Monday, January 26, 2009

Preparing for an Uncertain Future

Very often the life we end up with is not the life we thought we were going to have. That happens all the time for a variety of reasons (not the least of which is that we're just looking at our little corner of the picture and not even seeing the Big Plan).

But right now there is a lot of uncertainty on both a global and a local level. Globally, we have the whole financial meltdown, banks going under or being acquired by other banks, the big 3 automakers all in trouble, fighting in various corners of the world, the possibility of one or more further waves of credit problems, etc.

Here in Vancouver we have the Olympics coming up in 2010 and some major projects grinding to a halt because of financing issues. The City of Vancouver has guaranteed the completion of the Athlete's Village, which it has been suggested puts the city on the hook for up to $1 BILLION and another recent newspaper headline that puts the total cost of the Games at $6 billion. Vancouver is a pretty wealthy city with a great credit history but that's a hefty price tag for anybody to come up with in the next year!

I've been focusing on our financial situation as a family, the fact that we were spending more than we were taking in and that our debt load was growing. In response, I've been looking for ways to make more money and pay off our debts faster. Because we're coming very late to retirement planning I've also spent time worrying about whether or not we'd be able to manage once we retire.

There's nothing wrong with planning for 10 years down the road or for focusing on paying off debt in 3 years or less. But what if things really fall apart financially in the short term?

For the past while I've been buying as little in the way of groceries as possible and diverting as much money to debt repayment as I could. That's nice, but what if we end up in a situation where we have neither money nor food? What if everything really crashes?

My worst-case scenario would have us move to our rural home (which is fully paid for). We could plant a fairly large garden there and live much more cheaply than we do in the city but I'm hoping it won't ever come to that.

I could make our life more secure here in the city by stocking up on water and groceries but I don't have the money to do that right now. It's also not a good time of the year for me to stock up since we usually spend the couple of months before Passover getting rid of as much non Passover food as possible because it's a pain to box it up and sell it for the duration of the holiday or to toss it or burn it. Permanently disposing of it is also a waste of money and I would argue that boxing it up is too. There have been far too many times that a box of food disappeared into a black hole only to reappear after I'd rebought most of its contents.

So, what will I do? I don't like riding off in six different directions at once but sometimes you have to try to cover a lot of bases all at once. Between now and Passover I should begin to gradually buy extra items of things that are kosher for Passover or that don't require Passover supervision. For instance, I could stock up on toilet paper, facial tissue and grape juice now and wait until after Passover to stock up on things like granola bars or flour or decaf coffee. But I can't lose track of the fact that I'm also trying to pay down debt. I can't start charging things on the credit card or missing payments just so I can buy in bulk.

We also have a much smaller area here (than at the other house) that could be planted in veggies but we could do it and save a certain amount on our food bills. Both Trent at The Simple Dollar and JD at Get Rich Slowly have talked a fair bit about growing food in the garden and Mrs. Accountability has had a couple of really good posts on the subject recently over at Out of Debt Again.

The bottom line is that security isn't just about how much money you have in the bank or have invested (ask anybody who was in the stock market or mutual funds how their portfolio is looking). Security is also knowing that you'll have a place to live and food to eat no matter what.

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