New Guy - Have a Question!

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FriscoMike's picture
FriscoMike
Status: Bronze Member (Offline)
Joined: Mar 17 2011
Posts: 29
New Guy - Have a Question!

 Hello All – I am fairly new to politics and to this site.  I have only recently (this year) started really brushing up on my politics.  I am obviously a liberal / progressive based on what I truly believe in.  I cannot (no matter how much I listen to Mark Levin and live in a predominately conservative area) bring myself to praise the dollar over the welfare of others…regardless of how useless some folks can be.

 

That being said – I really feel that our society / generation is moving into a completely different world.  I think that our leadership and a majority of the voting population live in a world of normalcy bias.  There are very few candidates that I believe can really change that…well actually, there are none that I see with the exception of maybe Ron Paul.

 

Just sifting through the news, this site, and just overall gut feelings – I want to start preparing for the future that lays ahead.  I don’t think that the US dollar can really continue much longer.

 

Finally – before I get to my questions… I believe that we will soon find our government / social support systems broken and unable to even provide the most basic of societies needs (food, water, waste disposal, security, etc…).  Based on that, I need some advise on where to begin.  I think this is the right forum for which to discuss this.

 

My personal situation.  Married and have two small children under 10.  Job is stable at this present moment – that could change within a few months, it all depends on how this market responds.  My business relies on new construction and …. We’ll just leave it at that.  I essentially live paycheck to paycheck to make payments on my mortgage, car payments, insurance, and that is about it.  I have probably 30K in my 401K – have not checked in a while.  Beyond that – I have no other capital.  I own my pickup truck but make payments on my wifes guzzler.  I am making mortgage payments on a house that is worth about 20K less than I owe.  Beyond that – I have a student loan that is about 8K and really no other credit or debt.

 

My primary question is where do I need to focus my attention?  Do I need to focus on hoarding supplies or do I need to focus my attention on my financial situation?  Do I do anything with my 401K…leave it there or rip it out and invest into something else?  If I do that…will I be penalized?  Can I even take it out?

 

Once I can get a grip on this – I can throw more questions out there.  I just need to know where to start focusing my attention based on my financial situation. 

 

Thanks folks – I like what this site has to offer.  The information on this site is literally priceless.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Welcome

Hi Frisco

Welcome to CM.

You may want to start here with "What Sould I do":

http://www.peakprosperity.com/page/what-should-i-do

herewego's picture
herewego
Status: Silver Member (Offline)
Joined: Aug 11 2010
Posts: 144
Get stocked, since you're asking

Welcome FriscoMike and by all means check out the "What Should I Do?" link in Johnny Oxygen's answer. 

I sure would get my a#$ off to a bulk food store NOW and get at least a start on the "deep pantry" idea - buy foods you will use anyway but stock for several months and rotate as needed for freshness.  I would also get some cash hidden at home somewhere.  If there are crucial medications required by anyone in your home, keep them as stocked as you can.  That should take about 1 weekend.

After that, it's time to read, prioritize and act.  There's LOTS of info on this website.  It can be overwhelming at first.  Any step forward adds to your mental and practical preparedness.  You will feel the difference.  It can also be exciting.  Taking responsibility for our own existence - what's not to love?

Best Luck -

Susan

 

 

Poet's picture
Poet
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Joined: Jan 21 2009
Posts: 1891
Welcome, FriscoMike!

FriscoMike

Hi and welcome!

I would recommend:

0. Talk with your partner and family. They need to be on board and have buy-in. With them, your efforts will multiply. Without them, your job will be much harder.

1. Gradually deepening your pantry out to about a one or two-month supply that you can rotate into your regular eating. Over time, work into 6 months. Get some extra batteries, flashlights (including ones for your head), a small stove with fuel, a water supply, water filter.

2. Accumulate an emergency fund together (about $2,000).

3. Focus on living frugally (shop thrift stores for clothes, no more clothing purchases for adults, no more fast food or meals out) to use savings on snowball payments on your non-mortgage debt - maybe even sell the gas guzzler if you are not too underwater and can buy an economical used one (keep the gas guzzler if it is almost paid off).

