Thursday, October 23, 2014

Advice to a Missouri correspondent


Yesterday I posted a query received from a reader in Missouri.  I invited you to make your own suggestions to her in Comments, and many of you did so (for which thank you very much).  Blogging buddy Zercool turned his response into a blog post of his own, which is worth reading.

Here's my advice to her.  See what you think.


1.  Don't settle for selling enough to raise $2,000:  try to double or triple that sum.  Be ruthless with yourself and your family.  Give everyone a 'personal allowance' of, say, two or three suitcases or duffel bags or other storage containers.  Everything they want to keep - clothing, toys, books, etc. - has to fit into those containers;  all the rest is to be sold.  Go through every room, keeping essential furniture and listing the rest for disposal.  Do the same in the kitchen, the garage, the workshop (yes, your husband will hate to part with his tools, but in your present situation you can't afford to be soppy and sentimental.  If it's not in regular use or essential for a critical need, it goes.)  Even the family's collection of DVD's or CD's isn't sacred.  If you watch or listen to something regularly, keep it.  If you used it only once and then dumped it in a cupboard or drawer where it's sat for the past year, sell it.  Hold a yard sale or two (perhaps in co-operation with neighbors), use Craigslist and other advertising venues, and don't get discouraged.  It'll take hard work, but it's necessary.

I think you'll be surprised how much stuff you can free up to be sold, or swapped with other families for things you really need.


2.  If there are no jobs available in your area, it's time to take stock of where you live and why.  Missouri isn't one of the 11 'death spiral states' recently identified by Forbes, but it's not doing real well either.  There are lists of states and cities where jobs are more freely available, but Missouri and its cities aren't on them.  You may have to move somewhere else - even if it means moving far away from family and friends - if your husband and children need jobs.  For example, North Dakota may have viciously cold winters, but even entry-level shelf-stackers at Walmart are presently earning in the $12-$15 per hour range because the state's so short of workers.  You may have to put up with bad weather and sub-standard housing in order to earn a living.  It's as simple as that.

This assumes, of course, that you can sell your home.  If you can't, it's an anchor holding you back rather than an asset.  If you're 'underwater' on your mortgage, this may make it difficult to sell.  I'm of two minds here.  If Missouri is one of the states whose laws make the home itself the only security for the mortgage, so that you aren't on the hook for any losses remaining after the bank forecloses and sells it, that may allow you to walk away from it.  If not, you may be liable for the remaining balance on the mortgage after foreclosure and sale - a very unhealthy position to be in.  (Either way, your credit rating will take a major hit for several years.  This isn't a step to take lightly.)  On the other hand, if you can break even or make a small profit, it might be best to sell it right away before another downturn in the housing market (which I've been predicting for some time).

Of course, moving is expensive.  That's another reason to cut down on your possessions (see point 1 above) and sell them to raise more money.  Not only will this give you cash to pay for a move and start afresh when you get to your destination, but you'll have much less stuff to take with you.  This may be the difference between success and failure.


3.  If you can't move in the short term, your family will have to look for work where you are.  This is difficult at present, I know.  With so many people unemployed in so many areas, there's immense competition for the few available jobs.  I've seen it where I live, and I know most cities have the same problem.  If you have friends or contacts who can help to open doors for you, that's one thing;  otherwise you're competing with thousands, even tens of thousands of people in your area who are trying to do the same as you.  That makes it tough to succeed.

I think it'll do your kids a world of good to realize how seriously your situation has affected the family's finances.  Encourage them to try to find part-time work like babysitting, snow-shoveling, car-washing, etc. and put the money into a 'family food fund'.  That'll help them feel that they're part of the solution.  In addition, make it clear to them that if the family has to move for employment reasons, they'll have to be willing to move too, even if that means leaving their friends and schools behind.  It'll be tough for them, but that's life.  They're old enough to cope.


4.  Economize wherever possible.  I agree with my readers that your kids should be getting their clothes only from thrift stores (e.g. Goodwill) or the cheapest stuff at Walmart;  that probably applies to you and your husband as well.  Shop for food at Aldi (the cheapest store I've found almost anywhere - and their quality's at least on a par with Walmart or other supermarkets, so you won't lose out by shopping there).  Use the Internet to get ideas for cheap food that's nutritious and tasty (try this search for starters).


