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Money Issues

A number of years ago, Jo and I decided to start saving for our future retirement. This was still decades away, but from what everyone was telling us we should start saving as soon as possible. Once we decided to start saving, the question was how much would we have to save to become financially independent? Becoming financially independent is a catch phrase used often to describe the euphoric state of never having to worry about money ever again. Now granted, there are quite a few people today that probably feel confident about their financial status and at present could be categorized as financially independent. But what about the future? No one knows for sure what the world economy will be like 50 years, 25 years, 10 years or 1 year from now.

The majority of the working class today are investing in retirement funds (401k or other) through their employers. Most of these retirement funds are vested in the stock market. And if you look back at the history of the stock market, your money would double time and time again over the years. But who's to say that the stock market will continue to repeat itself? No one knows for sure and your savings are not insured. It's a giant crap shoot that the American public is playing.

The intent of this page is not to tell you where to invest your savings but rather how to reduce the need for money.  Although it is quite difficult, if not impossible to eliminate our need for money completely there are certainly ways to reduce our dependency on money.

What steps are necessary to reduce the need for money?

I.  Start by changing your money mindset.
This is by far the hardest thing to do. From the time of birth, our daily lives are filled with materialistic messages. Our ancestors were hunters and gatherers. Those instincts are still with us today. We hunt to gather BARGAINS! Our society's mindset is based on consumption of material goods. And if that wasn't bad enough, success is measured by it. How many people do you know that say "Boy, they're really doing well for themselves, they just bought a new Lexus". What you'll never hear is "Boy, they are really doing well for themselves, they just saved thousands of dollars by buying a good old used pickup truck". If you do not participate in this game, you are considered by most to be a failure and an outcast!

Regardless of the perception, it is important to put a stake in the ground and go forward with determination. At first it is very difficult to change habits. Start by making small changes. Take your lunch instead of buying lunch, buy food in bulk or plant a small vegetable garden. Reduce your energy bill by adjusting your thermostat or buy a thermostat that can be programmed. Turn the lights off in rooms after you leave them, buy energy saving light bulbs, or run the air conditioner less. Just by doing a few things a little at a time will get you to start thinking about how money is wasted. And you will find that everything that you do to reduce your dependency on money will have a very liberating effect.

II. Get Rid of All Debt
This is by far the most important thing you can do to reduce your need for money -- Get rid of ALL debt. This is not always an easy thing to do, and in some cases, the first step might be to consolidate all debt into a lower interest loan, but the goal is to have no debt at all. This means mortgages as well. You've worked hard to earn an income, why would you give your hard earned income away to borrow money? But you say that mortgages can be an excellent tax write-off. This is true, but either way your going to have to pay either the lending bank or Uncle Sam. Mortgages are if anything a physiological burden.

It's interesting to note that at present, interest rates are the lowest that they have been in some time and may be lower in the near future. Wouldn't it make sense to take out a loan if the interest rates are so low? Unless you know that your investment will make more money than the interest rate, you will lose money. It's a calculated risk that people are playing today. Here's an example using an extremely cheap loan. Let's say that you borrow  $75,000 for 15 years at an annual percentage rate of only 5%. Over the course of the 15 year term, you would pay the bank a sum of $31,757 to borrow  $75,000. And if it's over a 30 year loan, you would pay the bank a sum of $69,941 to borrow $75,000. Remember this was only a 5% interest rate. A rate that is probably unrealistic.

Since we're on the subject, if you have any credit cards only use them to buy things for convenience only and pay off the bills every month. If you can't trust yourself to pay them off every month, don't keep any credit cards. Use only credit cards that have no annual fees and/or pay you to use their card. The Discover Card is a good example of this type of card.

III. Reduce Consumption
Especially here in the United States we are a throw away society. Instead of reusing or repairing, we just consume more and throw used things away. Start by becoming aware of what it is that you are buying and ask yourself "Do I really need this or just want this?". Become aware of every action that you take and consider the implications of your actions.

Reducing consumption has many positive attributes:

  1. It reduces pollution. Every time we throw things away it ends up in a dump heap somewhere and takes up space for hundreds or thousands of years and worse yet, it damages the environment. Use items until they cannot be used anymore, then try to find another use for them and after that, then finally pitch it.

