How To Be A Financial Prepper- Part 3, by Brandon

No matter the crisis scenario for which a prepper prepares, the financial side of preparedness is unavoidable. Items are necessary and they are costly. Most of us have very limited resources, but I know that we can still prepare. I’m sharing the lessons my wife and I have learned.

In the first two parts, I talked about budgeting, assessing your financial situation, saving, and now we have begun to talk about the step of living below your means. Saving and living below your means needs to happen concurrently.

Reason For Living Below Your Means

Living below your means serves several purposes. Yesterday, I shared that the first reason is having more income available for prepping and saving for disaster.

The second reason is that living well below your means will begin to teach you how to do without and how to manage with less than you would otherwise have. Depending on how far you take this, you could live as though you were in a SHTF scenario already. Many preppers and homesteaders live without the use of modern conveniences, and they are mostly self sufficient.

Learn To Live Without, An Important Lesson For An Efficient Prepper

Living below your means will help you learn to live without. Albeit how far you take that lesson is a matter of choice. But learning to do without is an important lesson, if we are to be an efficient prepper.

This will also allow you to lower your debt. How quickly this is done is dependent upon a few factors and will vary from person to person. However, the concept stays the same no matter your income level. If you do without more, you will have more resources to combat debt that eats up income.

Some Painful Debt

Let me tell you how I was able to combat some painful debt. A few years back, I took out a car loan for my truck. They sold me on the truck, and I’m still convinced I got a decent price on the vehicle. The problem was that I took out a loan. So what began as a $12,000 loan turned into $22,000 of debt. I felt as though I had no options. I was in a bad way financially and couldn’t keep up with car repairs. This was a hard lesson to learn. I paid $400 per month on this truck for three years. And the payments would have continued if we had not paid it off early. We made some sacrifices elsewhere to be able to make that payment.

When it was paid off, we didn’t go out and buy a new car. We learned how to live below our means. Now, that extra $400 per month that we previously used on the truck loan is available for preparation.

Assessed Preparation Needs and Cycle Each Month From One Prep to the Next

I have assessed my own preparation needs. Each month, I choose one of the top needs or two and then I shore up those areas. I cycle each month from one prep to the next. And with that extra $400, I am able to get a lot more prepping done than I was previously.

Live below your means!

Whittle Down the Debts

The final step in being a good financial prepper is to whittle down your debts. For most Americans, payments on some sort of debt takes up a huge chunk of their monthly income.

The example I gave of my truck payment is just one of many. I have a family member that is a young doctor. She has a mortgage of over $100,000, student loans of twice that, car payments on one vehicle, and a couple of credit cards as well. They have no disposable income. She pays the minimum payment on her student loans and will not have those paid off for many years, at her current rate of payment. Most student loans charge from four to eight percent interest. Likely you end up paying an additional 50% or so of the original loan on top of the original loan, just in interest. That is a lot of wasted hard work, money, and potential preps.

Start Paying Off the Loans and Credit Cards

Once you have assessed your financial situation and set up a budget, it is time to start paying off the loans and credit cards. This is to be done with the other two steps above– live below your means and saving.

Make a list of all of the debts you have. With the lowest balance at the top and highest at the bottom. Pay the minimum balance on all of your debt, except the top on the list. Start paying as much as you can, while still prepping.

This is where some balance is needed. Only you are in your own situation, so only you can know where this line is. But, you should give part of your budget to prepping and part to paying off the smallest balance you have. Additionally, this can change month to month.

If you have a prep that is a bit more expensive one month, that is fine. Simply adjust that month’s budget accordingly. You just have to be sure you don’t go too far one direction or the other.

Discipline To Pay Off One Debt, Then Time To Celebrate

As you are the one that has assessed your own needs and created your own budget, you are the one that will need the discipline to stick to what is needed. But you continue to pay off one loan or card until that first debt is crossed off of your list. Then it is time to celebrate!

Take Amount Spent On First Debt And Add Onto Next Listed Item

Next month, take the monthly amount you would have spent on the first debt and add it onto the next listed item. Include the minimum monthly payment plus what you were paying on the first debt. This will get this one paid off quicker. Once the second debt is paid, you move on to the third, and so on.

