Archive for October, 2011

Economic Redundancy: What it is, Why it's Important, and How to Obtain it

Thursday, October 27th, 2011

How can you as a preparedness-minded person ensure that you are able to economically survive and ultimately thrive in these tough economic times?

The answer is through economic redundancy.

There are many of you reading this blog that know of someone that is experiencing economic hardship. That person may even be you.

I’m sure that most — if not all — of you that read my blog are not among the uber wealthy. Given that, I would bet that in some way or another the majority of you have been affected by the current economic crisis.

My story is that even though I am blessed to have a good job, over the last few years I have not had the yearly increases I used to get that would keep up with the inflation happening around me (fuel, groceries, property taxes, etc).

This, combined with some unforeseen medical expenses after the birth of our second child, has led to us struggling to keep up with the monthly bills. We are now living paycheck to paycheck and unable to pay down our debt.

It’s not the best of situations.

However, being the self-reliant, preparedness-minded person that I am, I am currently seeking to create economic redundancy much like I have food, water, shelter, security and energy redundancy.

In this post you will learn exactly just what economic redundancy is, why it is so important to include it into your preparedness plan, and the methods of achieving it.

Economic redundancy: defining what it is

Redundancy is a well-known concept among the survivalist community. In a nutshell it can be boiled down to the concept of “two is one and one is none”.

Let’s take your bug-out bag for example. If you have one (and I hope you do) you probably have packed some means/method of fire making. In this example, redundancy would dictate that you’d want to ensure you have more than one method of creating fire. This could be a lighter as well as a firesteel. Or even better yet — a lighter, a firesteel,as well as the skills to make fire from the environment around you.

By not depending on only one source of fire, you have created an insurance plan for that key pillar of survival.

Economic redundancy follows the same principle.

By including economic redundancy in your preparation planning, you are safeguarding yourself financially by not becoming dependent on only one income and wealth-preservation source.

Economic redundancy: why every prepper needs to have it

1. Times have changed

During my grandfather’s days (the World War II generation), having a job meant security.

Back then, loyalty mattered — for the employer as well as the employee. You could stay with one company for 40 years and expect a nice pension package at the end.

This is no longer the case.

There is no company loyalty any more. Retirement pensions are no longer a guarantee (Enron anyone?) and even after working 40 years with a company you could be just as likely to get laid off as anyone else.

2. Having a job is not economic security

The idea that having a job is a secure way to produce income is just ridiculous. Without control, there is no security.

I mean, how can you be financially secure when your entire source of income could be wiped out with just these two words, “You’re fired”?

3. Depending on the government is not economic security

If your definition of economic security includes depending on the government, it’s time to wake up.

When an overspending, overpromising, in-debt-up-to-its-eyeballs behemoth is your major income source, you are counting on a ticking time bomb and you need to seriously consider supplementing it with other sources.

4. The economy is unpredictable

As of the time of writing of this article (2011), the economy is in one of the worst states it has ever been in history (in many cases worst than the Great Depression). And it’s going to get worse.

Given the amount of market volatility, your current “low risk” retirement plan (401K, IRA, etc) could be worthless tomorrow.

Even gold, the great bastion of every preppers wealth-preservation plan, is not a guarantee.

Governments have and do put restrictions on transacting and owning gold. For example, from 1933 – 1973 in the US it was illegal to own and transact in gold. Stores wouldn’t take it, and you couldn’t sell it.

Who’s to say this won’t happen again.

Economic redundancy: how you can achieve it

Are you seeing a pattern here? Like any other prep, depending on a single source whether it’s for fire, water purification, energy needs, food or in this case income/wealth-preservation is not a sure thing.

Remember what I said in the beginning of this article, “two is one and one is none”? There’s a lot of wisdom in that saying.

So where do you go from here? How can you establish economic redundancy in your plans?

Here are four recommendations that will help you achieve it:

1. Seek to give value not time

As an employee, you only get paid a percentage of the true value you generate. For example my company bills me out at $250/hr but I only see a fraction of that. The rest goes straight into other people’s pockets.

This is akin to being a wage slave.

How to break yourself free from being a wage slave

To free yourself from slavery you first need to change your mindset.

