I go to several forums, not all are predominately homesteading oriented. Recently (this past week), I've noticed that there is a sudden upsurge in interest in stocking up and paying off debts, even among those who are not homesteaders. I suppose some of it has to do with recent unrest in the world, but that's been going on for the past couple of years.

Personally, I've been almost panicky about getting my debts paid down. I don't know exactly why. I've, also, tripled my garden space, am learning more about alternative ways of preserving food, studying wild foods, and storing more canning jars.

I've grown heirloom vegetables and raised my own meats, including fish, stored staples, homeschooled my children (and have an extensive reference library), and had my own water source for the past 20 years, so I don't need to do much work in those areas.

Have any of you noticed this trend? Are you more concerned with it, too? Do you have any specific reasons or is it just a gut feeling?

-- Gayle in KY (gayleannesmith@yahoo.com), April 04, 2004

Answers

Yes Gail, I am very concerned. I believe we are in for some extended inflation. The price of everything seems to be on the rise. Gold is up, and steel is up(making fencing become much more expensive). Someone told me yesterday that a six dollar piece of plywood has jumped to eighteen dollars in 6 weeks or so. The person I heard this from had a friend in the construction industry, and the project they were working on had to be adjusted ten thousand dollars. There was a very good article in Countryside this last month about this. The man who wrote it believes we are headed for a depression. Our economy could suffer some major correction. Interest rates are extremely low, and yet most people seem to have less money in their pockets. My friend just had her house loan locked in at 4.65%(I think she said). Oddly I don't think any of this has to do with the current political scene in Washington. I just don't think anyone can stop it. We have been moving along too fast for a while. I believe some of this is related to Nafta or GATT. However, I don't think that getting rid of them would help at this point. In fact it could push along the problem. America was built because we had great resources, and we put them to use. Our workers built this country. Now, we are sending our resources overseas. This is not good! This whole global economy thing is a load of crap. This is not what made this country great. We are living in one of the most resource rich countries in the world, and it is our job to feed, clothe, and shelter OUR people. This multinationalism is going to kill America as we know it. Now there may be some out there who think we ought to live in a "We are the world" type of system. However, those people better be prepared for worldwide tyranny without any of the Constitutional protection of their rights. They also better be prepared for this global system to come in and rape their land, and give NOTHING in return. It is already happening. Just go to Walmart. Someone said to me just yesterday in defense of this economy that unemployment is low. I would agree. However, I believe incomes cannot and will not keep pace with inflation. As incomes rise in the US, more and more product will be produced overseas. Our incomes are at a point because of trade agreements where if they rise to meet the demands of inflation, then it will widen the river of work going to other nations through trade agreements. So that $18.00 piece of plywood today, could be your job lost tomorrow.Eventually this IS going to affect jobs here in the US. There comes a point when the US becomes mainly a society of consumers, and very few producers. This means that the jobs that are here today are gone tomorrow. When that happens people will have no choice but to reduce consuming. This is what leads to depression. Back in the seventies, we had rampant inflation too. However, we did not have trade agreements that enabled our corporations to farm out their labor to toher countries. This protected us from depression, temporarily. However, pause and think about whatwill happen today if we have another inflationary period like the seventies. Picture Interest rates up around 20%, picture a dozen eggs at$4.00, a gallon of milk $6.00, a gallon of gas $4.00. Now also picture an income that CANNOT pay those prices. For if your income goes up to meet those prices, your job is lost. If your income does not, you cannot feed your family. This folks is what causes depression. Now there are those who would say I am a doom and gloomer. However, the truth is, I am an optimist. I believe I can make it through this mess that IS coming sooner or later. However, it is going to be tough for all of us. Tougher than the 1930's because then we didn't have a government who thought they should control every inch of our lives. The only blessing is that if we have no income, they can tax us, so they have no income either. And assuming this scenario happens, there won't be welfare either. Why? Because a government that isn't taking any money in, cannot give any money out. Of course then there is the potential for complete government control, which isn't out of the question, but is fodder for another post. So there you have it, Gail. My opinion! Don't blame me, you asked.

Little Bit Farm

-- Little Bit Farm (littlebit@brightok.net), April 05, 2004.

So sorry for the one HUGE paragraph. I forgot to double space!

Little bit Farm

-- Little Bit Farm (littlebit@brightok.net), April 05, 2004.

"Some things I can't change so will just have to work around'm."

Aint it the truth Hoot!We are also into a mortgage. I'm just gonna have to pray that when this kind of thing gets going there will be so many foreclosures that the banks just forget about our little old place. Of course we will pay our mortgage as long as we have the ability to. We will also pursue other sources of income than Joe's Job. I am however looking for a small piece of bare land to purchase outright. I figure it would be a lot easier to pay a piece of bare land off. In the mean time I am gardening, canning,and raising my animals.

