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Thursday, August 19, 2021

Cash and Your Credit Score: Often Forgotten Preps

by Dave S.

I like to read a lot of self-reliant and prepping blogs and articles, as we all likely do. Toward the beginning of my self-reliant venture, these articles and blogs were critical in my education. I am in no way an expert in this field, but I am comfortable enough that a lot of this information for me now is review, and it is always good to review the basics.

I love reading articles and blogs simply for the fact that there is usually more than one way to skin the proverbial cat, and I’m always looking for ways to improve my knowledge base or tweak existing techniques. This self-reliant community is often very willing to share their experiences, both positive and negative, so that others may learn from their successes as well as their failures. To say this community is rich in comradery would be an understatement, to say the least.

I have never written for another blog other than my own, so this is a new venture for me. I hope I will be able to give something back to someone here and return the favor that you have all given me over the last several years.

As I continue to read and search the self-reliant and prepper communities, I run across multiple hits regarding making fire, storing and gathering water, weapons and ammunition, just to name a few. It’s not that these things aren’t important, they should be the staple of anyone’s self-reliant plan, however there is one particular aspect that I rarely see mentioned, and yet it is likely one of the most common and overlooked ways to prepare for bad times ahead.

I’m not talking about having 10,000 rounds for each weapon you possess, or the most fail-safe knife ever (or two or three of them actually, remember two is one, and one is none).

If we could all just take a step back and forget about all the stuff we have and all the stuff we think we still need, and take an honest look at where we are, I think you may agree. Considering all the possible adverse scenarios that can seriously impact our future, what seems the most likely?

EMP? Absolutely, but for most of us this may never happen. Solar flares are possible, but highly improbable. With a little investigation, you may feel as I do that a significant terror event in the US could likely come from crippling our power structure as opposed to a dirty bomb. EMP’s are not that difficult to make with the right resources, and are a lot easier to conceal than a nuclear or biological weapon. Again, possible, but not probable.

Natural Disaster? Absolutely, as some of our coastal friends have already lived through. Hurricanes, tornadoes, long power outages are facts of life for these folks. If I lived in these areas, you better believe this is a priority for me. Living in rural Pennsylvania, there is some minor threat of tornado, or catching the tail of a hurricane, but very unlikely. I’m in the kill zone for a little place called Three Mile Island, you may have heard of it. It made the news a few years ago.

Foreign invasion? Another Civil War? I guess these are possible, but not likely probable. It doesn’t matter what adversity is handed to you, it is never good nor is it convenient. The only defense we have is to be reasonably prepared for multiple scenarios, prioritizing them accordingly to likelihood, and be willing to be flexible with our solution.


What I want to talk about today is something that is far more likely to cause a devastating event in our lives, and if it hasn’t already, it will, it’s just a matter of time. I think it is interesting that what I’m about to discuss is rarely, if ever talked about in this community, but when it happens, and if you are not prepared for it, can significantly impact your life forever.Cut to the chase, will you? I’m sure most of you are thinking that right about now if you haven’t mentally checked out already. What I’m alluding to here is financial hardship or disaster. Who here hasn’t had some significant life event involving a financial hardship? Some of us may live with this every day. For some of us this hardship is self-induced and for others it’s just plain old bad luck.

The thing to understand is that financial hardship comes in all shapes and sizes and is almost always unforeseen. No matter how it happens, we need to be prepared.

How many times in the last year have you checked your bug-out bag? Your food stores? How about your get-home bag or weapons safe? My guess is we all check these things at least once or twice a year, if not more.

When is the last time you checked your credit? Do you have an emergency fund? How much are you putting away for retirement? In case you were wondering, the answers to these questions should be Yearly-Yes and 10%.

It is likely that you will never have an issue with stolen identity, at least I hope you don’t. I had my identity stolen almost 15 years ago after someone stole my wallet. It only took three hours for this misfit to charge almost $3,000 in my name to various brick and mortar stores, as well as opening several thousand dollars worth of credit to a big box store and a cell phone company. As soon as I realized my wallet was missing, I notified the credit card company and reported it. It was then that they started to review “my” most recent charges and my jaw dropped.

After signing several affidavits, completing what seemed like a million forms, and running credit checks I thought I had this mess cleared up, but I was mistaken. There were outstanding credit accounts that were a year behind, and I didn’t even know about them until I checked my credit again almost a year later. In my stolen wallet was a credit card, my driver’s license, some cash and a few pictures. This is all this creeper of the night needed to gain these bogus accounts.

That was 15 years ago, it’s easier now for thieves to take your identity, and misuse it, than ever. It doesn’t matter if you don’t have a credit card or carry a wallet and only pay with cash. I have a friend that had someone open a credit in his name and had checks with his name and address mailed to his house. This thief knew when they were arriving and picked them from his mailbox before he ever got home from work to check the box himself.

