BECOME A FINANCIAL PREPPER
How prepared are you? What kind of contingency plans do you have? How long could you last in an extended emergency situation?
Every year, a survey is conducted by FEMA (Federal Emergency Management Agency) to find out how many people in disaster prone areas of the country are prepared for a variety of different potential natural disasters or states of emergency. What that survey almost always tends to show is that somewhere between 40% and 50% of people in those areas consider themselves ‘preppers’, or people who are always in some stage of preparation for some kind of emergency scenario
Not to be confused with conspiracy theorists, although there’s definitely crossover between the groups, a ‘prepper’ is simply somebody who believes in being prepared in the event that something happens that might limit their access to food, water, electricity, shelter, emergency services, family, banking, cell service, and any other resources that most of use on a daily basis.
I’m not a fan of labels since labels tend to paint people in a very narrow box and shut down critical thinking and rational thought. Most people are much more nuanced and complex than one all-encompassing label can adequately convey, and we like to use the label as a proxy for who that person really is at their core, when often that’s not the case at all. So, in this episode I’m going to suggest that whatever preconceived notions you may have about certain words and labels, you place those to the side for the time being and focus mainly on the important questions I’ll be asking in this episode.
We don’t have to try to imagine a random natural disaster or emergency, we can go to Google for a list of some of the more recent ones:
2004: Indian Ocean earthquake and tsunami (227,898 killed)
2010: Haiti Earthquake (estimated 300,000 killed)
2023: Turkey and Syria earthquake (estimated 60,000 killed)
Tropical storms and hurricanes, wildfires, the Covid pandemic, 567 bank failures since 2001 (from FDIC website), internet outages, grocery shortages, war in the Middle East, war in Ukraine, and a plethora of things that may have happened (or are currently happening) in your local region.
The list is not meant to scare you, and, as always, I must make the disclaimer that I am not a doom and gloom guy. I see sunshine and opportunity all around me. But I am also a keen observer of patterns, and I have a little bit of a background in self-defense, preparedness planning, emergency medical care, and a few other things that simply won’t allow me to remain ignorant to the multitude of ‘what if’ scenarios. So, with that being said, none of what we talk about today is meant to scare, fear monger, or preach the end. What it is meant to do is simply raise your awareness to the potential of certain things happening so that you can build in some mitigation strategies that limit your downside while enhancing the upside.
One of the things I learned after being in martial arts for only a few years at the time and getting into some potentially bad situations is that real self-defense is not having a vast inventory of punches, kicks, and flashy techniques. Real self-defense boils down to preplanning, preparation, awareness, pattern recognition, and a little bit of intuition. One might be tempted to think that all the training you do in martial arts is so that you have some defensive moves ready when the time comes that you have to use them, but they’d be wrong. All that training does build in some automatic responses to certain patterns in physical movement, but one of the biggest benefits to all that physical training is the increased awareness that develops in the practitioner.
The paradox of self-defense says that the more one trains in a self-defense art, the less one is likely to be attacked and it’s because of what happens internally to the self-defense practitioner. They start to carry themselves differently. They walk and talk differently. Their awareness starts to expand outward looking for potential threats, not to engage with those threats, but instead to avoid the threats. True self-defense is defense from the self, not defense against another person. You learn to defend yourself from your own lack of awareness and the ego voice telling you to go toward the danger because you have a little training. That mindset is what gets people killed.
Preparation, preplanning, pattern recognition and a little bit of intuition; that is the recipe for being prepared. Prepared for what? It doesn’t matter. Those four things are what it takes to truly be prepared for almost anything. You could also say those four things are what it takes to build a great business or build a great relationship. You could say those four things are required to build wealth and have a secure future.
Once you realize that these are really principles that can, and should, be applied to all areas of life, the term ‘prepper’ becomes much easier to accept as simply somebody who thinks ahead, plans for their future, is prepared for a variety of outcomes, and remains open to all information that may serve them toward the goal of being prepared for any eventuality.
What we’re going to focus on in this episode is your financial self-defense. By the end of this episode, you’ll at least have an awareness of what it takes to be, maybe not a black belt in your own financial world, but at least halfway through the journey to becoming a master or a Sensei in the vast economic dojo that is the financial world at large. After all, you work hard for what you have, why not protect it and expand it by being prepared, not only for bad things to happen, but ready when opportunities open up as well. The famous Stoic, Seneca, supposedly said that luck is where preparation meets opportunity. Based on my own anecdotal life experiences, I believe that to be true, so let’s go forward with that in mind as we talk about becoming a financial prepper.
The main rule of financial preparedness, or prepping, is quite simply to prioritize the essentials. In trying or questionable times economically, the essentials become everything. There’s no need for complex investment strategies or formulas. It literally comes down to the basics where preservation of resources takes precedent over expansion of your resources. Have no fear, part of the reason to employ some financial preps is to be able to expand your resources if and when the costs of certain assets decline or great opportunities present themselves.