You can see how this will create a growing effect with each removed debt. Gradually, you will get all of your monthly payments to disappear. With each debt paid off, you can dedicate a little more of your income to preparing for SHTF and a little more to the next debt.

Financially Free

Once you are completely debt free, you will feel more financially free. You may possibly feel more free and less burdened than ever.

Each month, I have only electricity, Internet, phone, and insurance bills. I could pay the insurance every six months or annually, if I chose to do it that way. The money that I make, I actually get to keep and use! It’s an amazing feeling. With this resource at hand, you will have the ability to be (at least potentially) better prepared.

Our Best Ability To Be A Prepper Comes When We Owe No One A Single Dollar

No longer do you have to worry about losing a job and having the debt collectors knocking down your door. Your voicemail isn’t full of collection notices or late notifications.

Truly, financial freedom comes in being able to say, “I owe no one a single dollar.” And our best ability to be a prepper comes at that same moment.

Finances Should Be Ally of Your Prepping and Not the Enemy

In conclusion, whether you believe being debt free is the best option for you or not, the principles mentioned here will undoubtedly make you better able to prepare for your flavor of doomsday. If you will budget, assess your financial situation, save, and live below your means, these things combined will free up a surprising amount of resource. Your finances should be the ally of your prepping and not the enemy.

Being a financial prepper will take your prepping to the next level!

See Also:

SurvivalBlog Writing Contest

This has been another entry for Round 78 of the SurvivalBlog non-fiction writing contest. The nearly $11,000 worth of prizes for this round include:

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Round 78 ends on September 31st, so get busy writing and e-mail us your entry. Remember that there is a 1,500-word minimum, and that articles on practical “how to” skills for survival have an advantage in the judging.


    1. Congrat’s Iggy!! I too recall what a great feeling it was to become financially free! Carrying debts can be a heavy burden. Living financially free is so much better life, w/ more joy & satisfaction & more choices. Enjoy your new financial freedom!

  1. Congratulations in less than a hour!! Good work. We have doubled down on the mortgage and could pay it off at once if the need arises. We were reading about how many folks lost their homes and land during the Great Depression or didn’t have enough set aside to pay the taxes and lost their property.

  2. Good series and thank you for sharing your truck buying experience.
    With the exceptions of illicit drugs and shifty members of the opposite sex, there is nothing with the potential to destroy lives and credit ratings faster than a honking chunk of depreciating metal sitting in the driveway with only 63 more payments until that baby is all yours.
    Thankfully, I learned that lesson very early in life as a salesperson at a full-line Chrysler dealership during the heyday of Mr. Iacocca’s reign. I will never forget the look in the eyes of an adult more than twice my age when I had to explain to them the horrors of negative equity after they decided to trade in a minivan bought new just six months earlier with practically no money down. The second biggest ruse ever pulled on the American consumer was when they were convinced that automobiles were status symbols. Most manufacturers operate their own finance companies so now the ability to fog a mirror is all that is required to drive away with your own mobile version of debt slavery.
    Buy used, pay cash, and drive that puppy until the wheels fall off.

    1. There are several national level car dealerships that specialize in finding the right used car or truck for a customer, then shipping it to him/her. Carmax, Autonation, etc. I’ve bought several autos from them, typically one model year old to eliminate the first big drop in equity value. Even if they don’t have a lot near you, you can still save money by using their website. The newest one, Carvana, appears to operate this way, shipping direct to your door and picking up your trade-in. Don’t know whether they do new or used cars, or both.

    2. A car is a consumer item.
      It´s life expetation is limited, in time and miles.

      A cheap, unreliable, unsafe car may be more expensive in the long or even medium run than a good car for which you pay a bit more, even when you go in reasonable debt.

      Hold an eye on the cost and timing of repairs if major repairs come to often (starts to become a Money sink) , it´s time to look for a new used car.(Don´t ask me how i know that)

  3. I would make one change. Whenlisting your debts, put the one with the highest interest rate on top and the lowest on the bottom. That way you decrease your total interest payments faster.

