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Ognen Duzlevski

Senior tinkerer.

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Most articles from financial advisers these days speak of preparing a person’s nest-egg for retirement. They speak of investing more in 401ks, saving more for the rainy day, diversifying and structuring investments such that they get their bang for the buck at the right time in life (retirement), making goals such as providing enough income to satisfy a lifestyle that is 50-75% of a current lifestyle today. However, most of these advisers assume a steady and stable stream of personal income and/or income from investments, dividends or similar investment vehicles. In today’s day and age where wages are stagnating and jobs are unstable, where many Americans need credit cards to cover immediate expenses of as little as $00, many in the middle class need to plan for a different kind of eventuality, one in which loss of income is anticipated, or at least prepared for as a real possibility.

In this article I will discuss a different way to prepare for retirement, but also prepare for a recession or for the possibility of loss of income due to, for example, being made obsolete at work. Some of the advice parallels advice given in the traditional sense of “preparing for retirement by investing” but hopefully I can also show that there are other ways to proof one’s life against various unwelcome possibilities.

First, I shall discuss possible threats to an average (debt-fueled) middle-class lifestyle:

Potential loss of employment

Recent few decades have shown that most jobs are not safe. The times when a family could survive on a single bread-winner’s wages are long gone. For the majority of people, in order to survive (or even barely scrape by), two wages are necessary. However, the bigger threat lies in the fact that most professions (or jobs) are now always in danger of being outsourced or replaced with cheaper labor somewhere else. Even worse, automation is marching on and even more jobs are at risk of being outsourced to - machines. This means that there is no loyalty left between employee and employer. Since the employer usually has more resources than a single employee, especially in the context of the corporate employer, the employee must thus plan to be able to quickly acquire another position elsewhere, or, alternatively, develop a different income stream or set of income streams “on the side”. Hopefully these income streams are diverse enough to provide enough to survive on (especially in lean times or in between jobs) but also maybe have the potential to turn into primary earnings sources, thus rendering the need for employment elsewhere unnecessary and thus transferring the control of one’s own destiny firmly back into the hands of the said person.

Since this website is geared towards the middle class professional yet budding homesteader/small acreage organic farmer (someone like me!), it only makes sense to discuss ways of protecting oneself as much as possible from the instability of today and at the same time prepare for the future. In no special order, below are some ways to make additional income:

  • Developing a market garden/farm which sells directly to customers
  • Diversifying the farm such as to
    • Keep bees for honey and bee derived products
    • Fruit trees for personal consumption, production of cider, etc.
    • A possible mushroom farm? Shiitake mushrooms can be grown in fallen logs if a person has some woodlands available.
    • Organic grain production for direct sales on Amazon or other platforms
    • Hay production for livestock
  • Branching into other crafts that could earn moneys, such as:
    • Leatherworking (produce scabbards, holsters, knife sheaths, cell phone holders, belts, other leather products)
    • Woodworking (produce bee-hive box kits for sale, for example)
    • Rawhide braiding (produce horse equipment that fetches high prices, such as bosals, romal reins etc.
    • Local welding services for people
    • ....

Having a market garden itself could provide a meaningful and sufficient way to pay basic bills and even put money on the side for a rainy day. Market gardening is a topic on which books have been written and whole Youtube channels exist. For the sake of brevity and completeness, I will not provide any advice on the topic past the list of books to read and channels to watch at the end of this article.

As can be seen, the idea above is to diversify into various crafts and skill sets that will not only save a household money but also provide various potential streams of income. The list does not stop above but it is selected for the homesteader/farmer with access to land and work space for crafts and equipment. In essence, it follows the old adage of not keeping all the eggs in one basket (single job/career), instead diversifying into multiple income venues.

Potential health issues

In United States bankruptcy due to healtcare costs is among the top reasons people lose everything they spent their lifetimes working for. Hence, carrying even a catastrophic health insurance plan is imperative. To put it bluntly and simply, without health insurance, a family is wide open to losing everything and worse yet, the downside is endless - couldhospital bills can run in the hundreds of thousands of dollars or more. If carrying health insurance is not an option (or if cheap, catastrophic insurance is chosen), an attorney should be consulted to investigate if everything of value (home, vehicles, equipment etc.) could maybe be transferred to an LLC and hence, maybe protected from possible creditors. In general, regardless of the health insurance aspect, everyone should always strive to legally protect all of their assets as much as possible.

The next on the list are potential ways to improve income flow.

Developing land (with a “green twist”)

In the time of “Flip or Flop”, which seems to have become a national obsession, flipping homes is not a new idea. Neither is developing land from scratch. Everyone is doing it with various degrees of success. Several trends have become obvious in the recent years: 1) more and more people cannot afford to purchase their own home, 2) there are a lot of people who would be just as content in a starter home they own (probably even happier without a large debt load of an expensive house) and 3) with unfolding climate change and failing food systems, more people are deciding to escape to a rural area, try to grow their own food and be more in touch with Nature. Capitalizing on the above trends, finding small rural lots in the 1-5 acre sizes and developing “turn-key”, “move-in ready” farms powered by green energy and Nature sensitive solutions, could be the next wave in profitable land development. The advantage for the DIY middle-class professional is that the investment is not very high. A few rural acres may cost as little as $20,000 and building a small home out of shipping containers or local materials such as wood or stone would be equally cheap. Powering a small home using solar or wind would not be overly expensive and “installing” a small garden to go with the home would be simple and easy. In this scenario, the aim is to come in the sales price range of $120-150,000, something that most families can still afford.