5.  What to do with the money you raise.  If you raise the $2,000 you're hoping for (plus, hopefully, at least a little more, as I mentioned in point 1 above), here's how I'd use it if I were in your shoes.

(a)  A 'rainy day fund' sufficient to pay essential bills for a month.  Winter's coming;  that means electricity, fuel for heating, water, etc. are critical.  I'm assuming that $1,000 will cover those bills plus your monthly mortgage payment.  Put it aside and don't touch it!  It's there for emergencies.  (Of course, if one of you needs urgent medical treatment, that counts as an emergency too.)

(b)  Invest up to $500 in building up reserve food supplies.  Readers have made helpful suggestions in that regard.  Personally, I'd put $100 into tinned vegetables;  that'll buy you up to 150 cans at Aldi of things like corn, beans (several varieties), carrots, peas, diced tomatoes, etc.  Get two dozen cans of each of (say) five or six staples and put them in your pantry.  (If you have a bit more to spare, buy tins of tuna as well - they're about 75c apiece at Aldi, and a couple of cans of tuna is good solid protein to add to a meal.)  Invest another $100 in dry foods that will keep;  rice, pasta, beans, etc.  Another $100 goes to bulk foods that you'll use over time;  sugar, salt, herbs and spices, cooking oil, flour, etc.  Buy only what you already use, and the essentials rather than a wide variety of stuff.  A fourth $100 goes to bulk purchases of toilet paper, paper towels, plastic bags (Ziploc-type bags for food storage [quart and gallon sizes], garbage bags, etc.).  A fifth $100 goes towards cleaning materials;  dish-washing soap, hand and bath soap, shampoo, feminine hygiene essentials, laundry detergent, bleach, floor cleaning materials, etc.  This $500 total expenditure will give you enough stocks for two to three months if they're used carefully.  That's your reserve.  As you take items from the reserve, add them to your regular shopping list and replace them, putting the newest stuff in the rear and using the oldest stuff first.  This means that if you should lose your job, you'll at least have food to eat and be able to keep yourselves and your home clean for a few months.

(c)  Spend a couple of hundred on making sure everyone's got adequate warm clothing for the coming winter.  It's likely to be a cold one.  If you turn down the thermostat on your furnace, you can save a lot of money that way;  but you'll have to have something warm to wear if you're to be comfortable.  Hit thrift stores like Goodwill to look for jackets;  buy the cheap fleecy throws that places like Walmart sell for less than $5;  perhaps replace older, worn comforters with heavier ones, again from thrift stores or supermarkets rather than more expensive specialty stores.  Don't throw the old ones away;  layer them (two old, thin comforters on a bed can be as warm as a new, thick one).  You might even sew the edges of an old comforter together to make a sort of sleeping-bag, into which your kids can climb and pull blankets over themselves.  We used to do that with old blankets and quilts in Africa.  It was a cheap way to stay warm compared to the cost of new stuff.

(d)  Home security:  this is important, particularly if crime is getting worse in your area, but first things first.  You've got to eat and stay warm.  After that, if you've got a few hundred dollars left over, my suggestion is to look for a used pump-action shotgun (available from many pawnbrokers or gun stores for well under $200).  Get one with a shorter barrel if possible to make it easier to maneuver indoors.  If you don't know much about them, ask friends who do, or read up about them online.  (I don't think you'll go far wrong with a Remington 870 or Mossberg 500 or a derivative of those models).  Plan on buying a couple of hundred rounds of cheap birdshot to familiarize the whole family with its operation, plus a couple of boxes of buckshot for defensive use - Walmart will probably have ammo cheaper than most places, or look in sporting goods stores like Academy Sports, Bass Pro, Gander Mountain, etc.  Your total expenditure, including gun, ammo, a cleaning kit, etc., shouldn't have to exceed $300, and you might be able to keep it below $250 if you're lucky.  I'd love to recommend a handgun, too, but a good one will cost too much for your budget right now, and it's much harder to learn to use a handgun effectively than a shotgun.  We've got to be realistic here.

