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Tuesday, February 17, 2009

Money, Its a Gas...

(originally posted on my personal blog TheFarmerGeek)

So I just finished reading The Total Money Makeover, by Dave Ramsey. First off, this book is Awesome, and I highly recommend it for everyone. The primary and only focus in this book is how to build wealth by removing DEBT. His goal is to help everyone who reads his book (or hears his radio show) to get rid of all debt and to live debt free! His process makes a lot of sense to me, but he had a couple points that I want to discuss today.

First point. Debt is bad. Period. End of sentence. I have read many many many financial books on buying rental properties, real estate, etc. The one big thing that every one that I read had in common is that they advocate the use of Other People's Money (OPM). Dave will explain that yes this could work, but this could also seriously backfire too. (Trust me, he explains it a whole lot better!)

The big point that I wanted to talk about because he lays it out in a page, and I think that this really needs to be talked about right now. Gold is not the answer. We are all aware of the new "stimulus" ... *ahem* ... bill that is waiting on the presidents desk to be signed right now. (If you are not, do the research!!!) This bill could sound the death knell for the American economy. I hope not, I pray not, but ... Now if the economy collapses, what do you want to have? Common wisdom says to invest in gold and precious metals because they have always been the foundation for economies. While that may be true, it won't help you right off the bat. Someone who has TONS of extra food saved may accept your gold, but most people won't because it won't be worth diddly. Dave states that a "black market barter system" is what will emerge. Heck, we know this in our heart of hearts, and we know it because the barter system is alive and well in rural America.

Barter... if things really go downhill, what are the most important things to have to be able to barter, if need be. Skills, first and foremost, you can always trade for things by being able to do jobs and projects that need to be done. Many people don't have these skills anymore, so the more skills you have, the more in demand you will be. Next, FOOD. Yes, I said food... If you have food stored up and saved for a rainy day, those that don't have any will try to beg, plead, steal, or borrow to get food for themselves and their family. The more you have, the more options you have. Another huge category? Things that would currently be "black market". This includes tobacco, beer, wine, hard-core distilled liquor(!!!!), ammo, weapons, etc.

Don't get me wrong, if you have the cash to buy some gold, DO IT! Just don't expect it to be the complete salvation of your family IF the economy collapses. However, depending on how long it takes to get a new economy set up, you could live long enough to have that gold make you rich in the new economy. So again, it is good to be prepared for that situation, BUT make sure you are prepared for the others as well.

Read the book, think about it, make your decision, and Do It!

*title from Pink Floyd's Dark side of the Moon track entitled Money.

1 comment:

Bullseye said...

Great post FarmerGeek. I love to barter and I do it often. I have skills and some equipment that others need and are willing to trade for. It works out great for us all.

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