Friday, April 11, 2008

A plague of questions

One problem of being in a different world than most other people around you is the plague of questions that must, generally, be answered by yourself.

For example, finances.

For Gen Xers, getting your financial house in order was fairly simple. Difficult, but simple. Sure, we couldn't rely on Social Security or pensions the way our parents or grandparents could - we just got in too late to those pyramid schemes. Still, there was hope. We just had to get with the new program!
1. Pay down debt; avoid incurring new debt.
2. Save enough money for a 6 month emergency expense fund.
3. Pay yourself first - 10% at least into your savings (401K or otherwise).
4. In savings, diversify into cash, mutual funds and bonds to assure a safe retirement (over the next 30 years).
5. The best way to save for retirement was a tax advantaged 401K or SEP/SIMPLE or IRA/Roth IRA. But the money could not be touched for years without large penalties.
6. And make sure to own your own home! God knows that the value of a home never declines!

Ah, those simple old days. Now that peak oil is nigh, it calls into question all the fundamentals of our lives - how to get food, shelter, transportation, employment - and yes, what to do with savings and investments.

For those who still have money in those old-fashioned institutions such as banks, 401K's, IRA's, what should we do with it? Here, the plague of questions begins.
  1. Should banks be considered safe knowing that the FDIC has only a small fraction of the reserves to be able "make good"?
  2. If banks are not safe then what do you do with your money? Should you keep all your cash in the house or maybe just a small reserve in case of temporary interruptions?
  3. Should we continue to rely on the dollar currency knowing that our government needs to print money like there's no tomorrow to pay it's debts and maintain our trade imbalance? Should we ignore the 50% decline of the dollar over the last 2 years?
  4. If not the dollar, what? Gold, Euros, Francs, Silver?
  5. If the S really HTF, will gold or silver be worth anything? You can't eat gold or silver.
  6. If not gold, euros, francs or silver, then what? Rum and condoms? Cigarettes and shovels? Toilet paper and soap? Grain storage?
  7. Should you bother paying down your debt if financial institutions may disappear or inflation may destroy the value of your debt?
  8. Should we liquidate all our potentially useless 401K and IRAs, taking a big hit financially, and put it into a BIG ASS RUM CLOSET???

Whew, I feel better now. All it took to find the answers was to ask the right questions. ;)

1 comment:

Heidi said...

But damnit I don't see the answers? 401k or rum closet? Shovels or guns??? I need to know these things! Ambiguity be damned, I want answers!