There are plenty of ways to save a little here and there. Every bit you save makes it possible to get more of the preparations you need. Just keep your eyes open.

I’m not going to tell you exactly what to do with all the extra money you’ll start to have once you get things under control. Invest in index funds, buy gold coins, stock up on long term food storage – spend some time studying and considering what will really help you the most. You’ll be in control.

There you have it. Even if you are already financially getting along right now, taking these simple steps will accelerate your ability to prepare for the future no matter what it may hold.

With just a little effort, you can afford to prepare.

If you’re interested in more information on getting your financial life in order, check out the following books: