Debt equals Death

Our Grandparents lived through it and learned the lesson that they took to their graves; debt equals the death when preparing for the future.

The Great Depression had survivors and even folks that did very well economically, but no one that was and serious debt made it through.

Cash flow is the formula banks use to grant debt with no consideration of how to prepare for a situation where cash flow slows or stops. The worse thing to count on is your current job, the next worse thing to count on is social security or a pension. These are NOT secure cash flow sources.

A secure cash flow source is one that people must pay you or suffer terribly if they don't. What kind of assets can you provide as a service to people whereas they would have to pay you no matter what happens to the economy?

The Arabs have found one called oil and have driven our economy with it. Food should be the next item but farmers have been slow to create a monopoly like the oil companies have to control supply and drive up demand. That may be changing in the next few years with corporations buying out our small farmers. Housing is the last item in that the rules and regulations have made it difficult to get a dead beat tenant out of your asset.

This sounds harsh but when push comes to shove, all people will fight to try and survive in a bad economy. If you don't believe that you need to read some of the stories about depressions in world history.

So what are you going to invest in that will guarantee cash flow and how will you get out of debt so no one has leverage to take that away from you?

Estate size property, will it really grow in value.

Large Estate Properties are so common now that we don't even notice a 6,000 foot, 5 acre property. The presumption was that this was going to grow in value and become even more of an asset. But do large properties really guarantee that?

I remember a elderly woman looking across the street at a large home being built who made the comment, "I remember houses like that being called the haunted mansions during the depression."

It was a startling thought. Could these large estates just be abandon at some time, due to the cost to keep them up and maintain them? We've seen this happen in Houston during the oil bust of the 80's and the latest crash as people just walked away from high mortgages.

So what do you do if you are in one of these places and your job ends or a financial set back happens? I ask the question because a friend just hit this wall last week, his plan is to sell and down size. But what if the economy is such that it won't sell fast enough or at all?

The answer comes back to a plan. One thing to consider is that accountants feel a mortgage is one of the better write offs. So is paying down the value of that property the key? Perhaps refinancing the equity out of that property and investing it in a more liquid asset is the better plan.

Weighing the options is part of being ready for that possible future.

Financial Safe Room

We talk about Tornado Safe Rooms, but is there a Financial Safe Room we should be building?

To most people finances revolve around paying their bills. This narrow immediate point of view can be as deadly as standing in the path of a Tornado with no place to run and hide from flying debris.

In the great depression many people were caught by "flying debris" that was not their making or something they'd ever thought would happen to them. That debris included accounts receivable they had counted on, banks they had counted on closing with their money still locked up. They found insurance policies not paying after a husband committed suicide. They had creditors call notes they didn't realize the fine print allowed.

The problem was they expected the existing system to work. The way to avoid that kind of damage is to presume the current financial system will not honor the promises it has made for you.

One of the weakest parts of most folks Financial Safe Room is depending on Social Security and their Pension. These will be the first to go, guaranteed. How would you survive if these were suddenly destroyed.

Your Financial Safe Room is a plan of action that looks for alternative options without the current financial system being intact. What do your REALLY need to survive. Food, Shelter and Clothing are the three real elements we need. So build a Financial Safe Room that has options with those factors.

Food; can you raise your own food? Shelter; can you share a home with enough family members to pay that mortgage? Clothing; should be the simplest of them all. Really not that big a stretch is it. And with that plan in your file, you have that room to escape to. So you can rest knowing a plan is in place.

Surviving Tornados

Tornados survival, what is key?

Tornados are a personal thing for me. My Grandfather moved from Kansas to California after his daughter was killed. One of my best friends was on the phone with me in Oklahoma when a twister went through his back yard and nearly killed him. There is nothing more helpless than being a thousand miles away from someone and not be able to help them.

So what is key to survival? The safe room is proving itself over and over to be the only true key to survival. Early warning systems are getting better, but if we do not have a room that can withstand a telephone pole coming at 70 miles per hour at us, we lose.

Safe rooms should be mandatory in Tornado alley, but no one seems to have the courage to pass the legislation. A design that is always in a specific area of the foundation to help first responders and a vault as simple as a cement room.

This really is not that expensive at the time of manufacturing. A simple cement room can come from even a new septic vault buried right at foundation level. Keep in mind this is a room you would be in for at the most 12 hours and more likely 2 hours.

If we are going to live in peace in Tornado alley we are going to have to take the responsibility for our own survival and make arrangements to protect our families.

2014 Weather

If anything the Tornado, Earthquake, Mudslide and Snow storms are teaching us; it is that we have to be prepared for the unexpected.

We are never immune to disaster and need to be ready in every way. With this in mind we have to go back to the focus of creating lists on what could happen with contingencies with what we will do if it ever occurs.

Doesn't matter if it is financial, weather or a complete break down of the fragile systems we depend on from the power grid to the banking system.

I believe one of the reasons we don't do this is our mind goes into a panic as we imagine things happening. Our mind actually reacts with adrenalin and other chemicals when it thinks it is in danger and as the mind thinks the body reacts.

To overcome this and be able to logically and systematically think of disasters and how to handle them, one of my colleagues is writing a book on "A good day to let go" which basically teaches us not to use dramatic words in our thinking such as "ruin" or "all is lost" but to dis-embody ourselves by saying if this happens to someone this is what they should do.

I know it sounds corny but surprisingly it is an important part of getting your mind to focus on devastating issues without reacting to them.