Saving on energy costs

If woodlands are a part of a property or farm, consider using a woodstove to heat. New woodstoves are efficient and not very expensive (a good one will cost around $1000), the savings will come back in very low electricity bills during the winter. The next item on the list should be the water heater. Highly efficient tank models run about $1100 but their cost to operate annually is a measly $120-150. Over the average lifespan on the heater (e.g. 10 years), savings of at least $3,000 could be realized (assuming average water heater with annual costs of about $450). If a stand-by (on-demand) water heater makes sense for a household, these are even more efficient since they only operate when hot water is needed; their cost (for a higher end model is about $500). They do demand installation of multiple breakers due to the current draw of their heating elements, sometimes the cost of upgrading the box may just be too prohibitive. Finally, consider producing energy. This should be a long-term, growing kind of an investment where solar panels or wind capacity is added slowly over time. One can follow a plan where they run an “alternate” electric grid in the house where electricity is supplied to targetted wall outlets or appliances from the battery bank directly. This is to avoid the complication of having to plug into the regular grid and “meter back” but also to avoid the need to make the (expensive) switch to off-grid capacity immediately and instead stagger the costs over time.

Saving by producing food and “doing it yourself”

This is nothing new but it included here as a “recession proof” step that is necessary to take. This is not about stock-piling cans of beans and bags of rice (although everyone should have these supplies, not for the end-of-the-world scenarios but for the scenario such as loss of income where food would be available for a longer period of time). Rather, it is about being resilient and able to feed the family in times of personal crisis such as loss of employment etc. It also contributes to a family’s overall budget positively and directly by savings on expensive groceries in the store but also indirectly by contributing to the family’s overall health (and thus potentially saving on medical bills long-term). It also provides the comfort of knowing what exactly is in the food and providing control over one’s own food supply. Doing things yourself will help save on labor costs (which are very high in the developed world) but also on making things last longer and understanding how things work when obtaining quotes from contractors for work a person is unable to perform themselves. For example, if someone knows what goes into changing a car’s brakes but they simply do not have the time, an outrageous quote at the local shop will at least help recognize this. There are many, many things one can do by themselves in a home - plumbing, repairs, renovations etc. Some folks (like me) do not like to touch certain things (e.g. electricity) but for the most part, home repair and building skills are relatively simple and easy to acquire. In addition, on a farm there are many tools and implements that get used daily for basic work - tractors, brush mowers, hay mowers, tedders, haybines, balers, so on and so on. All of these break down at one point or another and the more a person can fix themselves, the more savings in time and money they incur.

Saving by bartering and shopping locally

I just tallied up my Amazon shopping expenses for the period between January 1, 2009 and January 1, 2019 (topic of a separate article). It came to a whopping $36,000+ (or around $3,600/year, $300/month - a nice car payment or a nice chunk of a mortage payment)! The math also has it so that my spending amount has been increasing year after year. This confirms directly our growing over-reliance on online shopping and while some of this shopping was “discretionary spending” (watching movies, buying books, buying things we do not really need), a lot of it was on items such as food, health supplements, small appliances and electronics etc. etc. Obviously, some of these purchases are things that are needed and that would have been purchased in a physical store (e.g. a chainsaw which anyone with a woodlot needs) but some are repetitive purchases of various grains and flours we use regularly in our baking at home. When acreage is available, it should be growing all of these grains (oats, buckwheat, sorghum, teff, millet etc.) but if a person is still trying to set up the farming portion of their life, they can find local farmers who can sell things in bulk. For example, a local farmer around here will sell you a 50 pound bag of soy for $30 (which comes to about 60 cents/lb!) while the same thing will cost you at least a $100 on Amazon (at a whopping $2/lb). The same savings ratios more or less remain for all the grains, corn etc. Over a period of a lifetime, these savings add up a handsome amounts of money, money you would love to have in a situation of job loss, for example. Never underestimate the small savings, they do add up.
A more disturbing trend of online shopping is that it makes things easily available but at the same time it hides the costs of doing so - carbon footprint of transport, the “slave labor” employed to make something, the hidden environmental damage of growing something for the wealthy Western consumer, the list is endless.

Finally, carry no debt

One of the first things that will “bulletproof” someone’s financial life is carrying no debt. If this is not possible, getting rid of “stupid debt” should be a priority. By “stupid debt” I mean things like credit cards and car loans or any other revolving payment that is paying for a luxury and not a necessity. For example, a person may like camping and to do so, they may own a $30,000 RV and a $50,000 truck - all this in order to be able to go camping a few times a year. If said person has a monthly payment on these luxuries (even if they don’t - they have $80,000 tied up in something they rarely use!), it is time to take a hard and long look at the situation. Unless the person is living in the RV and traveling around the country full-time, selling the expensive truck/RV combination and downgrading to a smaller vehicle and a small pop-up camper, both paid for in cash, would make much more sense. These days there are also many options to stay in the myriad of AirBNB or VRBO homes available across the country instead.
In general, advice out there on carrying debt is split down the middle - some experts say it is OK to carry “good” debt such as a mortgage (esp. at a low interest rate) and use resulting cash liquidity to invest, hoping for a return (somewhat of a gamble but historically a good idea). Others believe that no debt is the only kind of good debt. Just beware that any debt is only as good as what is behind it in the bank account or as reflected in the stability of someone’s profession….