Emergency preparedness...we've been scolded about having a plan in place for years now. Remember the rounds that duct tape was making on the morning news shows after the Twin Towers and the following anthrax attacks? We got a stiff reminder during Katrina that we should be prepared for natural disasters as well. I've scoffed at some of the ridiculous crap they've tried to shove at us, but for the most part, having some preparation seems to be good, common, horse sense. Does that mean I've done anything to prepare? Um...no....I'm one of those procrastinators.
I'm motivated to change my procrastinating ways because of this bail-out fiasco that is going to happen in some form or another. Why would a financial bail-out of the fine folks on Wall Street make me want to stock up on duct tape? One word... INFLATION.
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My family is very fortunate. We have no credit card debt, our cars are paid off, and the only real debt we have is the mortgage. Our house is worth less than the amount that is mortgaged, because it has lost so much value over the past year. That is painful, but not a crisis if we keep the house and can continue to pay the bill every month. We're trying to help our son as much as possible in paying for college at a state school. We have been living within our means and even have a little bit left over at the end of the month. If inflation strikes as a result of this bail out, that comfort zone is going to disappear...fast.
With inflation, we could easily go from living within our means to having to get rid of the things we would consider luxuries, like cable tv and our subscriptions to World of Warcraft. We can deal with that, but once the luxuries are gone, there comes a point where there is nothing left that you can toss out of the monthly payment pool. Life can get very scary at that point. This is the first time in our 23 years of marriage that we have finally attained this point of comfort, where we could survive for a couple of months if a bread-winning job were lost. I'm not whining, but I'm not going back to that insecurity if I can help it.
As soon as the mortgage crisis started, we started making extra principal payments on the mortgage. It will save us money in the end, and we'll feel better regaining some equity.
What else can be done? That little nest egg that we've saved up in the bank is going to look like less and less as inflation rises. So, we've decided to put a big chunk of our savings into a different type of savings plan...toilet paper. We are sitting down tonight (at the kitchen table, not on the toilet) and making a list of all of the goods that we use that are necessary and then we're going to buy three month's worth of each of them. If we spend our savings on things that we're going to use every month, our savings will retain the value that it has today, but just in a different form. In the process, we're also going to be prepared for whatever disaster (Bush-made or Bush-ignored) is coming next. If we leave it in cash form, it is going to devalue as inflation climbs.
But what if everything works out great and there is no inflation? Well, then we have the 3 months of emergency supplies, I won't have to make trips to the grocery store for a while, and we'll continue to put aside a little money each month.