Everybody believes in an emergency fund, but what if you couldn’t get access to such funds in an emergency?  There are many possible scenarios that could occur and prevent you from having funds needed in an emergency.  As such, I believe you should keep some cash hidden at home for use in an emergency.

In the event of a major disaster or blow to “the system”, you could easily see one or more of the following situations occur:

1. Bank failures which could delay withdrawal of your money while the FDIC sorts out the mess – If the FDIC goes under, it will be even more messy (unlikely due to the printing press)
2. Power outages – disable ATMs, online banking, computer systems needed to access funds
3. In such a disaster, vendors and retailers will likely not accept credit cards either, even if they’re capable of processing them.  You will likely need cash.

We heard in 2008 all kinds of threats about total financial system collapse.  Not sure exactly how that would play out but it likely wouldn’t be good for your access to cash.

So, how much cash should you keep on hand?  Most people say you need 3-6 months in an emergency fund, some say even up to a year.  For probably 99% of people, that emergency fund is a savings account somewhere which means you’re reliant on a functioning banking system to gain access to that money.  While, it’s unlikely that you would actually lose that money, the scenarios outlined above could definitely disrupt or delay your access to funds.

To get through a potential disruption or delay, you should consider keeping 10% of your emergency fund (or more depending on your situation) in cash at your property.

Keeping cash on your property of course comes with several risks, namely theft.  I recommend keeping cash hidden in multiple places.  A small safe that is visible is not a wise choice as thieves can simply remove the safe and take it with them.  Be sure to consider other risks such as fire as well.

In conclusion, if you’re truly planning financially for emergencies, then it makes complete sense to have at least some chunk of cash on hand at your house to get your through a disruption to the financial system or the regular day-to-day workings of the economy.  I’d recommend at least $500 and maybe up to 10% of your typical emergency fund in cash at your house.

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1796Comments (3)http://20smoney.com/2010/03/05/should-you-keep-cash-at-home/Should+You+Keep+%22Emergency+Cash%22+At+Home%3F2010-03-05+09%3A12%3A22Kevin

I’ve looked into buying physical gold and silver recently, and have come to two realizations:

1. Finding physical gold and silver is not easy, which shows the demand is high – take that for what it’s worth
2. Owning physical gold is about security, not speculating or trading

I’m not going to comment on the first realization even though I think it is an important thing to take notice of.  Today, I’m going to focus on why owning gold and silver is for security.

First off, gold and silver prices are very volatile.  Trying to speculate where the prices are going is a waste of time.  Additionally, speculating about inflation vs. deflation is also a waste of time, because we could have both or one or the other, the result doesn’t concern me.  What does concern me is that I am more secure by having some holdings of physical gold and silver.

Now, when I say own physical gold and silver, I’m referring to the physical stuff that you can hold.  And I’m talking about having it in your house, hidden, accessible to only you.  Safety deposit boxes don’t count.  This is the security I’m aiming for.

Think about owning physical gold and silver as just a way to enhance your diversification.  If the dollar continues to weaken, which has been the trend, we will be not hurt as badly if we own gold and silver.  The reality is that gold and silver will have value today, and hundreds of years from now.  I can’t say the same about the U.S. dollar.

My advice is to buy some physical gold and silver, you determine how much, but to definitely buy some and then hang on to it.  If prices become more attractive, maybe pick up a little more.  Again, just hang on to it.  It’s security.  It’s insurance. Do not stress over the daily spot price of these metals.  Just relax knowing you have a little more security than you did before.

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1757Comments (1)http://20smoney.com/2010/02/25/holding-physical-gold-is-about-security-not-speculation/Holding+Physical+Gold+Is+About+Security%2C+Not+Speculation2010-02-25+09%3A29%3A02Kevin

Yesterday’s post was on whether or not the stock market has really bottomed.  On a related subject, I want to make a few comments about the supposed Depression that is still heading our way.  First, a little background.  Many people who follow economics and the markets believe that a Depression is inevitable.  By Depression, I mean a severe recession, worse than the recession of 2007-2009.  Many people, myself included, believe that the actions taking to avoid the current recession will do more harm in the long run than good.  Some believe that it will lead to an actual Depression with severe consequences.

