The Practical Prepper

As I mentioned previously, my schedule has changed and I am unable to write new posts at this time. While I'm on hiatus, we're re-running the earlier posts from The Practical Prepper. Thank you for your patience and your continued readership!

For our family, a big part of preparedness means relying on ourselves and our own resources, and not being dependent on others. Of course, our self-reliance is really measured in our degree of independence. That is, we (like a majority of people) depend on others for some aspects of our day-to-day existence.

We don't (yet) produce all the electricity that powers our home. Likewise, we rely on others to produce some portion of the food we eat and the water we drink (though that amount is decreasing). And, in the past we used to rely heavily on other people's money to meet our perceived lifestyle needs (though minimally anymore).

By this last point, I'm referring to the burden of excessive debt that we used to carry. It took some time, soul searching, and research, but we finally realized that any debt is an obligation to others — giving them a legal right to some of our hard-earned money. We finally grasped that working a job means we're trading some portion of our time (i.e., our life) for money. Given that, any debt truly results in a form of servitude, since we are obligated to work to earn money to pay off that debt.

Therefore, part of our being prepared and self-reliant is not owing anyone. But, because we had debt, we had to figure out how to get rid of it. We read books, attended seminars, talked to experts, etc., and found our way out of the majority of our debt (except for our mortgage). Here are some tips on how to get on the path to financial independence:

1. Knowing our debt: We evaluated our ongoing monthly spending commitment. This was critical... we needed to know exactly who we owed, and how much debt we owed in a typical month. We considered not only loans and credit cards, but also our ongoing monthly bills like mobile phones, cable television, etc.
    
2. Knowing our cash flow: We then figured out how much income we had every month, and then compared it against how much we spent as a whole. This outflow tallied everything we spent, including the payments on the debt which we considered in step #1. Calculating our income was pretty easy, because we only had two sources of steady income. Figuring your total spending might be more of a challenge if you work on commission or multiple jobs, etc. We started by collecting all our receipts for a month and writing down everything we spent, as we spent it, in a small journal.
    
3. Comparing our income and outflow: This was obvious for us: our outflow exceeded our income. If you're still reading this post, chances are that yours does too. At best, they may be pretty equal to one another. In either case, you're going to make some changes in order to become reduce your debt.
    
4. Scaling back: When you're driving and want to slow down, the first thing to do is take your foot off the gas pedal, right? The same was true here — we started by choosing to spend less. We cut out the daily Starbucks, packed lunch instead of buying, and so on. The more we cut our spending, the more money we could apply to lowering our debt. Once we're fully out of debt, this will ultimately lower the amount of money we need to live on.
    
5. Using “spending fasts”: When we got really ambitious, we tried going without spending for periods of time. We started with a day, and then progressed from that to several days or a week at a time. This was a worthwhile thing to do, because we literally spent less and got a tremendous amount of satisfaction from doing it. Though a bit scary or unsettling at first, we've found that week-long spending fasts are very liberating. It gives us a sense of "getting off the merry-go-round" for a while.
    
6. Getting out of debt: This is our real goal, of course... living on our own, and not being in servitude to anyone. That said, we haven't quite gotten there all the way yet. For instance, buying our home still requires our mortgage loan, since we chose not to save up enough to buy the house outright. (But, again, if you can do that, you're probably not reading this article). Cars and student loans are other big-ticket purchases that can (but don't have to) require some kind of loan. We eliminate all other debt as quickly as possible, of course.

These are very basic concepts, to be sure. For a really sound approach to getting out of debt, I recommend checking out Dave Ramsey's approach to reducing debt. The book we used, which is great for getting started, is called The Total Money Makeover: A Proven Plan for Financial Fitness. In addition to that link to our full review of the book, you can also read about the seven basic steps advocated by Ramsey on his website.

Another very book that we found helpful to help us get our head on straight about the role of money in our lives is Your Money or Your Life: 9 Steps to Transforming Your Relationship .... I recommend checking it out; reading this will give you a better understanding of what financial self-reliance is, and help you determine what the real value of money is for you. Specifically, it will make you think about what money costs you to acquire, and how much "enough" is for you.

Are you ready to become fiscally prepared? Have you already done it? Please share below!

Believing that preparedness and self-reliance are key to individual freedom, Atticus Freeman is the founder of the Self-Reliant Info blog, in addition to authoring The Practical Prepper weekly blog here on Farm Dreams. Thanks for reading!