  2. It saves natural resources. Contrary to most people's beliefs, there is not an infinite supply of resources on this planet. Reducing consumption helps save the planet's precious resources.

  3. It reduces space. Which came first the bigger house or more clutter? It's amazing how people will buy bigger homes and storage sheds just to contain their "gatherings" from their "hunts". Reducing clutter reduces the need for expensive storage.

  4. It frees up your time. The more possessions one has, the more time is required to maintain and use those possessions. Time has a value to it. The less "stuff" you have, the more time you will have to do the things in life that are truly meaningful.

  5. It saves money. If you've got any debt this is a great way to help reduce it to zero. Only buy the necessities instead of niceties. Getting out of debt should be the top priority.

Self-Sufficiency and Basic Needs
Food, water, clothing, warmth, shelter and our health are the main ingredients. These are the things in life that truly matter. The rest of what we strive for is pure fluff. Focus on what you can do to become as self-sufficient as possible as it relates to the basic needs. Don't run out to the store to buy food that you can easily grow on your own. For example, by growing your own garden you can greatly reduce your need to purchase food and you'll eat healthier for it too. And don't forget to save seeds from the best of the garden. (Make sure the vegetables that you grow are not hybrids.) Cut and chop your own fire wood to heat your house. Use clothes until they wear out, not just because they've gone out of style.

On the other end of the spectrum, take into full consideration what you are attempting to do on your own. For example, it may not be worth the time, monetary investment and labor to raise a herd of sheep just to knit a pair of wool socks. Research all aspects of your ideas on how to become more self-sufficient before leaping into it.

The end result of being as self-sufficient as possible of the basic needs will greatly reduce your reliance upon money. If you can get out of debt and own your own home and reduce your dependency upon the need to buy necessities you'll be in much better shape to weather any "storms" in the future.

Things you can't Control
Before you go out a quit your job, lets look at what you can't control when it comes to money:

  1. Health Benefits - This is a personal preference for those that are homesteading, but we live in a society that depends on health insurance to pay the bills otherwise you could lose everything that you have worked for. Having medical insurance gives you a safety net in case of illness or injury. If either you or your spouse decides to work a regular job, make sure to get a job with health insurance coverage for both you and your spouse. It's one of the least expensive ways to obtain health insurance. Some homesteaders do not carry insurance due to the added costs. The choice is yours. Just be sure to think things through regarding health insurance for you and your family and the implications of not having health insurance.

  2. Taxes - The only thing certain in life is death and taxes. Real estate tax will always be there and there's not much you can do about it. You will need some form of income to pay for taxes. And then of course, you might get taxed on your income. Make sure you know what your tax liabilities are and always be prepared for increases. In most cases, if you move out to the country, your tax liabilities will be considerably lower.

  3. Necessary Tools - Vehicles, tractors, tillers, generators, power tools, etc. are all personal choices that we must make. There will always be some form of monetary dependency on buying tools. Although we can reduce are monetary consumption on these items, it would be very difficult if not impossible to reduce this to near zero. Be especially aware that anything motorized will always need some TLC and will eventually need major repairs.

  4. Maintenance - Even if you can supply all of the labor to fix everything that breaks on your homestead, you'll still need parts and equipment to fix it in the first place. Be prepared to spend the money necessary to help maintain your homestead. On the good side, remember that your labor will greatly reduce the cost of your repairs.

  5. Up-Front Costs - If you raise your own crops or decide on raising livestock, your going to have to make an investment up front to get the operation going. Once things are in place, hopefully (if you've done your homework) you'll be able to self-sustain the operation by either selling off surplus or bartering goods.

This page has just scratched the surface of becoming less dependent on money. There are some really good books that can give a much better information on this subject. Here are a few of my favorites:

Your Money or Your Life -- Joe Dominguez and Vicki Robin
Voluntary Simplicity -- Duane Elgin
Living the Simple Life -- Elaine St. James
Simplify Your Life: 1000 ways to slow down and enjoy the things that really matter -- Elaine St. James