My Most Important Prep – Eliminate Debt!
We all have a plan to survive a tornado. We all have a plan to survive a hurricane. We all have a plan to survive a power outage. We all have a plan to survive a wildfire. These are things that happen to us. Do you have a plan to survive the one thing that most of us do to ourselves?
There is one prep that has saved me on several occasions – paying off debt. This is a HUGE prep and is highly rewarding.
The Challenge Of Debt Reduction
Paying off debt is one of the most memorable events of my life. I remember paying off the mortgage on a condominium I purchased in 1998.
Paying off my credit card debt (and never using it again) was a tremendous relief, and it allowed me to purchase a larger condominium that was perfectly adequate for the rest of my life (or so I thought at the time).
Soon thereafter, I paid off my school loans. That was a HUGE relief.
Paying off my car created some room for spending money.
Less Debt Equaled Income Freedom
In the depths of the great recession, I was EXTREMELY thankful to have the ability to make my final mortgage payment on my second condo. This allowed me to function at a lower income than I earned previously.
When Bad Things Happen
Today, I am facing divorce. Guess what, I have a beautiful condominium that I can move into that only costs me taxes, insurance and HOA dues reducing my expenses to an easily managed level.
Preparing for economic disasters is not sexy. I can think of many times during my 50 years on this planet where economic loss was or could have been devastating: the savings and loan collapse of the late 1980s, a loss of my job in 1996, the Great Recession of the aughts and my subsequent loss of work, and today a divorce.
Having a paid for place to live gives me tremendous peace of mind, and allows me to focus on the other trivialities that come with daily challenges.
What is the point of paying off debt when everything will be in disarray?
Never ever seen this covered. Everyone says payoff debt in one sentence and that the swhtf in the next.
I can’t speak for Merman, but Salty and I are also in the ‘pay off debt’ camp … in fact we did so more than a decade ago. The thing is that disasters can come in any size. Will The Big One, the TEOTWAWKI event, happen soon? I think anybody who claims to be sure to know is fooling themself or lying. On the other hand, single household problems such as job loss or sudden medical problems happen to families every single day.No debt makes such problems *much* easier to handle. Also, widespread disasters that are not complete collapses are also much easier to deal with without debt.
Consider this coronavirus thing. If we get a lot of community spread, many places of business are likely to shut down temporarily and there will be economic pain. Your (the generic You, not trying to get personal) income may suddenly drop. Does that mean your mortgage holder will cut you some slack? Or your credit card companies? I doubt it. We don’t have to worry as much because the RePo man is not going to show up here.
I concur with Spice; I can tell you without a doubt having no debt is a huge relief off the old shoulders. Not owing any body money or having that hang over your head is huge stress reliever AND allows you to focus your buying or financial power else where.
I pay cash for everything it, and it would bother me to owe money to some financial institution who at the drop of a hat will have no qualms repossessing your car, house, or property that you owe them money on.
But to your question GTC, before things get into disarray, guess what? People will still come to collect.
I am a version of a prepper who does NOT think SHTF will happen to me. Still, things happen – my home burned down March 25, 2005. Economic disasters are far more common than the “sexy” disasters we use as examples.
if SHTF what difference does your debt make?
There are many, many different levels of SHTF. For example, when the economy collapsed in the 1930’s following the Wall Street crash, money was very tight and people who were in debt ended up getting foreclosed on and losing their homes, spending much of the rest of the decade homeless.
There are all kinds of SHTF situations that we prep for. For example, if you live debt free (like Spice and I have done for the last 15 or so years) if we should have a loss of income, it’s not “PANIC” but rather it’s inconvenient.
People who are deeply in debt also tend to have problems prepping… if the choice is whether to buy that tool or water purification system or to add solar banks and the like… or… make two car payments… the car payments get made and the preps are skipped.