Little Bit Farm

-- Little Bit Farm (littlebit@brightok.net), April 06, 2004.

I think the whole point of paying off the mortgage is in case the primary earner find's himself out of work. If the mortgage is paid, the Land is yours. Free and clear land would solve my concern about feeding my family. I am to the point, I believe I could feed us if I had to. it might not be pretty, but it would be possible. I'd like to have a little more land however. Right now, I think our biggest challenge would be feed for the animals, and flour and sugar for us. The sugar could be solved with bees, and by tapping our maple trees. The feed is getting more and more possible, but needs further work.

Little Bit Farm

-- Little Bit Farm (littlebit@brightok.net), April 13, 2004.

Personally, I think stockpiled cash won't do much good. Better off holding your cash in real money, gold, silver. Our currency is currently not backed by anything but the Federal Government's word that it is good. I also believe that in the kind of scenario we're talking about Barter is going to be very important. GT, the FDIC will not be able to cover all deposits in the US if things get really bad. Basically what has been put in place is safeguards to prevent a domino effect of panic on the part of depositors. The simple truth is that most of your deposits are not kept as legal tender at any bank. In fact most of the time they are simple numbers in a computer. I will spend some time looking up some sites to prove this if you like. We are in a serious house of cards here.

Little Bit Farm

-- Little Bit Farm (littlebit@brightok.net), April 15, 2004.

Have a look at this article:

http://www.mises.org/fullstory.asp? control=1211&titlenum=&FS=&title=&Month

Banks and depression

-- Little Bit Farm (littlebit@brightok.net), April 15, 2004.

Here is another Article on the Federal Reserve, and it's effect on the economy. It is long, but very worth reading.

http://www.perfecteconomy.com/principal---federal-reserve-system.html

Federal Reserve- Keep scrolling

-- Little Bit Farm (littlebit@brightok.net), April 15, 2004.

Here is another really good page about this. Keep in mind that it could happen that America will sqirm out of this somehow. It has happened before, however I don't think so.Be sure and scroll down to this guys latest entries.

http://www.markswatson.com/Depression1.html

The Coming Depression

-- Little Bit Farm (littlebit@brightok.net), April 15, 2004.

Gail and Little Bit--I agree with everything you have posted. Our country can not continue on the way it is going. I believe also that it is too late for anyone to turn this around before we have something like the depression, or even worse than the one in the 1930's. I am sure our they will come up with a new name, even tho it will be the same. They may say the economy is getting better, and unemployment is down, but everywhere you read or talk to people, someone they know is either getting let go , because of downsizing outsourceing. Also a lot of people draw their unemployment checks till they are gone and then they show up as not being unemployed.

My youngest son who lives here on our farm, got out of the Army so that he could be here with his 2 children as he is a single parent. He got a good job not to far to drive, has worked there 2 years and now they are talking about outsouceing his entire department to India. Yes I am very worried about what is going to happen. My hubby and I are both retired and we do live on the farm , which makes it a lot easier to have our own meat, chickens , eggs and milk. but also we are on a fixed income and if our son loses his job then we would have a rough time making do. We have tried to be prepared because we have seen this trend happening for several years. The one thing we need to purchase is a generator, as we have a deep well but you need electic to power the pump. That is the next thing we are saving up to buy. We garden, we are planting more this year and also adding to our fruit orchard, I can , freeze and dry all of the surplus from our garden , trees, and berry bushes, I accept any bounty from relatives and neighbors from their surplus in their gardens. I was born during the depression and I can remember how hard a time my parents had on our farm , till after world war 2. Things were different thing, and I don't know now if we have enough Mom and Pop business's left, and enough small farmers to survive several years like that. Our younger generation would have no idea how to get by and make do. All we older ones can do it to hope that we have the wisdom and skills to teach them> Lauraleah

-- Lauraleah (lauraleah@mo-net.com), April 05, 2004.

Hey guys! Yeah we're in for some tough times ahead. It's already here now but will get much worse. Jesus Christ is fix'n to come back for His Church shortly. We are already in a famine--the grub we buy doesn't have the they should and when we eat it we're deprived of those nutrients.

I'm tryin my best to get out of debt but it's so slow. We bought a new Amish built modular in 94 and still owe quite a lot on it yet. When we bought it I didn't know I'd have to have heart bypass in 97 and then have to go on disability shortly thereafter. My pay was cut in half!!!

I think we should stock up as best we can, prepare to live off the land if need be. Plenty of rifle shells, fruit jars--garden space.