4. During this time, practice skills like hammering, sawing, auto repair, first aid, cooking, gardening - even if it is in containers or you only do upside-down tomatoes. Go camping and hiking, learn to build fires and shelter - kids love that stuff! Make friends with like-minded people near you. (http://www.transitiontownsca.org/group/transitionsanfrancisco)

5. Your 401(k) of roughly $30,000 - is probably worth only $15,000 to you if you take out all of it, due to taxes and penalties at both the Federal and state level, withdrawn at your highest marginal tax rate. So look up what it's invested in, consider putting it in a money market fund, and only think of tapping into this if you're willing to give it some hard thought.

Now that I've made the above suggestions, I suggest the following two resources:

1. The Crash Course video series, then the Crash Course book, both by Dr. Martenson.

2. The "What Should I Do?" section contains a lot of helpful information:

http://www.peakprosperity.com/page/what-should-i-do

Additional "What Should I Do Topics" to explore after the above link:

Poet

Rihter's picture
Rihter
Status: Bronze Member (Offline)
Joined: Dec 27 2010
Posts: 77
I'm no expert, but...

The only thing that has kept me composed through the process of educating myself on Mr. Martenson's 3E's is the emotional callus I've been building.

I went through all the stages of grief one goes through when they break through the barrier of cognitive disonance. My first piece of advice don't focus on the politics. After that

- read all the stuff posted above.

- learn to entertain yourself and your family without the use of electricity. Winter storms have made this an easy transition for me. (Maine)

- make your preps out of diligence, not fear.

No person is an island in and of themselves. Community, family, friends. Strengthen all of those bonds even if they don't see eye to eye with you on the things you are going to be studying.  Build your callus through hard work and study. That's all I got. Good luck.

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
You'll feel better

Welcome FriscoMike

You have received excellent advice from everyone above. You will feel much calmer after you have followed it and accomplished some preparations.  Constructive action is very important for your state of mind.  Stewing about the situation just makes you feel worse.  Time also helps to get things into perspective and adjust your outlook.  If you make the effort you will be happier six months from now.

Travlin 

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Poet wrote: FriscoMike Hi
Poet wrote:

FriscoMike

Hi and welcome!

I would recommend:

Well I wouldn't recomment that at all......  with all due respect to rhare, only a wealthy person could afford such a profligate system.

If you're going to downsize, downsize EVERYTHING!  You'll end up saving so much money you'll be wondering how you ever did otherwise...

http://damnthematrix.wordpress.com/2011/09/04/the-power-of-energy-effici...

Mike

Poet's picture
Poet
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Joined: Jan 21 2009
Posts: 1891
Bit O' Clarification Re: Solar Mike

For the record, I'm not specifically recommending solar energy systems. It was just one in a long list of all the "What Should I Do?" additional articles extant for consideration.

Poet

Damnthematrix wrote:

Well I wouldn't recomment that at all......  with all due respect to rhare, only a wealthy person could afford such a profligate system.

If you're going to downsize, downsize EVERYTHING!  You'll end up saving so much money you'll be wondering how you ever did otherwise...

http://damnthematrix.wordpress.com/2011/09/04/the-power-of-energy-effici...

Mike

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
401K

Hello Frisco... I hold a somewhat eclectic view on the 401K... I found myself in a position similar to yours when I started waking up in 2009 (and congratulations on waking up... as you become more passionate and educated about our predicament, you will find that many, including friends and loved ones, have no interest in being woken up themselves) and I made the decision at the time to take advantage of my plan's option to borrow against it, paying myself back over time with interest.  I balanced my cashflow by reducing my deduction to make up for the payments.  Anyway... I still think this a good idea for people that have capital tied up but don't necessarily want to cash out and pay penalties, etc.   