The essentials of financial preparedness revolve primarily around 6 or 7 things. Those things are debt elimination, investing in yourself, preserving capital, not chasing the latest trends, rethinking memberships and subscriptions, and owning hard assets. Each one of these needs a little unpacking, although if your podcast flux capacitor suddenly decides to go on the fritz in the middle of the show, I want you to at least have the list of essentials.
The purpose of almost all self-defense training is to increase one’s mobility, agility, and flexibility. Mobility is the ability to be mobile, to move when the need arises. Agility is the ability to move quickly and decisively without hesitation. Flexibility is the ability to choose one’s course of action and having multiple options available. Prioritizing the essentials automatically increases your ability to move about with agility and flexibility, which many find to be priceless, I know I do.
So, let’s talk briefly about the first, and maybe the most obvious one, which is to eliminate all of the debt that is humanly and financially possible to do so. Obviously, you may not be able to retire the debt on your house, for example. No worries. The goal of this financial prep is really designed to eliminate, to the degree possible, any revolving debt like credit cards, recreation loans, and anything with either a variable interest rate or high interest rate. If you’ve got a $10,000 balance on a credit card with 18% interest, give yourself an 18% raise each month by paying it off. That 18% is eating away at your already diminished buying power each month.
With the cost of housing, gas, food, and entertainment on the rise, anything you can do to cut down on monthly outflows goes a long way to increasing your mobility. By the way, when I say mobility, I’m not talking about your physical ability to move around in the world, although that’s super important too. The mobility I’m mainly referring to is your ability to travel when you wish, do the things you desire to do, work from wherever you want, and make choices about things because you want to do them, not because you’ve been backed into a corner to do them.
I won’t spend much more time on that one because It’s really a no-brainer. If a portion of your monthly income goes out to the door to pay interest on loans each month for things that don’t free you up in life, they will simply become things that will weigh you down over time.
The next financial prep I believe everyone should be doing, regardless of what is happening in the world today, what was happening 10 years ago, or where the world will be 10 years from now, is investing in yourself. What does this mean? It means any investment you make in body, your mental health, your skillsets, your spiritual growth, your ability to earn, your ability to move about in the world, your personal brand, your education, and increasing your demand in the market.
Make more money as an Appraiser in less time with professional coaching! Try it FREE for 30 days!
Since I’m speaking primarily to people in the real estate appraisal, sales, and lending worlds, I’ll say this in the strongest way I know how to do; if you aren’t developing some new, in-demand skillsets and abilities, you may find yourself behind the proverbial eight ball in the coming years. I don’t say this as some kind of doom prediction, I say it because the world is changing extremely fast.
AI and machine learning is here and is not going away. It is already affecting many industries and it has only just begun. That’s not to say that AI will put you out of business, but as the new saying goes, the person who is well versed in using and leveraging AI just might. If you aren’t developing some new skillsets that either enhance what it is you currently do for your income, or skills that a new stream of income can be developed around, you will most certainly be relegated to the lowest paying jobs available in the future.
I am suggesting to all of my appraiser brothers and sisters who might be listening to this show in 2024, you’d better be growing your personal brand, developing some new future based and in-demand skillsets, and building up the non-lender side of your appraisal business if you want to still be doing anything that resembles what it is you do today in 5 years. Will there still be appraisers doing lending work in 5 years? I think so, although it will be much more analytics based, much lower paid, and will most definitely involve AI in some way.
Again, if you don’t have a specialized set of skills heading into the coming years, I believe you will be relegated to the lowest paying roles in any process, and they’ll be the lowest paid because they will be the most competitive. There will be so many people that didn’t keep up, didn’t develop any new skills, didn’t heed the warnings, didn’t read the writing on the wall, didn’t build a personal brand, didn’t add any additional streams of income, and didn’t take any of the advice of people much smarter than me that have been saying for some time that the world is changing fast and never going back to the way it used to be, and we’re seeing it play out in real time.
Investing in yourself will always pay off in one way or another. Acquire some new skills and start studying something that already is, or will be, in demand in the future. I know the advice over the decades has been to focus on one thing and go all in on it, which is applicable in very specific situations, but for most people in 2024 and beyond, the advice should be to develop a fairly broad set of skills that, at a moment’s notice can be directed and focused when a specific opportunity arises.