As far as the generator--I'm puttin one together with a chevy 6 cyl engine--rigged for propane. The little motor on the 3kw blew up last fall and I had the chevy motor---. We have a deep well pump too and have to have power for it plus power for the gas furnace. Some things I can't change so will just have to work around'm. old hoot. Matt.24:44

-- oldhoot (oldhoot@shawneelink.net), April 05, 2004.

Sorry, if this is a double post. I got an error message the first time I tried.

I have a generator, but, if gas is too high (or unavailable) I wouldn't be able to run it. I'm planning of building a small Stirling Engine this summer (for practice). They don't require any fuel because they run on heat. The heat from a candle would be enough. They, also, have very few moving parts, so maintenence would be minimal. If the practice engine works, I will build a bigger one that I can use to generate energy for heat, fans, and (hopefully) to run the pump.

I have a deep well, too, but I scrounged a well-bucket and could easily build a crank to raise and lower it (in case the Stirling Engine won't work in that application).

LQ~ I've recently had to explain myself (on another forum) because I was accused of being all gloom and doom, too. I, also, feel that I'm an optimist :) Some people read the news and get depressed, but I use that information to get prepared. Instead of being paralyzed with fear, I take action. There is always something we can do, even if it's just to pray (in fact, prayer is always a good place to start, no matter what you do next!).

-- Gayle in KY (gayleannesmith@yahoo.com), April 09, 2004.

Little Bit, sorry about calling you LQ. No excuses, just made a mistake.

-- Gayle in KY (gayleannesmith@yahoo.com), April 10, 2004.

Hey Gayle! More info on your sterling engine. Are you buildin it from a kit or from scratch? Very interestd in buildin one myself too. joldhoot. Matt.24;44

-- oldhootgibson (oldhoot@shawneelink.net), April 11, 2004.

Hi, Hoot! I'm building the Stirling Engine from scratch. I don't have the design completed, yet. I'm using info from the following sites to design it.

http://www.bekkoame.ne.jp/~khirata/english/make.htm

http://www.webcom.com/sknkwrks/stirling.htm

I've read quite a few good things about the Stirling Engine, their efficiency, and ease of operation. They seem very easy to build and maintain.

-- Gayle in KY (gayleannesmith@yahoo.com), April 11, 2004.

I have used small stirlings with servos to produce nice low power generators.

-- Jay Blair in N. AL (jayblair678@yahoo.com), April 12, 2004.

I see more refinancing (but that probably depends a lot on local housing markets), and a lot of people who were in the stock market almost exclusively are looking at other investment vehicles. I don't know why the big push to repay a mortgage early, unless you were paying really high interest, as long as you're paying on time, no one's going to take your property away, and you may be able to do something else with the money that you don't immediately pay on the mortgage that will pay you more.... Right now is a good time to borrow, if you have plans and back-up plans in case you lose your main source of income.

It's hard to see the other side when you've just lost your job, and/or everyone in your immediate circle of family and friends has lost theirs, but remember that even in the Great Depression, not everyone was out of a job. Even in bad times there seem to always be some group of people who seem to survive well, regardless of the situation.

-- GT (nospam@nospam.com), April 13, 2004.

Free and clear except for property taxes, that is. You can always sell property to someone else and get out from under it to buy a cheaper place, or rent part of it out to someone else and let them make your payment for you. Most could avoid foreclosure if they were honest about their situation and made the difficult decision to sell earlier rather than when it's too late.

The "taxed out of your home" stories you read about are very true in some areas where property has really appreciated unless you live where your taxes are "fixed" (like in CA). In other places you can get exemptions when you're older, which is fine if you have no children to leave your house to, because they'll just take it out of the sale of the property when you die, but if you have children you wish to leave the property to, things are somewhat different. If you want them to keep the house, hopefully you bought life insurance to pay the taxes on the stepped up value....

I guess I'm just more of an optimist. Losing a job is not the end of the world unless a person perceives it to be. There are still plenty of jobs for people who really want them, but yes, it takes work to find them and often an attitude adjustment. Nursing homes seem to be always looking for people, for example. Older people who aren't in nursing homes yet can use people to run errands or take them to their doctor appointments. Lots of things are available if you see yourself as an indie contractor and not an employee.

-- GT (nospam@nospam.com), April 13, 2004.

My main reason for wanting to pay off my mortgage early is that we are getting old. My husband is 53 and I'm 48. If he were to die, I need to be able to, either make the payments on the mortgage (not easy to do around here, as jobs are scarce), or own the house, outright. I figured, if I got the payments as low as they could get (we refinanced, at a much lower rate, last Friday), then start paying it off, I would have it covered either way.

