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Wednesday, September 7, 2016

half and half 3 of 3


HALF AND HALF 3
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note: thank you to the minion that recommended the movie "10 Cloverfield Lane".  I didn't think I'd like it very much, nor did I think the NOL would.  We both enjoyed it immensely!  Different and engaging.  I liked that you were left guessing even at the end.  Still available at RedBox.
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note: on the shortening note, sorry for the confusion.  This is the CLOSEOUT price, not a sale.  Sometimes, with my new Old Dude vision ( needing reading glasses, things now blur up close with my distance glasses ) I miss stuff on signs.  I bought out the shelf full this morning.  Kroger is having sugar on sale ( why I went ) at 99 cents a four pound bag if you buy in multiples of 3, limit fifteen total.
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Yesterday, I left off with the question, “if all you have are tangibles rather than cash, how do you handle unemployment or take advantage of fire sales?”.  As hyper-inflation seems the more likely outcome than deflation from overcapacity globally ( because of the insane debt as well as JIT inventories ), cash has been trash for quite some time, for a lot of us.  But just planning for inflation not only leaves you exposed to your coming unemployment ( ALL of us will be unemployed soon enough.  If you don’t count on that you are delusional ) it leaves you vulnerable to other Cash Only Needed emergencies.  I don’t see corporations selling too much below cost ( as discussed in a previous article ) and right now only certain items are being given up cheaply by individuals.  For instance, I’m in awe how most folks think their over-priced much lower quality car is actually worth multitudes of my yearly income.  I’ve seen mediocre autos with far too many miles on them being placed on sale for a price I wouldn’t pay for land and shelter ( of course, I prefer junk land and building myself, so my standards are a bit lower ).

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But one day, everyone’s little delusional world is going to come crashing down and 99% of the assets they own will be recognized as being worthless.  Right now, a ‘60’s muscle car is a valuable collectors item.  In the decade following the Oil Embargo, V-8 engines were out of favor and gas guzzlers were selling for not much more than scrap.  You couldn’t get rid of the things.  How valuable is your tin box, after oil imports stop?  About as valuable as a BetaMax and an Atari game station.  How valuable are McMansion’s once utility bills soar and nobody can afford to climate control them, or drive from their suburban location?  There will be deals to be had at the right time, and cash will be like crack to a junkie.  Would you rather have cash, or another gun you had to sell to get cash?  You have cash, you might even be able to buy much more gun in the future than you can now.  I understand the reluctance to bet on this, and you shouldn’t, but as a back-up plan to an already stocked armory, perhaps?

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Now, true, even with the recent cuts, it isn’t impossible to get government assistance with Food Stamps and such.  At least part of every family can get an Obammy paycheck or a job.  This holds things together for now.  But you can’t believe this will last indefinitely, can you?  There will come the day you are broke, jobless and unable to liquidate your assets as all others desperately try to do the same ( while your assets prevent you from getting any government bennies ).  It won’t be enough that you are out of debt and have a few months of expenses in savings ( AND FOR THE LOVE OF ALL THAT IS GOOD AND HOLY, do NOT trust those savings with the bank.  You haven‘t forgot about “bail-in‘s“, have you? ).  You’ll still need cash.  You don’t want to eat on your stockpiled food until during the collapse.  Not prior to it.  But you’ll need to if you don’t have savings.  Not to say you can’t have a pantry overstuffed with daily food to cut way down on what you need to buy, just that you will need some cash.  Do you really want to dig up your silver for paying property taxes, if the government is still in charge and has confiscated precious metals? 

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Nothing I’ve brought up is completely necessary.  You could put all of your cash into food now and have 90% of your calorie needs met for the rest of your life.  You could plan on selling your silver on the black market for paying your property tax.  You might just, plain and simple, prefer the piece of mind of not needing cash.  I don’t disagree with you, it is just that I have these nightmares of there being no jobs and no crash.  If your area became jobless, as so many have, and there was no other change as far as the population or government, you would still need cash to function in an otherwise normal society ( normal except for the lack of jobs ).  It seems implausible, but that is the reality we are living in now.  How many areas, absent Social Security, Unemployment and Food Stamps, would blow up and dry away because in reality only a quarter of the workers have a real job?  And without all those government checks, that figure would be too high since consumer spending allows retail establishments to survive. 

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No matter how you justify it, ONLY employing the Alpha Strategy is placing all your eggs in one basket.  That isn’t the greatest plan, regardless.  Just theft or a fire could wipe out a lot of your wealth, which then becomes a strategy on par with waiting until hyperinflation destroys your cash.  Again, I’m all for being cash-less.  I prefer it.  But it can’t be your only go-to move.  You need insurance and contingency plans.  As much as it pains me, because the future does get far more uncertain every day ( when the economy was humming along, this doomsday planning stuff was fun and easy.  Now that reality is setting in, it is just getting scarier ), it might be better to go Half And Half.  Take your disposable income ( I assume you are out of debt already and actually have some money left at the end of the pay period ) and keep buying those tangibles.  But take the other half and bury your bills as savings ( a wad of cash in a Zip-Lock bag in a plastic peanut butter jar avoids metal detectors and fire ).  At times, you’ll spend some of that.  Just keep adding to it later.  This ISN’T your emergency six months living expenses money.  That you already have elsewhere.  This is just your surplus savings.