If you can take a loan, you can then accelerate some of your prep's, and diversify at least a portion into Gold/Silver.  The idea here is that, if the dollar does devalue, the Gold/Silver become a hedge.. one that you would not have access to within the plan (usually).  Check with your plan to understand whether there is a loan provision.  Taking a 401K loan to buy an indulgent car = dumb.  Taking a 401K loan to buy Gold/Silver/Water filter/initial food storage = smart in my book.    Best to you and your family,  Jim

rhare's picture
rhare
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Joined: Mar 30 2009
Posts: 1323
Welcome FriscoMike...
DamnTheMatrix wrote:

Well I wouldn't recomment that at all......  with all due respect to rhare, only a wealthy person could afford such a profligate system.

Welcome FriscoMike,

Yes the system we put in was large, but all the items shown in the system scale pretty well to any size system.  We have a large house (>5K sq. ft) and I have 1 electric vehicle and plan on aquiring another soon... It all depends on your needs.  If you have the ability to build from scratch you can easily get along with a lot less of a system, or if you have a smaller house the system should scale.  Prices have even come down a fair amount since we installed the system but incentives have also been reduced in many jurisdictions - but take your energy bill to a good installer/system designer and say hey, what will it take -quotes are generally free?  You can then decide how much to put in, enough to cover your usage or enough to just offest it. If your a DIY'r I included links to sites with good information.

The PV system in the article is a straight grid tied PV - just like most other grid ties systems.  Then we added an AC coupled battery backup (nice but expensive).  The grid portion of the system is no different than most quotes you will get from any installer.  The thermal system is a bit more unique in that we have a large space to heat, have radiant floor heat, live in a climate where it freezes, and we have a poor house to try to heat with solar.  Mike critized our system by showing a simple domestic hot water system in a climate that doesn't freeze and said look how simple our system is.   If you happen to live in a non-freezing climate and don't require heating the yes, your system will be much much simpler.

Anyway, based on your statements I think I would prioritize food (deep pantry or long term storage), gardening, PM, self defense, energy savings, and then maybe look into solar.  The only thing that would make me prioritize solar higher is if the incentives in your area are great enough.  If you can put up solar with free/low cost financing, little or no capital up front, and incentives then why not? If bankrupt governments are wiling to throw money at you, take advantage of it.

You should read through all the "What should I do articles" and do the crash course self assement.  The self assement is great and helping you identify what areas you need to tackle first.  Some will be easy like take a bit of cash out of the syste), buy some extra food at Costco, etc.  You have made the first step by questioning your support systems.

On a political note, perhaps your not really liberal, but rather Libertarian - particularly if you like what Ron Paul has to say.

 

 

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
Hi FriscoMike-     You've

Hi FriscoMike-

    You've gotten some great advice above!  

     All I can add is my personal experience and lessons learned.  I did the same thing Jim did:  

Jim H wrote:

Hello Frisco... I hold a somewhat eclectic view on the 401K... I found myself in a position similar to yours when I started waking up in 2009 (and congratulations on waking up... as you become more passionate and educated about our predicament, you will find that many, including friends and loved ones, have no interest in being woken up themselves) and I made the decision at the time to take advantage of my plan's option to borrow against it, paying myself back over time with interest.  I balanced my cashflow by reducing my deduction to make up for the payments.  Anyway... I still think this a good idea for people that have capital tied up but don't necessarily want to cash out and pay penalties, etc.   

If you can take a loan, you can then accelerate some of your prep's, and diversify at least a portion into Gold/Silver.  The idea here is that, if the dollar does devalue, the Gold/Silver become a hedge.. one that you would not have access to within the plan (usually).  Check with your plan to understand whether there is a loan provision. 

    I borrowed against my retirement savings, which gave me some money to prepare right away, in a way I couldn't have afforded to otherwise.  I was concerned that if I waited until I had saved that kind of money, I may be a "day late", and miss the window of opportunity to get things that one can now still get.  So I used the money both to buy food for storage, to buy essential clothing for my growing son in particular (boots, shoes, etc.), and to buy some physical gold as a hedge while still available and before the price went out of reach.  I couldn't afford a lot, but I have enough to add a little resiliency to my situation in case things get hairy with the banks and the dollar.  We also bought and installed a woodstove (we live in the NE US).  These actions gave me some peace of mind, as I knew I had SOME resiliency after I'd made these preps.