This mindset shift happens when you realize that you earn income by providing value, not time. So look for ways to provide the most value to others, and charge a fair price for it.

One of the best ways is to start your own business. Whatever work you’re doing now in your employment, find a way to provide that same value directly to those who are benefiting from it. This way you get paid to the full level of the value you are offering.

It may take a bit of up-front investment in time and perhaps capital, but the freedom gained will be well worth it.

2. Seek to create additional streams of income

Additional revenue sources could come in the form of part-time jobs, consulting (if your expertise warrants that), to starting a small home-based business.

With the internet age, we have more opportunities to create income than at any other time since the entire world has become an available market.

Here are some suggestions on possible internet income streams:

Sell other people’s products:

With such a large market, the internet is a perfect venue to sell other people’s products. Here are some examples:

  • Buy low, sell high:

    If you have a knack for finding good deals (yardsales etc), or better yet have access to wholesalers or other “at-cost” sources, then you could do well selling from your own site or on online marketplaces like eBay, Craigslist, Amazon et al.

    The disadvantage to this business model is that you need to handle all the warehousing, shipping, and inventory management. Which, depending on the amount of products you move, can take a substantial amount of time and cost.

  • Dropshipping:

    Dropshipping is a retail method where the product you sell (from your site or through eBay for example) is shipped to the customer directly from the supplier or warehouse instead of directly from you. When a purchase is made, you fulfill the order, send it to the dropshipper and they ship it to the customer. Whatever the difference in your selling price and the dropshipper’s buying price is your profit.

    The benefit of this business model is that your risk is minimized since you don’t have to buy the product until it is sold. The dropshipper takes care of all the warehousing, packaging, and shipping of products, saving you a bunch of money.

    The downside is you still need to spend time fulfilling the orders as well as dealing with the hassle of refunds.

    If dropshipping is something that might be a good fit for you, here are two of the more well known dropshippers: Doba.com and Simplx.com.

  • Affiliate sales:

    If you have a website or a good-sized social network (like facebook or twitter), a great way to make money online is promoting affiliate products that you like or have experience with.

    As an affiliate, you promote a product or service via a link on your site or a social network. If someone clicks on that link and makes a purchase you receive a percentage of the profits. For example, some of the links such as the Amazon store links and the ads under the “Blog Affiliates” section on my site are affiliates.

    It’s real simple to sign up as an affiliate and once you get their links you can be up and running very quickly.

    I find this business model even better than dropshipping since you don’t have to be concerned with any portion of the order-fulfillment process. Everything is done for you allowing you to literally make money while you sleep!

Sell your own products:

If you like to create things, you could turn those creations into profits.

For example, my wife has a friend who makes good money selling fancy children’s necklaces that she makes herself. Another woman I know sells wonderful homemade soap online.

Sites like Etsy.com, Artfire.com, and BuyHandMade.org are some good examples of where you can sell your own products online.

Sell information (sell your passion):

One of my passions is all things survival and preparedness related. This site you are reading from is a result of that passion.

Even though I am not replacing my normal income by any means, this site does bring in some extra revenue that goes a long way in helping out with the monthly bills. The best thing about it is that since it is such a passion of mine, it doesn’t feel like a part-time job (I just wish I had more time to focus on it).

You can make some good money teaching others about things you are experienced with and are passionate about.

There are people making money teaching others about how to drywall, do carpentry work, garden, sew, paint portraits, raise children, find a mate and so on.

With this type of business, you are selling information (in the forms of ebooks, physical books, downloadable videos, DVDs, CDs etc).

If you are interested in this form of online business, and are clueless as to where you should start, I highly recommend becoming a member of Sterling and Jay’s Internet Business Mastery Academy (of which I’m a member).

These guys will take you step-by-step through the process showing in detail how to turn your passion into a profitable online business. And if you don’t know what your passion is, they will help you discover it.

3. Seek to build economic systems

Creating economic redundancy through multiple streams of income is very difficult if those income sources are directly related to the time you actually work. Since there are a limited number of hours in the day, trading your time for money limits the amount of money you can make.

In other words, just how many part-time jobs can you take?

