Protecting Your Assets: It’s About Much More Than Money
So, in keeping with the advice of my last post, I will assume that you have gone and informed yourself about the economy. And I will assume that you don’t like what you have heard and read. Now what? You didn’t cause this mess, but unless you are already living on your fully paid for self sustaining farm with some gold bullion stashed next to the squash in your root cellar, you are certainly going to be affected. The first order of business: protecting your assets. I am going to broadly lump assets into five categories:
- Monetary Assests: savings accounts, retirement accounts, etc.
- Property Assets: home, land
- Community Assets: schools, libraries, parks
- Health Assests: your and your family’s physical and mental health
- Job/Skills Assets: your job, your education, other useful skills
And you thought I was just going to talk about money.
Monetary Assets
Savings accounts: Most of us have one (or more of these). First off, whatever you do, don’t keep more money in any one institution than is covered by the FDIC deposit limits. Now I realize, that most of us don’t nominally have $250,000 sitting in our bank account, however, there are situations where this might apply. For example, you might receive an inheritance. Or perhaps after selling your home you may have a small gap before purchasing another – even just a few days where a couple of hundred thousand dollars or more (if you’re lucky) might sit in your bank account. It would be rather unfortunate for you, if the bank happened to fail on one of those days. For more information on the current limits go to the FDIC website. Second, there have been 15 bank failures this year – expect more. I would be wary of most commercial banks. Yes, your deposits are insured, however, in the event of a failure you may have limited access to them. Furthermore, given enough failures the FDIC insurance fund will be depleted and then there will be trouble. We use a relatively small, local credit union. Credit unions are not for the profit of shareholders, therefore they generally took on much less risk than the commercial banks. As an added bonus, credit unions almost always offer better interest rates on savings accounts than a traditional bank. Finally, I think it is always a good idea to keep some cold hard cash on hand. Enough to buy a couple of weeks worth of groceries and gas. Even if the economic apocalypse never comes to pass, the next earthquake/hurricane/flood might be just around the corner.
Retirement plans: I am not going to tell you whether or not pull your money out of the stock market, although I will say I doubt it has hit bottom yet. For many young people, such as myself, there is nothing much you can do about the money in my retirement account even if you wanted too. For example, I simply am not permitted to access the money in my retirement accounts unless I retire. So we are stuck. I was joking to Jeff that I am just going to consider the tens of thousands of dollars we have lost as a sort of indirect campaign contribution for Obama since the economic crisis has clearly helped him in this election.
Property Assets
If you own a home, it is probably your most valuable asset. As such, treat it like you would a family member and keep it in good health. Take care of things such as roof repairs, leaks, termites, etc. that have the potential to become major expenses and/or render your home uninhabitable. If you have some land associated with your home, treat it as an asset as well. Land is good for much more than a manicured green lawn, you can use it as humans have for thousands of years – to grow food. So treat your soil well – don’t use pesticides/herbicides, fertilizers, etc. Build up your soil and it’s fertility through composting. If you are lucky enough to have shade and/or fruit trees maintain their health. For more information on how to turn your lawn into food check out the book: Food Not Lawns.
Community Assests
Unfortunately, as resources tighten and government appears increasingly bankrupt you can expect that many public services and institutions will be given short shrift. But remember that long before public schooling, libraries, and parks became the responsibility of the government, they were the responsibility of the people and were built up through volunteers. Become an advocate for the things that you care about. Personally, I have a great love for our library system. It provides us with books, movies, children’s music/storytime, and internet access all for free. If services do shut down or become so ill-funded that they are no longer useful remember that you can create your own. Get together with a bunch of other moms and start a music class, consider homeschooling, exchange books with friends, invite kids over to your park-like backyard.
Health Assests
Your health, and the health of your loved ones, is obviously one of the most important things to protect. That said, it is not easy in a severe economic downturn, particularly if you face the loss of your job and it’s health insurance. Now is the time to make sure you are current on your and your children’s vaccinations, go in for that dental check-up, get into therapy, and pick up that spare pair of glasses. This issue hits very close to home for me. For example, I nominally take a combination of drugs to treat my rheumatoid arthritis (RA). One of those medications, Humira, is insanely expensive. Without insurance it is $17,500 a year. Seventeen thousand five hundred dollars. Even with insurance, we pay a couple of thousand dollars a year for my medication. Needless to say, I don’t see how we would make ends meet if we lost my job and my health insurance. That said, RA is an aggressive, damaging, and potentially fatal disease. Not treating it is not an option. So I have a back-up plan. There is a cheap, generic, medication (prednisone) that I can take in fairly large doses to keep me alive and walking with a total cost of $48 a year. Despite the vast price difference I don’t rely on alone now as it has significant side effects. However, it is good to have a back-up plan. If you have a chronic health condition, mental or physical (remember that your mental health is just as important to you and your family as your physical health) it is a good idea to talk your doctor now about low-cost solutions should the need arise.
Job/Skills Assets
Job: Your job is a huge asset, particularly if it comes with insurance benefits. Now would probably be a good time to make sure that you are a “good” employee. You don’t want them to think of you first when the lay-offs come around and if you should lose your job you will want excellent references. No matter how secure you think your job is, you should also update your resume and keep it current. If you have an inkling that you may lose your job, start looking for a new one immediately. You want to beat the rush as much as possible.
Skills: Remember that you almost certainly have skills beyond your job. For example you might work in IT, but also spend your free time working on your car or motorcycle. Many hobbies can be turned into marketable skills. If it isn’t too expensive, perhaps now is a good time to polish your cooking skills with a culinary class, take an advanced carpentry workshop, or learn how to brew beer. You’ll be protecting yourself against the loss of your job and you’ll have fun in the process.
I strongly believe that the economic turmoil we see now is only the beginning of what is to come. We face not only the potential collapse of our financial system, but the (not unrelated) problems of climate change and the end of cheap, abundant energy (e.g., peak oil). Despite that, this post reminds me of how much I do have and how much I want to preserve what is good. I have a beautiful (if rather dusty and furry) house, a garden full of ever increasing amounts of food, a fantastic family, great neighbors and friends, and a good education and set of skills. That’s what is important and that is what I am working to protect. I hope that by that definition, you are all rich as well.