Mr. Rawles,
My family and I are facing some challenges in our pursuit to become prepared. First off, a little background on our situation. I’m a 12-year Air Force veteran currently stationed in Montana. My wife also works full-time. We have about $60,000 in debt between credit cards and two auto loans. We have no problems paying our bills and our credit is excellent. It’s just that we don’t have a ton of extra money to begin our grand survival scheme. We’ve talked about all the different routes about living debt free and also purchasing the right vehicles, retreat and equipment that we feel we would need.
Option #1 – The Air Force pays large bonuses for certain career fields if you reenlist into that career field. I’m interested in one that will pay me a minimum $50,000 ($25.000 on signing, the rest spread out over the length of my reenlistment.) We talked about paying off one auto loan and our credit cards with the up-front $25,000. This would free up about $500/month which we would probably put towards our bigger auto loan. Since the first auto loan would be paid off, we can then sell that car and buy a less expensive ’73-’86 Chevy/GMC Blazer or Suburban (gas). That would take care of survival vehicle #1. The other $25,000 over the following years would be used to pay down our other vehicle to where we can pay off or even break even so we can purchase survival vehicle #2—1994-1997 Dodge Ram 2500 4×4 5.9L Cummins diesel. If we go for this option, most if not all of our debt will be gone and we’ll have about $1,000/month to spend on fortifying our equipment, supplies et cetera. The problem with this option is we won’t be too prepared if something were to happen in the next 4-to-5 years or so.
Option #2 – Let’s assume that I still have the same bonus as listed above. I retire in eight years and would like to have a little piece of land to go to–TEOTWAWKI or not. We plan on 10+ acres somewhere in north central Idaho (Orofino/Pierce/Deary–that area). Well, I could take the $25,000 up front bonus and put it down on a piece of land. We don’t plan on spending over $80,000, so we can figure on a payment of around $300-$600/month. Then, when I retire, I’ll move the family up there and build a house with a mini-farm. Of course, if I went this route I would still have a lot of debt.
Option #3 – Perhaps I should plan for more immediate needs. My family has little of the proper equipment/supplies that we would need. Shoot, we don’t even have a Bug-Out Bag.. I’ve considered using that bonus money (or a portion) to build up in the equipment area and forego paying any additional to debt (after all, if TEOTWAWKI happens in the near future, debt will be the least of our problems).
So, this is the dilemma that I am faced with. I know my end goal a (self sustaining mini-farm in Idaho, while still receiving a pension and being debt free). Getting there is the hard part. The costs of my current debt, state of provisions, buying land, building on the land, vehicles, alternative power for the retreat will probably cost anywhere from $200,000-$500,000 when it’s all said and done. I think the smart choice is putting as much money as possible towards debt and getting that out of the way, but at the same time making small provisions for WTSHTF. Perhaps I’ve missed something? – Dan W.
JWR Replies: For anyone that might be laid off, debt can be a real killer in the next few years. I still predict a at least another 18 months of deflation to be followed by sharp inflation. In deflationary times, having any debt load would be disastrous if income were interrupted due to a layoff. Granted, military service is a unique situation, but my general advice is to pay down debts, and avoid taking on any new debt. The situation in the immediate future will resemble the Great Depression of the 1930s, where cash was king, and the few people that had jobs fared well, but those that were unemployed suffered badly. So my advice is to take Option #1: Pay off one auto loan and your credit cards with the $25,000 re-up bonus. Not only will it remove the stress of potential loss of income, but it will eliminate interest payments, which are a non-productive drain on your resources. Then make your preparations gradually, using your expendable income, without incurring any new debt. If need be, downgrade one of your vehicles to an older model that won’t require a car loan. That will free up even more cash each month.