Your ultimate goal when ensuring economic redundancy is to setup systems that generate income 24/7 — especially passive income. This could include starting and building a business (like joining a MLM company), building a web site as described above that runs itself or other people run, owning commercial or rental property, building dividend income through investments, or generating royalty income from things you’ve created (music, books, patents etc).

Once set up, the system will continually deliver the value to people and generate income from it — whether you are actively looking after it or not. This frees up your time to generate more income either through building up and fine tuning your existing system or creating new ones.

4. Seek to protect your wealth through diversification

The final recommendation is to protect your existing wealth through diversification.

No, this does not mean spreading your money across different funds in your 401k as your fund manager might have you believe. Diversification means to spread your money across different asset classes altogether.

This includes market assets which are things like equities (stocks), fixed-income (bonds) and cash equivalents (T-Bills etc) as well as real estate (land/property) and commodities (precious metals).

For the prepper you might also want to consider barterable items such as seeds, ammo, fuels, sugar/salt and so on.

Conclusion

Just as you would include redundancies for security, fire, water, shelter and food – redundancy in your economic preparations are just as important.To survive and ultimately thrive in these tough economic times, you cannot rely upon a single income source or wealth-preservation method to carry you through.

So with this in mind, start implementing these recommendations today. Go out and start looking for other sources of income — the internet being one of the best ways. If you’re interested, but worried about not being technically savvy enough, I could do a post on how to set your own blog in under 10 minutes.

If you haven’t yet, I also recommend you sign up for my newsletter (sidebar top right). From time to time I’ll point you to specific products/services that will help you achieve economic redundancy.

How the Government is Stopping the Heart of our Economy

Thursday, October 20th, 2011

urbanprepping.com keyed me on to a great post put out by AboveTopSecret.com that I had to share with you guys (thanks Vic :)).

Although the letter may be fictional, I think it summarizes our economic situation perfectly and shows how the government’s tax and “stimulus” policies are doing nothing but worsening the current situation. I just don’t get how these politicians with no business experience think they can fix the economic crisis we are in.

It’s time to get your preps in order because the worst is yet to come…

Subject: Letter from the Boss

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job.

What does threaten your job however, is the changing political landscape in this country. Of course, as your employer, I am forbidden to tell you whom to vote for – it is against the law to discriminate based on political affiliation, race, creed, religion, etc.

Please vote who you think will serve your interests the best. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest. First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story.

This back story is often neglected and overshadowed by what you see and hear sure, you see me park my Mercedes outside. You’ve seen my big home at last year’s Christmas party. I’m sure all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don’t see is the back story.

I started this company 12 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living space was converted into an office so I could put forth 100% effort into building a company which, by the way, would eventually employ you.

My diet consisted of Ramen noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70’s.

My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9 a.m., mentally check in at about noon, and then leave at 5 p.m., I don’t. There is no “off” button for me. When you leave the office, you are done and you have the weekend all to yourself. I unfortunately do not have the freedom. I eat, ****, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to me like a one day old baby.

You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations. You never realized the back story and the sacrifices I’ve made. Now, the economy is falling apart and I, the guy that made all the right decisions, sacrificed and saved his money, have to bail-out all the people who didn’t.

The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for. Yes, business ownership has is benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man just to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Is it me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, is it the single mother sitting at home pregnant with her fourth child waiting for her next welfare check?

Obviously, government feels the latter is the economic stimulus of this country. The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy. Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the mud of America are the essential drivers of the American economic engine.

Nothing could be further from the truth and this is the type of change you can keep. So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV payment and for your child’s future. Frankly, it isn’t my problem any more. Then, I will close this company down, move to another country, and retire.

You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

While tax cuts to 95% of America sounds great on paper, don’t forget the back story: If there is no job, there is no income to tax. A tax cut on zero dollars is zero. So, when you make decision to vote, ask yourself, who understands the economics of business ownership and who doesn’t? Whose policies will endanger your job? Answer those questions and you should know who might be the one capable of saving your job. While the media wants to tell you “It’s the economy Stupid” I’m telling you it isn’t.

If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the Constitution, and will have changed its landscape forever. If that happens, you can find me on a beach, retired, and with no employees to worry about.