When I divorced my first husband, I got the house, but the payments were so high, there was no way I could make them on a starting salary, let alone pay the utilities, insurance, gas, and food. I sold the house and, eventually, ended up in a homeless shelter with my kids. I'm not going to risk getting into that situation, again.

The other debts I've been paying off are credit cards. I have one paid in full and the other will be paid off by the end of summer. After those accounts are closed, I will begin paying extra on the mortgage.

I've, also, reduced my regular bills as much as I can without lowering our standard of living. I've started using the clothesline, instead of the dryer, cut back on long-distance phone calls, cut out unnecessary phone options, began making my own cleaning supplies, etc. If I have to, I can get rid of the computer and the satellite dish, but I use the computer for homeschooling and hubby likes the TV (it's his only form of entertainment- and I even cut back on the programming on that). So, as you can see, my efforts have been in several areas, not just the mortgage.

-- Gayle in KY (gayleannesmith@yahoo.com), April 13, 2004.

Good for you, Gayle! I've never had credit card debt--my parents were good examples for us, always paying it off every month, and we do the same. You have no life insurance to pay off the house if your DH goes first (and he should have some on you as well)? Usually it is pretty cheap to buy through work or through Veterans Group Life Insurance if either of you were in the military.

I look at debt in terms of good debt/bad debt. Good debt is house debt, rental property debt (that a renter is paying for you), etc. Bad debt is credit card debt, payday loan debt, any car loans, etc.

I think you're doing great.

-- GT (nospam@nospam.com), April 13, 2004.

"I think the whole point of paying off the mortgage is in case the primary earner find's himself out of work."

I think it is the economy. EVERYONE is worried about downsizing. It makes people look at their budget-AND their backyard-and go "HMmmm".

-- Terri (hooperterri@prodigy.net), April 14, 2004.

Besides all the suggestions you folks have talked about...is anyone here "stockpiling" cash somewhere at home just in case the banks wont let you touch your savings or checking accounts if there is a depression??

-- Marcia (marcia125@webtv.net), April 14, 2004.

If things are that bad, we've got other things to worry about.

-- GT (nospam@nospam.com), April 14, 2004.

Please elaborate, GT. My DH and are pretty much self-sufficient (raising our own meat, veggies, etc.) but what are the other things that we all should be worrying about?? We'd like to be capable of taking care of our son and his family...if need be!!

-- Marcia (marcia125@webtv.net), April 14, 2004.

Yes, Marcia, I've been doing that, too. I thought about using it to pay the credit cards in full, but decided it might be more important to have those liquid assets in the event of an emergency. It hasn't been easy to make all those cutbacks AND save money, but I felt it was important (or, dare I say, URGENT!)

-- Gayle in KY (gayleannesmith@yahoo.com), April 14, 2004.

I'm not a "don't worry, be happy" person, but I believe there was a law passed a while back (as a result of the depression bank runs, I think) that disallowed banks from being closed more than 3 days in a row. Also this is where the FDIC (federal deposit insurance corporation that guarantees all deposits in banks) came from. Even if a bank "fails", your deposits are safe.

If the situation you describe were to occur (not being able to get the money out of the bank) for some reason, well, that would affect everyone, not just the normal man in the street. The company you wrote a check to couldn't cash it either. I don't know why people are even thinking this way, really. So your question kind of puzzles me a bit, Marcia.

Does that help a little? We're probably looking at it from different points of view.

-- GT (nospam@nospam.com), April 14, 2004.

GT...I don't know why I'm thinking about it this way either! Guess I spent too much time talking to my grandfather many years ago about the depression of '29. I know the situation "should" be different if it happens again...but who knows?? We're just trying to stay prepared in every way possible. Maybe money wont even be important in the next depression...bartering might be the way to go :-)!!

One thing we've learned for sure is that you're way ahead paying off credit card debts with their interest rates of 8% and higher rather than making payments to them and letting your money sit in a bank gathering almost NO interest!!!

-- Marcia (marcia125@webtv.net), April 15, 2004.

Hi Little Bit Farm,

I look at it this way (and yes, I was aware of the percentage of money that is actually at a bank and so forth--thanks for the info). If things are that bad (and I really think that people are going overboard here) that money is no good, then some piece of paper that says you "own" something is just as likely to be ignored by someone bigger and stronger than you....

You can't eat gold or silver, and it's too heavy to carry around, hence money, now credit. Even gold and silver fluctuate from day to day. Barter may work for certain things in a very local area, but again, it is money and credit that allows you to do business far away from where you live.