  4. We’re almost there, too. Cars were paid off long ago, and the mortgage will be paid off as well in two years. Our friends and family thought we were nuts when we bought our home and opted for a 15-yr note (“but you can have smaller payments with a 30-yr and write off the interest from your taxes!…etc. etc.”). Now that we’re almost at the end, those same people are jealous because they’ve all refied and are still looking at 20+ years of payments ahead of them, which (because of the refis and pulling out cash from their equity) are now equal or greater to what ours are.

    Our (now grown) children heeded our example, fortunately, and none of them have any debt, and even paid cash for their used cars. Makes us proud (sigh…). 🙂

  5. For years I wondered why basic finance wasn’t taught in high school. Then it hit me; “they” (the banksters, car dealers, etc) don’t WANT you to know about the perils of debt until you’re already in it! By then, even when you come to your senses, they have already gotten a piece of your pie!

    While I was in the military, mandatory attendance stand-downs were implemented for junior members to teach them how to navigate debt. Reason being; a person in big debt is easy pickins’ for espionage!

    Debt is a weakness in your fortifications. Get out of it. STAY out of it! Teach this to your kids! No one else is going to!

    Oh; and pay off the HIGH-interest loans FIRST!

  6. I am 75 and my wife is 69. We are debt free and own our home. Live on SS and have about 40,000 in disposable cash.
    Problem is what do I do with cash.
    If I put in silver or gold, it becomes inaccessible. If i leave in cash inflation makes it worth less.
    If I spend I cannot replace because of bad health for me and wife.
    I really don’t know what to do.

    1. Ron, depends on your assessment of disaster risk. If you are comfortable with the current economic environment, you could put half in a CD or stock market account. Or you could put half in cash and half in silver. BTW, congratulations on your retirement and debt-free status.

    2. Ron Stephens: I am in a very very similar situation to you. I have been looking for an inexpensive house to buy as a rental with that $40,000 as a down payment. Generate a little income Probably generate a little headache too, but hope to keep up with inflation that way.

  7. While I know that tangibles are preferred by many, you might want to consider a tiered strategy of brokered CDs to combat inflation while maintaining a fair degree of liquidity.
    If you keep $10K in actual cash for immediate expenses that may come up, you can put $10K in a 3 month CD, $10K in a 6 month CD and $10K in a 12 month CD. When the 3 month CD matures, just put that $10K+ in a new 12 month CD and keep doing that as they mature. Brokered CDs are a bit different in that their value goes up and down during their term (you can choose to cash them out early if the value goes up – usually for a small fee – around $5-$10) but even if they go down during the term, you are guaranteed the full face / original investment amount plus the accumulated interest upon maturity, In addition, they are FDIC insured, unlike other investments – yes I know some are skeptical about the value of that, but unless the sky falls entirely, it is a fairly good assurance. Interest rates for these CDs are going up and seem to be around 2%+, not great but better than putting it in a savings account or under your mattress!
    That’s my 2 cents (see-financial humor!), also I am not affiliated with any investment vehicle or institution.

  8. Just a suggestion for the young doctor family member, in case she doesn’t already know. I have a family member in the same situation. She managed to keep up a minimum of schooling so the student loans remain in waiting with no need to pay. Then found a place to work at a good pay but where her loan would be forgiven in a set number of years. Many underserved areas and have deals like this.

  9. It’s a difficult decision to be mortgage free but reduce your main next egg by 2/3 plus having to pay all the taxes.

    We have chosen to pay our mortgage debt over time and hopefully we will be debt free in 7-10 years.

    And we have been blessed that the appreciation is way up on our home too. Plus our mortgage is less than most people’s rent.

    The one suggestion on housing is mobile homes lose value while stick homes gain value

    I have found a home is the only investment you can live in while it’s increasing in value.

  10. I decided in 2004 to see if I could live without the car that would require many dollars to resuscitate. Now these fourteen years later, I have paid off my house and am debt-free.

    I get around by foot, bicycle, bus, and by asking for a ride. Sometimes I feel embarrassed to request a ride and then accept it as an opportunity to experience some humility and accept the generosity of another person. I learn much about people I would otherwise hardly know and have found a few potential SHTF teammates. Just by asking for help.

    I’m thinking there is a relevant gospel passage regarding this and am blanking on it right now.