Remember, we’re talking about financial prepping in this episode. Being prepared means being prepared for a wide variety of scenarios and opportunities. From a self-defense training perspective, if you only ever trained for a scenario where you get punched in the face, what if you’re confronted with a situation that doesn’t unfold like the way you’ve been trained for? What if the attack is a bear hug from behind? What if the attack doesn’t start out looking like an attack at all? What if, what if, what if…
Investing in yourself means investing in a variety of different skillsets that can be deployed effectively when an opportunity arises. If you can only ever do one thing, you’ve painted yourself into a corner that can be very difficult to get out of should you need to. Many appraisers are finding that out now as their business has dwindled over the last year or so. They’ve been doing the same thing in the same way for the last 10 or 15 years and have developed zero new skills over that time. When the market shifted, they weren’t prepared, nor skilled in any other areas in which to create new opportunities.
I’ve said it before and I know it will be asked again, so I’ll restate it here. “Is taking more appraisal classes and getting more designations considered investing in yourself, Blaine?” Yes, of course it is. It’s going to cost you a lot of money to get a designation that means anything, and it may just help you become a better technician. It may also help you increase some aspect of your business in some way if you know how to market your increased knowledge and designations. If you don’t know how to build a personal brand or market your skills, you may end up being a better appraiser with less money in your pocket. Do I recommend that route to people? Not really. Personally, based on the trends I’ve been watching for the last 10 years or more, I don’t see much evidence that the person with the most knowledge, education, or designations necessarily produces better appraisals, nor builds a better appraisal business than someone without those designations.
Am I telling you not to become a better appraiser and always continue learning and growing? Absolutely not! I just haven’t seen any evidence that advanced designations lead to one definitely being a better appraiser and building a better business. I know lots of Certified Generals, I know a fair amount of SRAs, and I know a good handful of MAIs. Based on a very unscientific measure of quality and business acumen, I would say that the data is very muddy. I also know a good handful of MBAs, a couple from Ivy League institutions, who don’t seem to have a solid grasp on business in any fundamental way.
Advanced degrees and designations might help, hopefully can’t hurt, but are absolutely zero guarantee of being better or more successful at the thing the piece of paper on the wall says you paid for. However, always learning and adding to your toolkit should be mandatory in any endeavor. As it relates to financial prepping, I’ll take the ability to connect with people, communicate with and have influence with people, build communities of people, the ability to market and sell a product or service, the ability to build a personal brand, and the ability to earn over letters after my name every day of the week. Investing in yourself means investing in the skills that will increase your ability to survive and thrive when markets change and leave the majority behind.
With those big ones out of the way, let’s talk about some of the smaller financial preps that can have a big effect. In full transparency, these next one’s hurt to talk about because these are the ones I have to remind myself of weekly. The first one is limiting how much you eat out. Again, I am speaking from personal experience on this one because I still do it entirely too much. Jolene and I really enjoy going out to eat, not necessarily because we love the food, but because we enjoy the experience of getting out of the house and having somebody else do all the work.
We both enjoy cooking, and I would say we’re both pretty good at it. My mother began teaching me how to cook when I was 6 years old, and I’ve been learning and practicing ever since. I think the meals Jolene and I make are objectively better than what we get at restaurants, but it can get monotonous eating at home every day. Some of you might be scoffing at that because you’re more disciplined than I am, and you already eat at home every day. I, unfortunately, really enjoy the experience of getting out of my house or office and working from a café or one of my three favorite breakfast places. The problem from a financial perspective is obvious: It ain’t cheap!
The average omelette with a side of bacon and coffee at one of my favorite restaurants is somewhere between $25 and $30 after tip. Dinner is never less than $40, usually more like $60. Do breakfast and dinner once per week and you’re spending $100 per week, $5000 per year or more on something that doesn’t really fit into the ‘essentials’ category. If you remember from the beginning of the show, we said that prioritizing the essentials is the key to all preparation activities since anything extraneous and non-essential typically gets jettisoned in emergencies anyways. All the extra stuff we have and do becomes excess load we have to make choices on when what is really needed in tough times is a few key things we focus on.
I am not telling you what to do with your life. I would hate for somebody to tell me what to do with mine, and I don’t like it when somebody tells me to stop eating out. But not because they’re not right, I don’t like it precisely because I know they’re right and it’s something I need to reign in. Every little bit helps when it comes to being prepared financially for tough times, especially if you have high interest debt that should be paid off first.
The next piece of advice for prioritizing the essentials while becoming a financial prepper is to (this one hurts more than the eating out advice!) stop chasing the latest tech. if you’re like me, you love tech and all the cool things that technology allows us to do in our lives. I consider myself a ‘technophile’, which is essentially someone who loves tech. I get the latest Samsung phone or iPhone almost every year, I buy new tablets and laptops, I love buying new camera gear, I have the latest Apple watch, the latest Garmin watch, and I was just recently looking at a new watch brand called Coros.