Signed, your boss

via abovetosecret.com

Meltdown: An Investigation Into a World of Greed and Recklessness that Led to Financial Collapse (full movie)

Wednesday, October 5th, 2011

Here is a good summary into the roots of the financial collapse of 2008.

Meltdown, a 4-part documentary by Al Jazeera deals with what caused the crash, how it spread like a cancer throughout the world, who were affected the most, and how the world leaders are (conveniently) rethinking capitalism.

Even though I’m not a big fan of Al Jazeera, they did a great job of bringing to light some of the key players involved in this financial mess (although I feel the rabbit hole does indeed go much deeper).

Each episode is around 45 minutes but well worth it.

Part 1: THE MEN WHO CRASHED THE WORLD

In the first episode of Meltdown, we hear about four men who brought down the global economy: a billionaire mortgage-seller who fooled millions; a high-rolling banker with a fatal weakness; a ferocious Wall Street predator; and the power behind the throne.

PART 2: THE GLOBAL FINANCIAL TSUNAMI

In the second episode of Meltdown, we see how the financial tsunami swept the world. We hear about a renegade executive who nearly destroyed the global financial system and the US treasury secretary who bailed out his friends.

PART 3: PAYING THE PRICE

The third episode of Meltdown looks at how the victims of the 2008 financial crash fight back. A protesting singer in Iceland brings down the government; in France a union leader oversees the kidnapping of his bosses; and thousands of families are made homeless in California.

PART 4: AFTER THE FALL

In the final episode of Meltdown, we hear about the sheikh who says the crash never happened; a Wall Street king charged with fraud; a congresswoman who wants to jail the bankers; and the world leaders who want a re-think of capitalism.

Survivors: A Novel of the Coming Collapse

Tuesday, October 4th, 2011

For those familiar with James Rawles of SurvivalBlog.com or his books Patriots
and How to Survive the End of the World as We Know It, he just released (today) a sequel to his widely successful novel Patriots called Survivors: A Novel of the Coming Collapse.

Although Survivors is considered a sequel to Patriots, from a timeline perspective the plot of the story is contemporaneous with the action in the first book. However, in this book it is set in different locales, with mostly different characters, with vastly different levels of preparedness.

Unlike the main character in “Patriots”, most of the characters in “Survivors” aren’t as prepared, so they are forced to improvise and hustle to survive. I think this will be most interesting as Rawles does a great job at teaching survival/preparedness skills while telling a fictional story.

Here’s the official description of the novel:

WHAT IF THE WORLD AS WE KNOW IT ENDED TOMORROW?

The America we are accustomed to is no more. Practically overnight the stock market has plummeted, hyperinflation has crippled commerce, and the fragile chains of supply and high-technology infrastructure have fallen. The power grids are down. Brutal rioting and looting grip every major city. The volatile era known as “the Crunch” has begun, and this new period in our history will leave no one untouched. In this unfamiliar environment, only a handful of individuals are equipped to survive.

Andrew Laine, a resourceful young U.S. Army officer stationed overseas in Afghanistan, wants nothing more than to return home to Bloomfield, New Mexico. With the world in turmoil and all air and sea traffic to America suspended, Laine must rely on his own ingenuity and the help of good Samaritans to reach his family. Andrew will do whatever it takes to make it home to his fiancée, no matter how difficult the circumstances.

Major Ian Doyle is a U.S. Air Force pilot sta-tioned in Arizona with his wife, Blanca. Their young daughter, Linda, is trapped in the North- eastern riots. Three teenage orphans, Shadrach, Reuben, and Matthew Phelps, have no choice but to set out on their own when their orphanage closes at the beginning of the Crunch. Then there is Ignacio Garcia, the ruthless leader of the criminal gang called La Fuerza, who will stop at nothing to amass an army capable of razing the countryside. And over everything looms the threat of a provisional government, determined to take over America and destroy the freedoms upon which it was built. The world of Survivors is a terrifyingly familiar one. Rawles has written a novel so close to the truth, readers will forget it’s fiction. If everything you thought you knew suddenly fell apart, would you survive?

I am a big fan of his book Patriots and will definitely be ordering the Kindle addition of his latest book.