Today we are going to chat about money!  

I know, it might seem like an odd topic, but it is absolutely vital to talk about money in terms of preparing for the unexpected. 

Not convinced?

 Here is a short list of unexpected events that could take place in your life over the next year:

1. The loss of job or reduction in work hours (Hello COVID)

2. An accident or injury that creates unexpected medical bills

3. A family emergency or funeral that requires unexpected travel expenses 

4. An insurance claim for your house or car (especially if you live here in CO with our crazy hail!) 

 5. A pet emergency that requires an expensive trip to the vet

 6. An unexpected household repair bill (you know when your washer goes out)

 7. Your car breaks down or needs a major repair

 8. A family member needs support for an unexpected event

 9. A natural disaster hits your area forcing you to leave your house and stay in a hotel for a week

 10. Unexpected moving expenses 

 This list probably hits home at some level.  From personal experience I can tell you ALL of these things can happen.  A few years ago, I experienced three of these situations in 6 weeks.  

 My worst year for financial bills was due to a hail storm in Colorado, a broken AC in FL, and a move across country.  The Colorado hail storm created two major insurance claims (one auto and one home), that cost me nearly $4K out of pocket even with great insurance.  The air conditioner repair was another $5K out of pocket, and the move was a couple of thousand.  Without an emergency fund these things would have been devastating.  I’m sure you have all had similar moments.

 Unfortunately, according to statistics, more than 2/3 of Americans can’t cover a $1000 emergency.  And up to 50% of Americans are living paycheck to paycheck.  That means any little bump in the road can create significant stress and strain on our budgets.

 With these types of statistics and emergencies in mind, it is easy to see why getting more financially prepared has to be a top priority when you start prepping.

 I am a pretty big Dave Ramsey fan, and I really enjoyed reading the Total Money Makeover.  If you haven’t read it, I would encourage you to get a copy.

 His “baby steps” include:

1.     Save $1,000 fast

2.     Get out of debt using the debt snowball 

 3.     Save 3-6 months in a rainy day fund 

 4.     Invest 15% of your income for retirement 

 5.     Save for your children’s college 

 6.     Pay off your home 

 7.     Build wealth & give!

This isn’t an easy plan, but it does create the financial freedom that most of us crave.  

 As a prepper, I would change the order of these steps just a little bit.  I would focus on the savings before I worried about reducing the debt.  The reason I would switch these from a prepping standpoint is that having a rainy day fund is HUGE!

 Here is what I recommend (please remember I’m NOT a financial advisor, so this is just my opinion...you need to make money decisions based on your unique situation).

 1. Save some cash at home!  From a true prepping sense it makes sense to keep some cash in an accessible location at home.  

 Most of us do all, or at least most of our banking online and all of our buying with credit cards.  From a prepping standpoint this puts as at some level of risk.  Having access to some of our savings in the form of cash gives us more flexibility in a power outage scenario where banks may be closed and ATMs may not work.

I’d recommend storing at a minimum a few hundred dollars at home and maybe some in your car.  In a scenario where stores still have supplies, but credit card machines don’t work, those of us with cash will have an advantage.

 Keep a variety of denominations in your, “at home bank,” and consider keeping some coins for easy transactions in local stores.  Obviously, keep this somewhere secure.  We use a fireproof safe in our home for vital documents and cash.

 Remember cash is king!

 2. Save for a rainy day!   Dave Ramsey recommends paying off all debt before you start saving an emergency fund, and from a pure financial perspective there are some great reasons for this approach.  

However, from a prepping standpoint, I like to have a cash cushion in the bank.

 Just as Dave Ramsey suggests, having 3-6 months of living expenses saved in an emergency fund is absolutely essential, particularly for those of us that are preparing for the unexpected.  The stay-at-home orders and partial shutdown we experienced during COVID-19 was a great reminder that having a financial cushion can mean the difference between survival and stress.

 Taking even modest steps towards creating an emergency fund now can create a sense of calm and peace in uncertain times.  

We KNOW we will all face unexpected emergencies, so start planning and saving now!

 3. Once you have a cushion, pay off your credit cards & other loans - This just makes sense from an overall financial well-being perspective.

I love Dave Ramsey’s debt snowball approach, where you pay off the loan with the smallest balance first and then add that payment to the next loan and then the next until they are all paid off. 

This approach gives you quick wins and helps you gain momentum by the end of your journey (depending on how many installment payments you have), you have a significant amount of money going towards a debt by the last loan.

 Now imagine how fast you could store food, water, medical supplies, and other gear for your family with that dollar amount invested towards preparing each month...kind of cool!  

 The average American spends $4,000-$5,000 a month in installment payments...that’s a lot of rice, beans, band-aids, and bullets!

4. After that, follow Dave’s advice!  After all he is the financial expert.

 One quick note about building wealth and giving!  

 As someone who is looking at preparing your family for the unexpected, imagine how much you could help others in a time of crisis if you had no debt, owned your home, and had cash in the bank.  Your ability to help family and friends would be significantly greater than it probably is today.

 My husband and I are working through the baby steps now.  We haven’t done everything exactly in order, but we are making progress on our financial goals.  Just having an emergency fund and investing towards retirement makes us feel more secure. 

 What financial advice do you follow?   How can you take small steps to get more prepared financially?