People give gold its value, it doesn't have that much on its own, other than its value in jewelry, industry and so forth. Diamonds are the same way. If it weren't for the DeBeers ad campaigns that try to make people feel inferior if they don't bestow a huge "rock" on their intended, diamonds would just be another rock. Just because something is rare, doesn't automatically make it valuable. Look at some of the things people collect, like stamps and coins, Barbie dolls and Beanie Babies. Value goes up, value goes down, depending on how many people are interested and how much they are willing to pay. Oil drives the economy right now, develop and implement a cheaper source,

What would happen if the US stopped feeding the world and met more of our needs with ethanol made from corn? Could we do it, especially if people were highly motivated to dump the gas guzzler and get more fuel efficient vehicles, and we went back to odd/even lines at the gas pump?

Like I said, in any bad economic situation, there are still survivors. Look at all the people right now buying up foreclosures for $1000 (they make up the back payments and penalties) and the person walks away but at least without a foreclosure or bankruptcy on their record. People are doing well enough to do that, and it is not all foreign corporations and such. There will be new ways to make money as the old ways change. I think that worrying about all the bad things that can happen without spending equal time or more figuring out ways to thrive, not just survive, is counterproductive....

-- GT (nospam@nospam.com), April 15, 2004.

Thanks for all those sites, Little Bit!! I'm still working my way through them all :-)!

GT...can you tell me what you are doing to prepare in any way for a possible depression?? I know that there are always jobs available for folks that are willing to work...either for money or barter. We learned that when we first moved here to Maine. Couldn't find the high paying jobs that were available in Massachusetts, BUT there were lots more jobs (lower paying) here in Maine!! Can you share any secrets of preparation you might have? Thanks!

-- Marcia (marcia125@webtv.net), April 15, 2004.

Well, I'm not thinking depression at all--though certainly we may be in for a period of inflation. But inflation works both ways. Low borrowing rates mean lower interest on CDs and interest bearing accounts. Higher borrrowing rates mean that those same CDs will earn more....

Part of being prepared is being open to new options. For example, renting out a bedroom with its own bathroom to someone to make some extra money. I think a lot of homesteaders would turn up their noses at that option because they want to be left alone, but if it makes a difference between keeping and losing your house.... Could you put a mobile home on the property and do the same thing, maybe with a composting toilet? Shower water could just run off, it's not that dirty.

In places like the San Francisco Bay Area, housing is so high that people get bus passes and ride the bus all night, or they pay $200-$300 a month for basically just a place to sleep over/take a shower at someone's house for the night--and these are people who were making $50,000 a year, which is good money everywhere else.... If you're single, and you're not a homebody (you're working, and perhaps taking advantage of all the activities, museums, parks and so forth), that's actually not a bad deal. I think the minimum average salary to qualify for a home loan over there now is like $60,000, which in other parts of the country would buy you an entire house and then some.

Everything's relative, lol.

-- GT (nospam@nospam.com), April 16, 2004.

I stumble upon this site while googling for info on seeds ("vine peaches" and such like), and noticed this thread while nosing around. I saw this comment:

"Even if a bank "fails", your deposits are safe."

Yes, if A bank fails, your deposits are safe. The key word there is "a".

The FDIC is a cascade of happytalk designed to protect you from bank failures, yes -- but not the way you think.

The idea is to protect you from bank failures by using the FDIC to PREVENT bank failures. How? By preventing RUNS on the banks, that's how!

If multiple banks fail -- and it won't take many -- the FDIC will come up dry. That's when the real fun begins.

So my sentiments are to only trust the FDIC for "run of the mill" bank failures, e.g. Banker Smith runs First Nowhere Bank of BFE West Dakota into the ground, and the way the depositors find out is the next day there's a sheet hanging over the sign with a new name for the bank.

In a scenario where banks start failing in multiple locations, though, don't count on much help from the FDIC. They simply do not have the money.

Someone else posted something about welfare:

"And assuming this scenario happens, there won't be welfare either. Why? Because a government that isn't taking any money in, cannot give any money out."

Well, that's not exactly right either.

The government does not need to take money in before they can hand it out to the welfare people. They can simply print more of it. Money as we know it is a debt instrument. That is, it's borrowed from the Federal Reserve by the Treasury, and then it works its way into circulation. In a runaway inflation situation, they'll have those printing presses smoking. They'll be running them 24-7, churning out the dollars.

The welfare will get the money, but it will be worth an increasingly smaller value. Sure, the number of dollars will be there, but each one will be worth less and less, the more of them they print.

This is called "monetizing the debt." It's happened before in other countries, and it's not pretty.

-- Just passing through. (pri@va.te), April 18, 2004.