Do you have $1000 in the bank?

“Bad planning on your part does not constitute an emergency on my part”
-Proverb

According to a new survey from the National Foundation for Credit Counseling (NFCC) 64% of Americans don't have enough cash available to them to cover a $1,000 emergency.

"It's alarming," a NFCC spokeswoman tells CNN Money. "For consumers who live paycheck to paycheck — having spent tomorrow's money — an unplanned expense can truly put them in financial distress."

CNN reports,

“Many respondents, 17%, said they would borrow money from friends or family. Another 17% said they would neglect other financial obligations — like a credit card bill or mortgage payment — in order to free up some funds.

Alternatively, 12% of the respondents said they would have to sell or pawn some assets to come up with $1,000 and 9% said they would need to take out a loan. Another 9% said they would get a cash advance from a credit card, according to the NFCC.”

Bottom Line

The recommended safety net was THREE MONTHS of income in a bank account for emergency use. If you take home $40,000 after deductions, then you should have $10,000 in the bank to cover three months of unemployed or a large medical bill, etc.

Today however three months of unemployment may be a best case scenario instead of worst case if you're laid off. People are now unemployed for 6 months to a year or more so you may want to increase your emergency fund. If you don't have an emergency fund - start one immediately with an automatic deposit into a special account of as much as you can afford each month, $100, $500, etc.

Self Reliance

The civilized man has built a coach, but has lost the use of his feet. He is supported on crutches, but lacks so much support of the muscle. He has got a fine Geneva watch, but he has lost the skill to tell the hour by the sun. A Greenwich nautical almanac he has, and so being sure of the information when he wants it, the man in the street does not know a star in the sky. The solstice he does not observe; the equinox he knows as little; and the whole bright calendar of the year is without a dial in his mind. His notebooks impair his memory; his libraries overload his wit; the insurance-office increases the number of accidents- Self-Reliance, Ralph Waldo Emerson, 1841

The less you can do for yourself, the more you have to pay others to do it for you. As the posting Self-Reliance puts it, "Plumbers know that you’re reliant on them for your life to continue as normal, so they can charge exorbitant rates and take their sweet time solving the problem. This costs you money." At CodeNameInsight, the author was inspired by this idea and created a list of ways we have become reliant on others:

• Cooking - we eat out or buy ready to eat meals at the grocery
• Growing food - we buy it
• Catching/Killing food - we buy it and it comes pre-cut and cleaned.
• Coffee - Starbucks does this for you
• Washing clothes - what would you do with a washer/dryer or laundromat?
• Child raising - nannies, day-care
• Car repair - mechanics
• Plumbing - plumbers
• Electrical - electricians
• First Aid - emergency rooms
• Make clothes - we buy them
• ... and so on

Bottom Line

The more you can learn and do on your own the cheaper you can live. You'll have greater self confidence and survivability during emergencies.

See also:

Lost Skills
Wildfire Policies
Living off the Land
Learning to Fish
Practical Survival Skills
The Value of Cooking
The Survivalist series

Living off the Land

"Only he can understand what a farm is, what a country is, who shall have sacrificed part of himself to his farm or country, fought to save it, struggled to make it beautiful. Only then will the love of farm or country fill his heart.” - Antoine de Saint-Exupery quotes (Author of 'The Little Prince')

Eventually most discussions on preparedness end up with moving to the country side and living off the land once you've lost all faith in the government or civilization to sustain you. I'm not that extreme but it remains the "holy grail" of preparedness. Here is an alleged first-hand account of a family who learned how to farm the hard way.

Perspectives on Prepping on a Very Low Income, by Kuraly

...I was forced to take very low-paying jobs and survive on a low-income.With our savings we were able to buy a small rural house and 7.5 acres in the southeast. We were able to pay cash, I wanted it to be ours with no strings attached, regardless of what the future held. I figured that at the very least we would have a roof and some plantable land.

...My first priority was for two weeks worth of provisions. ...

... We also invested in chickens, and watched some of them die, some of them be eaten by neighbor's dogs, some get eaten by our dogs, and the hardy survivors begin to lay eggs. We watched them eat their own eggs and learned to give them calcium.

...We had zero experience at any of this, and no one around that we knew to advise us. We had to learn everything from scratch. We bought a goat and promptly saw it attacked and killed by a stray dog. That hurt, financially as well as emotionally. After sending the dog to join the goat "on the other side", I bought another goat. and then another. These have survived. We have learned to care for them.

Bottom Line

Read the whole story. How would you do in a similar situation?