    I agree with our author. Now is the time to practice living simply, while we have means to live below.

  11. There is another option for those with some cash on hand. I have some “lots” and sold them for a small down and I carry the note! Get enough down to clear the lot if it comes to that. Most people looking for a place to park a trailer will ignore the interest rate and price as long as the payment is low. You can more than triple your investment on a ten year note at ten percent interest.

    Much easier than owning rentals and getting calls at all hours.

  12. You, as an American, will never be debt free. We moved to an off grid home and have no mortgage and no utilities and no association payments but we will never escape property tax. Something about giving children a free education in the public schools. There’s two problems with that, first there’s no free lunch (education) and second there’s no public schools anymore but Liberal Leftist indoctrination mills. That’s it.

    Sorry to hear your doctor friend is female. There’s almost a 100% divorce rate among working women and increased amounts of lawsuits, abortions, male terminations, and male incarcerations just to have women in an equal role as men. But woman don’t want to be equal to men because as the IRS eloquently points out women do not support a stay at home husband with her equality of income, retirement, and benefits.

    The best place for a woman is in the family like in my generation and that’s what made great men for the next generation of women to marry. Let the men be men and the women be women as there’s no gender equality on God’s creation timetable ever.

    1. You use roads, bridges, etc. without paying road fees, customs?

      Public Free Education isn´t About free lunch, it is About giving every child the Right to go to School and learn,
      Not only the wealthy, not onlay those whose parents see anything worth in it but every child in a civiliced Country.

      With all due respect to the IRS, their Study is eloquently flawed.

      You could discuss that with my grandmother, she´d to raise two daughters as a widow without a professional Job, it wasn´t fun.
      I´ve been raised on the stories of her working in the fields during Harvest.
      Since beginning of humanity, Woman´ve been a part of the workforce, if on the farm, the Workshop or else.
      Often running the whole businness when the man weren´t at home or otherwise not able to do so.

      1. Ok I guess when you give a short answer you expect folks to read between the lines. I don’t know if any public school in the history of the country that gives a free lunch. However there’s a cliche used in America which you must know about and was used against Bernie Sanders socialism and now against Cortez. “There’s no free lunch”. The bridges and roads must be paid for by tax oayers because they don’t promote a Liberal Leftist bent as public school education does today. My comment has nothing to do with hindering children from education even from tax payer monies but it’s not warranted to fund public schools when there’s an underlying message being taught to children. Some could say to obtain the democratic vote when they graduate. The IRS just uses tax forms and tallies up those men supporting wives without employment and those working women who are supporting husbands without employment. The IRS is correct unless folks are lying in their tax forms. As stated and the IRS concluded, Women will not take the same financial responsibility as men in our country and years ago women were paid less money for the same job and there was merit for that. Man shoulder the burden of families, on the whole, in this country. Sorry your personal experience didn’t pan out to the whole of society and praying for you.

        Anyways hope that helps. God bless.

        1. I know About TANSTAAFL, but i know also that public Services aren´t free.
          My Education was at least partly Paid in taxes, i suppose yours also so here Comes Instead, pay it forward to some other brother who needs it in Play.
          Others Paid with their taxes for mine now is my time to pay it forward

          There´s an proverb in Germany.
          The cost of ecucation may be high, the Price of noneducation is higher

          If you don´t want a School wothout an Underlying message, you will never´ve one.
          A good teacher will influence his pupils through his example, his ability to teach, his ethics.
          A good Thing in my experience

          Man shouldered the burden of bringing home the Money, in a short episod of time of the short history of the USA and modern western civilisation or did meant you american Woman refused to fulfill their responsibilities to their Children and Family in this time?

          I meant at least About 2000 years longer at the very least, but more likely 200.000 .

          The experience of my grandmother taught me, that putting the breadwinner eggs all in one Basket has it´s dangers,

          If Woman were Paid less for the same Job with the same qualification as men, the Woman didn´t got a square deal.
          Maybe in the US employers pay employees not for their work but to subsidy their Family, in europe it´s a bit different.

  13. Excellent and timely essay. As usual, the comments were just as informative. Thank you all for contributing. And an extra thank you to JWR and company for a great blog to facilitate all this useful info. Blessings to all from OH.

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