Monday, November 29, 2010

Steps Toward Resilience

As promised yesterday, here are a few of the simple changes I’ve made to my environment in an effort to increase my resilience and lower my exposure to risk.

The most important goals for me are to ensure that my family has a roof over their head and food on the table. These are just a couple of the areas I am working on to achieve those goals.

Learning to Live on Less
In general, my needs are quite simple. I have a small car, a small house and I don’t drink or smoke. It might not seem like that much but smaller cars generally have much better fuel economy. Small houses are cheaper to furnish and to heat and cool. And, addictive habits like drinking and smoking can chew through vast amounts of money for absolutely no positive return. Money that might have gone to oil companies, utility companies or tobacco companies goes to my mortgage instead.

My garden isn’t a sprawling acreage but, I’m using it to reduce the impact of economic risk by lowering my expenses. Robert Kiyosaki says that your home is not an asset for the simple fact that it creates expenses not income. For the last few years, I have been working on creating an ‘income’ from my property to off-set the expenses. I have planted a wide range of fruit trees to provide a variety of fresh fruit over an extended season as well as fruit for preserving. I have a substantial kitchen garden with everything from potatoes to herbs for tea and flowers for the table. I have also planted deciduous trees where they’ll have maximum cooling effect for my house. The ‘income’ I receive is probably not income by Robert’s definition but in my view, the house is beginning to pay its way. My only regret is not thinking this way when I first planted out the garden 10 years ago!

I have more than one job. I currently work two part-time jobs as well as run my own business from home. Yes, it can be awkward at times but I know that not all my eggs are in the one basket. I feel insulated against the vagaries of the employment market.

All these changes have occurred over time. In isolation, they probably don’t have a huge impact but stitch them together and they begin to provide the fabric of a resilient life.

Sunday, November 28, 2010

Patchwork Economics - Risk Assessment

Risk (n) A chance or possibility of danger, loss, injury, or other adverse consequences.
Source: The Concise Oxford Dictionary, Ninth Edition

Assessing your vulnerability to risk is a quick and simple process. Determining how to build resilience into your lifestyle so you can either reduce the risk or lessen its impact, is a little trickier.

What are the potential risks to your financial well-being? You might be surprised at the list!

Here’s a few to get you thinking:

Economic Recession/Depression/Collapse
The economic environment in which we live is completely and utterly beyond our control. We cannot change the environment but we can change the way in which we’re affected by it.

If the company you work for decides to downsize in order to show their shareholders a profit, your job could be gone. What then?

Keeping a roof over your head (literally!)
If you are lucky enough to have a home of your own, whether or not you carry a serviceable mortgage, what happens when general wear and tear over time brings about the need for a major repair job; like replacing the roof? Do you have the money to get it done? Do you even know how much it would cost?

Increasing Fuel Prices
Even the International Energy Agency admits that we’re already seeing the effects Peak Oil (where production exceeds demand) in their recently published World Energy Outlook 2010. When demand outstrips supply, prices go up. If the price of petrol (gas) doubles, how much will it cost you to get to work? What sort of impact will it have on the basics that you buy regularly, food for instance?

Increasing Energy Prices
We’re already seeing ongoing rises in electricity prices. At what point will using electricity to keep you warm or cool become a luxury you can’t afford?

These are just some of the big picture issues that we all face. I guess you could say these are the big rocks that we need to deal with first. As you begin to ponder these issues, I’m sure you’ll be able to fill in the specifics with details from your own experience and add some colour from your own lifestyle. At first they might just seem like headlines but as you place them into the context of your own life they will become personal.

Tomorrow, I’ll share with you some of the steps I’m taking to ensure financial resilience for myself and my family. I hope it will help spark some ideas for you to use.

Sunday, November 21, 2010

Patchwork Economics - Creating a lifestyle that insulates against adversity

A while back I heard the term ‘patchwork economics’. It really caught my attention.

No, it’s not about making quilts economically; it’s about applying the same patchwork theory to the financial side of your life.

Traditionally, patchwork quilts were created using a variety of fabrics that were salvaged from worn out clothing, off-cuts from the construction of new clothing or recycled from packaging like flour sacks.

This is the approach I am now applying to my financial life. I’m piecing together lots of small changes to create a new financial fabric. This new fabric will insulate us against adversity in the same way a nice cosy quilt insulates against the cold.

Where do you start? You've got to know where you are before you can plan the route to where you want to be. One of the best ways of finding out where you are: assessing your risk for adversity. If you have one source of income and very high expenses, you're exposed to a huge financial risk. What would happen if you lost your job?

Spreading your financial risk is the same for earning a living as it is for investing - don't put all your eggs in one basket. So, look at ways to create new avenues of income - legally, of course! And, just as importantly, find ways to reduce your dependence on your primary source of income and that means also lowering your expenses.

Applying Patchwork Economics requires a considered approach to determining where your money comes from, where it goes, and how you can hang on to more of it while becoming less dependent on it in the first place. It means giving serious thought to what would happen to your financial well-being if the economy took a serious downturn.

It's certainly giving me lots to think about.

How secure is your financial future and can you benefit by applying Patchwork Economics theory as well?

Saturday, November 20, 2010

Finding Abundance

In an uncertain economy, it's easy to become caught up in feelings of lack and helplessness but, an early morning stroll through the garden offers up an endless aray of abundance.

A productive garden offers so much more than just it's productivity. Yes, it will save you extraordinary amounts of money, and provide you with chemical, pesticide and to a certain extent 'corporate free' food. A productive garden is also a never-ending lesson in abundance.

Here are just a few glimpses of the abundance nature has sent my way.
Unknown variety of apple

Broccoli side shoot - ready to be picked

Starkrimson cherries - first crop

Unknown variety of lemon

Chilcotin raspberries


Colour - Rose 'Rhapsody in Blue'
What's your garden's potential for abundance?

Monday, November 15, 2010

Delays, Disasters and Disappointment...

It's now roughly a month since the electrician was here rewiring the lights and sundry power points; and I still don't know when to expect the builder.

Now... I need to add 'leaking roof' to the list of disasters, then 'replace hall and dining room ceilings' to the To Do List.

It seems the saying is true - houses do just sit in the garden and eat money!

In spite of the recent disappointments, I am still ploughing ahead with my plans to prepare this house and garden for a self-reliant future. Money is becoming harder to find but that just amps up the challenge to make the most of what's already here.

I know when it's all complete, the delays, disasters and disappointments will be the stuff of my survival story.