This is the list from earlier post outlining some thoughts.

The basic human needs for survival / preparedness and to have relative comfort are:

1. Knowledge, knowing what to do with the things you have.
2. Water that’s clean and drinkable
3. Shelter, could be your home, a tent, or proper clothing for your area.
4. Food, canned goods, freezer stocked up, garden growing, dehydrated or freeze dried.
5. Energy, be it heat to cook your food or warm your shelter or electricity for lights & radios.
6. Security / Self Defense
7. Low or No Debt
8. Trade Currency, i.e. cash (or Barter items), to acquire the things you need from others.

Today we’ll talk about number 7 on the list and that’s the advantage of low and ultimately no debt. If you’re a follower of some of the investment gurus out there like Dave Ramsey or others, you know their teachings concentrate on staying out of debt. What’s the old saying, the debtor is slave to the lender. It is true that until that debt is paid back, some portion of your earnings has to be allocated repaying the debt or the phone calls are going to start and ultimately the loss of some possession. At the very least if it was money borrowed from a friend or family member, then there is always going to be the hurt feelings and strains on the relationship.

Let’s go back to the earlier scenario we talked about in previous post, what if you lost your job or your spouse lost their job. For most people that’s a serious personal disaster. But if you had no debt, no credit card debt, no home mortgage or no car loans to pay, how serious would a job loss in the short term be for you? On the other hand a big house mortgage payment, two new cars in the driveway, several credit cards with sizeable balances owed, add on some student loan debt, and you have the average American family debt load.

I’m sure there are other well known advisors on personal finance other than Dave Ramsey but he’s the one I’m most familiar with and his teachings make a lot of sense. He preaches living within your means, living off a budget, and staying out of debt. From the standpoint of being a prepper I can see distinct advantages to this type of lifestyle. For example if I have decided I want to start storing food so I have 30 to 60 to 90 days in my house, if I use his budget guidelines, I can lay a plan to make my purchases over time and achieve my goal. If I’ve decided I need a generator or solar panels then I create a line in my budget spreadsheet to save the money for that purchase. I save the money and pay cash, no purchases with credit. Some of Ramsey’s resources are free on the Internet others you need spend a little and attend the classes, or you can purchase one of his books or DVD’s. (Check your local library). I use one of his budget forms in an Excel spreadsheet that we modified the categories for the additional things we found important to budget for.

Not only does being out of debt benefit you and your family if there are no major disasters in your lifetime, it’s one of the commonalities for events. If nothing major happens, wouldn’t you be better off debt free and able to purchase the things you need and want as you can afford them and improve your preparedness. The advantage to being out of debt should things really get bad is you would be able to keep the things that you own, no worries of repossession if you didn’t have an income for whatever reason to keep up the payments. If the Poop hits the fan on a higher level you’d be better prepared to deal with expenses as they come up.

As a side bar, do not neglect adequate insurance coverage for you home, automobile, health and life, they are investments that should be studied and made wisely. A bad localized storm that knocks a tree down on your house could be a major financial set back or an irritation and inconvenience depending on if you had adequate insurance coverage or not. Insurance can enable you to keep what you have if something goes wrong and not end up in huge debt because you didn’t invest the time and money.