Debt and Prepping

Dear Fellow Survivalist;

I was recently writing about building a survival retreat and found myself coming to a sudden and complete stop. What made me stop wasn’t what I was writing, but something a friend had recently said. I realized that if my friend read what I was writing, he would take it wrong, doing what I was suggesting, but using credit cards to pay for it.

If I’ve never said it before, in my opinion there’s really no place in prepping for credit cards. While prepping is a financial strain on most people, going into debt ultimately creates a bigger strain. So using debt to try and solve one problem really doesn’t do anything more than create additional problems.

There seems to be an idea subtly permeating the prepping community, that one the SHTF, we won’t have to worry about paying things off. This idea really isn’t articulated, but I see it anyway. I especially see it when people decide to buy expensive bug out vehicles and build a bug out retreat. Few of the people doing that truly have the money to do so.

I even see it with people who have money. I remember seeing a video about one prepper family who had bought a sizeable tract of land in the mountains, and was building their home there. The home, situated where it was and build as it was, would not only serve as their family home, but an excellent survival retreat if society were ever to break down. That’s why they were building it.

The family could afford to build what they were building… at least as far as conventional wisdom said. They owned a successful business and had the income to make the payments on their home. But there was nothing to say that they would have been able to continue making their payments, if something happened to the economy and they lost their business. Such a loss would have also meant losing their home, as they owed several hundreds of thousands of dollars on it.

That’s the problem with debt; you have to pay it sometime. If you don’t, you lose whatever you’ve put up as collateral. Usually, that means your home or property. In the case of buying land for a survival retreat, it would probably mean losing that land.

About the only scenarios I can think of, where a disaster would also mean eliminating the need to pay off any outstanding debt, would be in the case of a loss of the grid. Without electrical power, the records of those debts and the ability to collect on them would be pretty much put on hold. If the loss of the grid were caused by an EMP, then the records themselves might even be destroyed. But even if they weren’t, it would take so long to restore the grid, that most of the population would die of starvation before it happened. So there’s a chance that you’d never have to pay it.

Notice that I said “a chance.” That’s all it is. In every other situation, you’d be stuck having to pay the bill. If the country has a financial collapse, it’s quite possible that you’d have that responsibility, without the ability to pay. In that case, you would lose everything.

That’s why debt reduction needs to be part of every prepper’s plans. While unsecured debt, like credit card debt, won’t cause you to lose your home or survival retreat, most debt will. Debt for homes, other property, cars and major purchases are all secured by the lender keeping a lien on the item you borrowed money to buy. So, each of those items, is at risk of loss, if you can’t make the payment.

For this reason, paying off secured debt is actually a higher priority than paying off unsecured debt. That’s actually the opposite of what most financial planners will tell you, as they say to focus on paying off the debt with the highest interest rate first. By and large, that’s unsecured debt, usually credit cards.

While I don’t normally advocate bankruptcy or defaulting on debts, if you are forced to default, you will need to be able to keep hold of your home and survival retreat. If you have them paid off, your family will be much more secure. But if you follow the advice of most financial advisors and pay off the rest of your debt first, leaving your home for last, you might just end up losing the one thing that you need the most, in order to survive a disaster.

Don’t let your desire for survival work against you. Be smart and get out of debt. Ultimately, that will help you to survive.

In the mean time, keep your powder dry and your survival gear close at hand.

-Dr. Rich

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