Typically my viewpoint is one where I am critical of actions and policy that delays the inevitable… the Depression.  The reason for this is because by delaying the consequences of our overleveraged, overconsuming society is that the eventually crash becomes worse the longer we put it off.  Typically, I say bring it now!  Let’s get it over with!  That way we can restructure and the quicker we can get on to real growth and real prosperity.

This past weekend I thought about this for a while, and I decided that there are some good results of our government propping up the economy in order to prolong the inevitable (they think escape the inevitable).  The good result is mainly one: time.  What do you need time for?  To prepare for a potential depression of course!

Don’t Waste The Time You’re Given

Preparations can be categorized into two camps: financial and security.  First, you can take financial preparations such as scaling back your positions in stocks, diversifying into hard assets like gold and silver, etc.  While a deflationary depression could make gold prices go lower, gold will still be a decent place to be; therefore, allocate some of your assets to gold.  You can research and decide for yourself how much that should be.

When it comes to security, I have yet to subscribe to the idea that the world is going to completely come to an end (though, I don’t totally dismiss these folks and what they say).  With that said, there are real things to prepare for in a severe Depressionary environment.  The main thing is an increase in crime.  You can take this time to find ways to secure your home, acquire and learn how to use firearms, install a security system, etc.  I think an increase in crime is a real possibility, especially when you consider the terrible financial position of municipalities across the country.  Funding for police forces will likely be limited.

In addition to crime, you may consider stocking up on some basic necessities should some type of disruption take place.  If you take a step back and think about how dependent you are on others, it’s actually quite scary.  Again, while society probably won’t break down completely, why not prepare for some level of disruption.  How far you want to take this is up to you.

My official position on whether or not we’re heading for a Depression is… I don’t know.  I do think we’re heading for more economic troubles.  I think there’s a good chance that the next recession is worse than the current/previous one.  None of the problems were fixed and in fact, we’re probably worse off than we were in 2007.  Some level of preparation is recommended.

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1448Comments (0)http://20smoney.com/2010/01/19/waiting-for-the-depression/Waiting+For+The+Depression...2010-01-19+09%3A42%3A27Kevin

I ran across a great post at SurvivalBlog regarding depression proof jobs and wanted to comment about it.  This blog is all about surviving “the end of the world as we know it” which typically involves readers who desire to live in a rural area with supplies, weapons, etc.  The question that comes up for so many of these people is how can one move to a rural area / retreat and still maintain an income?

Since I have a strong desire to move towards financial independence and income independence (not dependent on a job/career), I found many of the author’s points very applicable towards my own goals.

The recommended strategy is similar to what I talk about here at 20smoney:

My suggestion is to start a second income stream, with a home-based business. Once you have that business started, then start another one. There are numerous advantages to this approach.

The advantages that the author discusses are the ability to get out of debt, you can build the business up gradually while you work and generate your “main” income, you can spread the risk amongst multiple businesses/income streams and you can work from home which means that home can be anywhere.  All points that I completely agree with.

The author lists a bunch of potential options of home based businesses that are recession/depression proof such as locksmithing, gunsmithing, accounting, etc.  One that he mentions that definitely is in line with my focus is blogging.

Check out the article referenced above for additional information such as home based scams that you should avoid.

I loved this article because while I may not be fully preparing for argmaggedon and self-reliance, I do strongly believe in pursuing financial independence with the cornerstone of that being self generating an income.  For now, my strategy remains blogging and/or web based income.  I believe web based income offers great potential, is practically risk free and requires little startup capital.

The bset part is that you can build your online income while you work your main job.  At best, the income grows significantly to where it can fully replace your main income.  At worst, the project fails and you keep your main job.  A very possible scenario is that you create a second income stream that generates some extra cash for you.  This would be huge in your financial independence efforts.  What are you waiting for?

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1397Comments (1)http://20smoney.com/2010/01/05/home-based-income-depression-proof-jobs/Home-Based+Income+%26+Depression+Proof+Jobs2010-01-05+15%3A36%3A24Kevin