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Obviously if you have very few bills, this is easy to do even on very little income.  I’m paying half my income for rent and utilities, but since I have little more than food for bills, even then I can put something aside in savings.  It gets discouraging at times.  Suddenly, here comes the annual web site fees.  Or, I need to replace a failed bike part.  Or, it is past time to invest in more lumber and insulation for my retreat building.  Or, property tax comes due.  Everyone is always nibbling at your savings.  But if all you do is buy tangibles, even on almost no bills, you run into money problems.  Don’t give up stockpiling, just recognize the need to diversify.

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12 comments:

  1. diversify. You should have been a stock broker.

    ReplyDelete
    Replies
    1. Just because parasite bloodsucking douche's employ the strategy doesn't mean it lacks value, right?

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  2. The word "frugal" to many is a bad word, laced with shame and cheapness, but nothing could be further from the truth. As my ol' Granny used to say, "Watch your pennies and the dollars will take care of themselves."

    In the world we find ourselves today it is only intelligent to spend time equating how money will be spent because with everything that is going on money will be wasted on things that should never have been on the market in the first place.

    Because I am below the radar sweep and cash flow is less than 10% of what it used to be (because of the maneuvers I have taken to be below that sweep) my purchases are heavily scrutinized before the coin is dropped. Simply, I don't have money to waste any more. And, after having lived this way for the last 10 years I have come to reason that my spending practices in the past were nothing short of wasteful. I have my regrets. Plenty.

    I have learned my lesson.
    And changed my life accordingly.
    Nothing short of a major lottery win could drag me back to my former life. Ever.

    It used to bother me, the smug arrogance of those people driving around in their $40k rides with their $600/mth payments. Now, those rides are great big billboards exclaiming the possessors ignorance. Maybe soon they'll get the opportunity to see if those leather car seats taste good between bread.

    ReplyDelete
    Replies
    1. They won't get a chance to eat the seats. When gas runs out they will use the last of what is in the tank to run over pedestrians or bikers in a fit of rage, then be arrested and die in jail or pulled out by a vengeful mob and hung. I'm thinking on upcoming article of the unholy lust for cars and how they are used to avoid humanity as an escape mechanism. And how that will VERY soon end.

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  3. Jim while having eggs in many baskets make sense. I am a firm believer that coffee, sugar, tea and spice's. Are same as cash. When the dollar tanks Imports appreciate at a higher rate than other items. You need to look up the shipping company Hanjin and its bankruptcy affects. The buy price of metals vs. what a pawn or gold buyer pays makes it a loss in a fast sell . I stock sugar because it holds value and I use it in my hobbies.

    ReplyDelete
    Replies
    1. Well, my main point was we lose money prior to the collapse and still need some. I don't disagree with you otherwise ( except with tea. Tea sucks. Tea is dirty mop water. Tea is for effeminate posh Brits or East Coast Blue Bloods. Or dirty hippies )

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    2. I am in Alabama we know how to make sweet tea. I don't drink it but it has value. If you hate tea stock cocoa powder instead or chocolate Bark. Both high value with women . :)

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    3. Ice tea is not the same foul pretend beverage that hot tea is. Strange-in OK it was unsweetened tea but in FL it was sweetened. Does this mean OK isn't really part of The South?

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  4. What burns my weinie is the 'car math' used for depreciation. As in losing 20% of MSRP regardless of the miles driven - WTF !! My pickup is a 2000 GMC with 169,000k miles on it. I bought it in 2003 with 72,000k on it. I have no reason (yet) to get rid of it. Why a truck - I have some rural land that would be tough on a car to drive thru, some terrain features demanding the truck. Truck tire cost is crazy - I always cringe when I have to buy them.

    Road tax - the same cost as my wife's Chevy Tracker for some damn reason.

    ReplyDelete
    Replies
    1. So, no matter the miles it is the same depreciation? That encourages more driving prior to trade-in.

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  5. Diversify into things that are good (or suck less, like long-term food, training/skills/knowledge, ammo, pm's, non-electric/fueled machines, mortgage-free non-bubble-priced productive property, Dental work/health, limited amount of personally-held paper currency) and away from things that are bad/corrupt and priced as a bubble (bonds & urban property, desire-not-need-based businesses, luxury vehicles with 0% interest and 125% financing).
    pdxr13

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    Replies
    1. With everything so reliant on petroleum and trade, I'd be leery of investing in ANYTHING outside your personal use/household.

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