   One thing I wish I had done differently was, as was suggested above, taking advantage of local thrift shops to buy the 'just in case' larger sized clothing for my son.  I didn't buy expensive clothing, but I bought new.  If I had instead purchased those things at a thrift shop, I could have used the money saved for something else. Lesson learned!

   Best of luck,

   pinecarr

  

No_Fiat's picture
No_Fiat
Status: Silver Member (Offline)
Joined: Oct 20 2011
Posts: 104
Poet wrote: For the record,

[/quot

 Damnthematrix! I agree with you,  not only will one need money and storage of resources, but the ability to protect them as well. 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Caution On 401(k) "Borrowing"

One reason I don't recommend borrowing from your 401(k)... Remember, if you lose your job or leave your job, you have to repay whatever you borrowed from a 401(k) plan within 90 days of termination. If you don't pay it back, it's considered an early withdrawal (I assume you are not 59 and a half years or older) and you pay all the taxes and penalties for that "income" in that tax year.

So imagine you borrowed all of $30,000 and start paying it back slowly (with interest)... But then get laid off with $20,000 left to pay back.

Now either you got $20,000 to pay back, or you are considered to have taken a $20,000 withdrawal. If it's treated as a withdrawal, you'll owe Federal and State income taxes at ordinary rates on that, with the 10% Federal penalty, and California also has a penality. You're likely looking at roughly a half tax. Do you have, let, say, roughly $9,000 or so lying around? I hope you saved some of that.

Note: I am not a tax professional. This is not tax advice. You should consult a tax professional for advice. But this is something to think about.

Poet

docmims's picture
docmims
Status: Platinum Member (Offline)
Joined: Jun 17 2009
Posts: 644
The best return in my 401k

The best return in my 401k is the 4 percent interest I pay myself on my loan.  I have the rest in money market because I expect the stock market will be devastated when Europe defaults and dollars will actually appreciate as the world scrambles to them for "safety".  (Jokes on them)

 

Food storage is so easy.  don't waste money on freeze dried stuff -- it's ok if you can afford it, but peanut butter and jelly  and multivitamins will carry you for months in a pinch.  Start off with a couple cases of peanut butter and Jelly.  A case of tuna fish when it's on sale.  You can later buy vegetables you like by the case when they are 50c a can right now in GA(probably going to be higher in california).  you can get water for 4bucks for 6gallon contaner here.  buy an extra of those a month.  You can fill in the gaps later and maybe buy some of the 20yr freeze dried when you have some extra cash.  The canned stuff even though it expires in 2 yrs has been shown to provide calories with some degredation in vitamin content for 10yrs. you have time i think 2 yrs before the shit really hits the fan.

when Greece actually defaults all commodities including gold and silver will drop as Europe sells everything to buy dollars.  I am already in silver for a safety net and you ought to buy some now, but when the dollar hits the stratosphere it will be time to switch out of the money market into silver again. (i am not a financial advisor. this is just what i'm doing.

I think solar power is also a good investment.  It is mocked for being 15c a watt but in 5 yrs with inflation utility power may be a lot more per watt than that.  also those panels last 30 yrs (in 20 years do you think electricity will be less than 15c a watt?  doubt it.  you don't need to power your house just small refrigeration/freezer and pumps for water will make life sooo much easier if the grid goes down.

for protection you are not far from Las Vegas.  For 100 bucks you can get a certificate for a weekend gun course at Front Site which not only teaches you to use the gun.  It give you a handle on when guns are apropriate or inapropriate. ( And when you should just run like a girl <which is what my first choice is -- even though: when i'm unarmed and within 5 feet of an assailant with a gun, his gun is a disadvantage for him.) Which leads me to say owning a gun but not knowing how and when to use it, makes it the property of you opponent.

Good thing about this site is all the previous posters gave good advice.  Pick and choose what suits you, because none of us knows exactly how this will end.  I am on the lighter end where life becomes tough but society does not totally break down, but crime skyrockets kind of like Argentina in 2000.

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