(e)  Celebrate!  You'll probably have a little left over after the purchases I outlined above.  I strongly suggest using some of it to have a low-key family celebration.  After all, you're alive, you're well, and you have enough to eat.  There are many people who aren't so fortunate.  Invest a little in some 'comfort food' and sodas, rent a video and have a family evening together.  I also highly recommend donating a little to help those less fortunate than yourselves.  The Salvation Army's always a good place to start.  If you find you can't sell some of your excess goods, donate them to the Sallies as well.  They'll send them to their thrift stores.  "Do unto others as you would have them do unto you":  in other words, if you hope to receive help from others when you need it, help others in your turn.


Those are my ideas.  Thanks to all my readers who contributed other suggestions.  I've already e-mailed my correspondent and advised her to read what everyone had to say, then make up her own mind.  Ultimately, it's her responsibility.

Peter

5 comments:

Anonymous said...

Peter, I agree with most of your recommendations, but selling tools goes against my grain- I cannot count the times having tools (and skill set) has allowed me to save big repair expenses,and provided a job-
Many times when others won't hire, you have to make your own job- by building or supplying something others need. My view may be outside the norm, it is influenced by thirty of forty years of self employment.

The Other Anonymous said...

I'll agree with Anon,above, on tools. Frequently, having the right tool has allowed me to repair things that otherwise I would have had to pay someone to fix. The knowledge of how to use a particular tool is invaluable, and as Anon also pointed out, can create income.
Pro tip: Having tools and skill can allow recovery of an item someone is throwing out, repairing it, and selling it, generating income.

RE: food. I have shopper's cards from every local supermarket that issues them for free (Pro tip: don't use your real name and address when filling out the form - let someone else get all the junk mail) and aggressively shop sales. The local public library has a coupon swap bin, and I regularly look through it for coupons I can use. Coupons are also available online, but one has to weigh availability against the privacy loss.

BOGOs - "buy one-get one" sales are great, especially if one has coupons. I've found store brands are as good as the brand name stuff (and frequently are exactly the same because Fred & Larry's Excellent Supermarket house brands are made by the brand name packer and just re-labeled, which are sold by F&L at a lower price).

I agree completely with Peter's recommendations on emergency savings and food storage. Knowing that one's back is not constantly against the wall because you have several months worth of economic and food "cushion" is a huge attitude improver.

And he's right - get out of Missouri and find someplace with greater job opportunities and lower costs. Vote for success with your feet.

Bill said...

If one has to hunker down you might want to keep the DVD's and game systems. As Fer Fal notes it is good to have some sort of entertainment and staying home watching a movie or playing a video game is a lot safer than going to a movie theater. Don't forget board games and books in case power is limited.

Gaffer said...

Too bad more people can't read your suggestions. You are spot on.

smithgift said...

Re: Keeping video games/dvds.

Ditto on the boardgames. In fact, I'd recommend them even more, for three reasons:

1) They're cheaper. The latest Xbox is five hundred dollars, not including games. Meanwhile, simple abstracts can be cobbled together out of stuff in your house, and if you're not concerned about quality, print and play can be nearly as cheap. Card games and dice games are the same. Even a shiny new "boutique" game of the kind that you see on BoardGameGeek usually aren't that expensive compared to a single video game, because--

2) Multiple people can play them at once. Your average console (to say nothing of handhelds) game does not have multiplayer with a single set up. (that said, the old N64 has some great 4-player games.) Solitaire games are the rarity in board gaming. Which also brings me to--

3) They work if the power/internet goes off. While the grid might never go down (and I hope it won't) should it happen, you're still OK. Your electronics, on the other hand...

BONUS 4) There is, IMHO, a bigger selection. Most Americans would have the impression that board games are for kids and parties and/or take forever to play. There's actually a huge variety. Want a hard-SF harsh simulation of rocket science and space colonization set in the near future? High Frontier. Cooperative game for the whole family? Forbidden Island. Building a civilization with cards and crazy combos? Innovation. Build trains across America? Ticket to Ride.

(Considering the general interests of the average reader of this blog, I cannot help but mention the old chit and hex wargames. While generally more expensive in both money and time, there are wargames to cover just about every historical and fictional situation imaginable.)

That all said, stay away from anything that has "collectable" or "trading" in its name. Fun though they may be, they aren't cheap.