There is too much data out there on you that is poorly protected. Are you a veteran? The VA had a laptop stolen several years ago and exposed 100,000 vets to identity theft because this laptop had access to date of birth, SSN, name, address, etc. Have you ever shopped at Target? There was a huge data breach there several years ago. Don’t even get me started on Wells Fargo and their customer account reps opening bogus accounts simply to get the bonus credits. Have you ever been to the doctor or ER? Filled a prescription? The list goes on and on…….the bottom line is, check your credit at least yearly. Anyone can get a free yearly credit report from services like or

Do you have an emergency fund? A few years ago, my wife suddenly, and unexpectedly got sick with a life-threatening illness and was unable to work for three years. Since losing her job, our family lost 40% of its annual income. Take a minute to do the math right now, how will you survive with 40% less money today than you had last month? Fortunately, we are believers in being good stewards of our money, and we are able to wade the storm. We had over 6 months worth of expenses in the bank and lived a frugal lifestyle. At this point it didn’t matter that I can start a fire 13 different ways or had a bug out bag for every person in the family.

There are several key components to being financially prepared. (1) Have an emergency fund of 6 months savings in liquid form (cash) ready to be used at a moment’s notice is where we start. What this doesn’t mean is having a few hundred ounces of silver in your basement safe. Silver is not liquid enough, and selling silver when you have to as opposed to when you want to will likely mean you are not getting its full value in transactions.

Having three months liquid savings in cash and three months in precious metals is reasonable, but still risky, especially these days. Have you seen the spot prices of gold over the last 6 months? The spot price of gold has been $1,675 – $1,950 during this time period. That’s a 16.5% variance in just 6 months, way too risky for an emergency fund, since cash is king here. We were able to comfortably utilize our emergency fund to offset our living expenses for a year, which gave me time to create additional paths of income to offset the loss.

Living a frugal lifestyle, aka (2) living below your means, is also a major key to financial survival. Having 6 months expenses in the bank goes a lot further if you are free from debt and can manage your daily expenses comfortably. Having frivolous debt (credit cards, high value auto loans, student loans, extravagant mortgage) will eat through an emergency fund quicker than you can possibly imagine. Emergency funds and living below your means is the 1-2 punch that is absolutely crucial to survive any financial disaster.

Thinking toward the future, we should all be (3) investing 10% of our income for retirement. Emergency funds and living frugally will get us through hard times, investments will get us through the rest of our life. What’s that you say, have a pension plan, so you don’t need to save? I have an uncle that worked for many years and then the company went bankrupt, he lost almost everything he put into his investments. Pension insurance paid pennies on the dollar, so it wasn’t a complete loss, but an 85% loss of his pension is catastrophic.

You work for the government, so your pension is safe? Tell that to the government workers in Detroit. Many of them may have only recouped a fraction of their losses and continue to struggle every day. This is not an isolated case, many teachers unions, state and other government pension plans are top-heavy, they are not sustainable past 10 years.

Don’t even get me started on the government theft program called Social Security. Waiting for another COVID-19 relief check? The money was nice, but not impactful for most families. The government will likely get all of this money back, and then some when your taxes increase to pay for the government’s bills

Starting at age 25, saving $200 a month will accrue $790,000 at retirement based on an 8% return rate. The average rate of return of the stock market is about 10.5% over the last 100 years, so your $790,000 will likely be even more when you hit the golden years. As you get older, and can afford more savings, your end of life preparedness only gets better.

Here is the icing on the cake, placing that $200 a month into a Roth IRA, means that every penny of that money after the age of 59½ is yours to keep, tax-free. Want to take all 790,000 out at once when you are 60? By all means, go ahead, not one penny will go back to the government. There are many other advantages of the Roth IRA and I highly suggest looking into this. By the way, maximizing the $5,500 a year contribution cap to a Roth IRA for the same timeframe will leave you with almost two million dollars at retirement, conservatively speaking.

So there you have it, a financial plan for your preparedness basket. The next time you find yourself forking over $50 for that cool new prep, think about your financial prep, is it up to par? The likelihood of an EMP, government collapse, or zombie attack is slim (admittedly not beyond reason however, that’s why we prep for multiple scenarios) yet we prepare for these to extreme. Take some time to prioritize your preparedness scenarios and be honest with yourself, financial jeopardy should be in the top tier of probabilities.

Editor’s Closing Comment: While the author considers the volatility of silver prices to be a risk, he seems to discount the risk of mass inflation in the coming decades. I consider inflation the greater risk, so I keep the majority of my retirement savings in physical silver. But I must agree with him that there is folly in having no savings, and sadly that is the condition of the majority of the populace. Anyone who plans to rely on Social(ist) (In)Security or a pension and who holds no savings at age 65 is an utter fool.

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