I would say that I’ve gotten better over the years, but I’m still not fully cured of my tech obsession. Occasionally, I find myself buying something that I tell myself is going to make me more efficient, smarter, or better at something in some way and, in the end, it really doesn’t. Now I have to charge it, keep it updated, make sure it’s safe and protected, and not lose it. Like all of the rest of our ‘stuff’, it becomes a burden at some point because it sucks up our money, it takes focus off of essential things, and, if you’re like me, you now have a room or desk filled with tech that you no longer use.
In fact, as I was making notes for this episode, I shamed myself into going through a bunch of my tech and beginning the process of selling some of it on Facebook marketplace. I just put an Apple Watch Ultra I no longer use up for sale. I have a really nice Sony A7III full frame camera I’m selling. I have a Macbook Pro laptop I’m selling. And a few other things that have just been sitting around gathering dust. They all represent dollars and life energy that is stuck and needs to be released. By the way, the reason I’m selling my watch, camera, and laptop is because I bought a new watch, the next version of the Sony A7 series, and a new Macbook Air to replace my Macbook Pro! Stupid!
I’m sharing this with you, not to tell you what to do and sound superior to someone else. I’m sharing with you because these are the areas that I fail in on the regular. However, one small saving grace, at least for me, is that I started financially prepping many years ago, so I have some reasonable margin in that area, and I know many people who do not. If things go south in the markets, which they have for many, I’ll be ok for a good long time, I know many who won’t be.
One of the biggest reasons to train or prepare in any area of life is to create margin. Margin simply means space. Space to think, space to act, space to relax, space to make decisions and choices, space to move about freely, the space to help out others in a time of need, and space to take advantage of opportunities when everyone else is freaking out. I feel only slightly bad about saying it that way, but it’s one of the realities of being prepared. The prepared are able to take advantage of opportunities while the unprepared have to rely on the prepared, to some degree.
The next financial prep is, quite simply, to rethink dues, subscriptions, and memberships. I learned several years ago from one of my own coaches a little credit card hack, which is to pay all of your dues, subscriptions, and memberships with one credit card or bank account and then, once every 2 years, close the account and cancel the card. It can obviously be a little hassle to re-set up the memberships and subscriptions you want to keep, but the ones you don’t use any longer will be eliminated and will more than pay you for the time and hassle to set up the remaining memberships. Of course, if you’re really good with your tracking, you can simply call all your memberships and subscriptions every year or two and change your payment method. But, if you’re like me, I sign up and forget about the next day
Guaranteed, if you try this, you will end up uncovering some things that you’ve been paying for years and have completely forgotten about. When I first started doing this, I saved about $1800 the first year. By doing this I uncovered around $150 per month in memberships and subscriptions that I wasn’t using that were basically just flying under my radar each month. If I did see the charge come across on my bank or credit card statement, they were often small enough that I’d just shrug them off. A $10 or $20 subscription often flies under our financial radar, but 10 of those subscriptions add up.
The last suggested financial prep for this episode, and this is by no means a complete list, nor is it professional financial advice, is to prioritize hard assets over digital assets. What I mean by that is that, in difficult financial times, or even national emergency situations, digital assets can become difficult to access. If power goes out during a hurricane or flood, not that you need to run down to the local convenience store during that time, but your debit card may not be usable to access cash.
Cash is considered a ‘hard asset’ when you’re holding it in your hand. Cash in your bank isn’t really cash, it’s digital 0’s and 1’s that can only be accessed by physically walking into a branch or by using a digital ATM card to turn the digital asset into a physical asset. Gold, Silver, your home, a building, artwork, your cars and trucks, and cash in your home safe are all considered hard assets. I’m not saying you shouldn’t have any stocks, bonds, mutual funds, 401K plans, or keep cash in the bank. I’m simply suggesting that, as a financial preparation for an emergency, it’s wise to allocate some of your investing to hard assets that you can touch and have immediate access to if and when needed.
My advice, at a bare minimum, would be to always keep $5,000 to $10,000 in cash in a strong safe at home should you ever need it for an emergency. While I always carry a fair amount of cash on me (for other reasons not necessarily related to financial prepping), I don’t use it when I’m out and about. Probably like most of you, I use my cards for almost everything for good record keeping, tax purposes, and to have a digital paper trail of purchases, not to mention getting the mileage and travel points from some of those cards.
The problem with this habit, at least from a prepping standpoint, is that, if we become so reliant on credit and debit cards that you never carry cash, should something happen where you cannot access your funds, you’re stuck. Keep some cash for emergencies, invest a little bit into assets that represent a 1 to 1 value exchange like precious metals, artwork, and other hard assets, and prioritize the essentials first before thinking you have to become learn some complex trading secrets or the wealth secrets of the billionaires to be prepared for challenging times.
Join FREE and gain access to my Podcast, Blog and upcoming Newsletters!
We respect your email privacy
