With Governments around the world so eager to shift the burden of this financial crisis onto society through bailouts and quantitative easing, there are more and more people realising that paper money (or more realistically data entered into a computer) has no intrinsic value. All money is created by the issuance of debt, so one begins to question whether money really is the same as wealth. Once we realise that it is not, the next natural question then is how to invest any surplus money we have into real, tangible assets.
It’s something I’ve been thinking a lot about now that I’m out of debt, so a recent discussion on What should you do with the money you have available? – Part 1 on the The Oil Drum was very timely.
Gail suggests four possible courses of action: Spend Money Now; Give it away; Pay down debt; Invest it using conventional approaches. Since I’ve already paid down my debt and for reasons I’ll cover another day I choose not to invest conventionally, today I want to talk about the option of spending my paper money now. Here are some of the options Gail suggested, followed by some discussion on my plans for the next couple of years.
1. See the world, while you still can.
Experiencing different places and cultures is really important to me. In fact, other than servicing debt, travelling has been my biggest expenditure over the last few years. As the financial crisis deepens and energy becomes more expensive, I imagine travelling will never be as cheap and easy as it is now.
2. Visit friends or relatives you have wanted to visit, but put off.
Last Christmas we spent a few days in London with an old friend of mine. It was really great to catch up with her now because I don’t know when I’ll get to see her again (other than on a Skype call). This summer we plan to visit our good friends in Alaska and other than that, we’ll get to see our families when we return to Australia later this year.
3. Take care of health or dental issues that need to be taken care of.
Brendan and I both had some elective surgeries prior to moving to the U.S. We had heard horror stories about the American health care system, so we wanted these things taken care of before leaving Australia. I had laser-eye surgery which has been money extremely well-spent in my opinion.
4. Take a course that might be helpful long term.
This is an important one. We’ve already seen so many jobs in certain industries (construction, manufacturing, auto) disappear or be outsourced. This trend is likely to continue in the coming decade. Investing in skills that are going to be needed long-term is a no-brainer.
5. Buy extra canned goods or other non-perishables.
The price of food keeps going up. I therefore think investing in some non-perishables is a very wise strategy. If food prices rise 15% this year (it could happen if there is another oil price shock) and you’ve locked in prices early, you’ve essentially earned a 15% return on your investment. Try doing that in the stock market! It also makes a lot of sense to store some extra food in case of emergency.
6. Buy property where you can farm (if you have the skills to do this).
Ultimately this is what we’d really like to be spending our excess cash on. Unfortunately for now, the Australian property market is still inflating into a huge bubble. We won’t be buying until prices become more realistic.
7. Buy gardening related equipment, or soil amendments.
This year we plan to buy all the garden tools we are likely to need for the next 10 years.
8. Buy books about specific skills you may need.
I have already started a library of books which contain useful information, but I will continue to add to it this year as I come across more good recommendations.
9. Buy goods to trade.
Brendan has been stocking up on spare bicycle parts. They are items he can use himself down the track, use in his bike repair business or barter if needed. I’m reluctant to spend money on items we won’t use ourselves as I don’t want a bunch of useless items in storage forever, but bike parts are usuful purchases.
10. Buy a dog that can be trained as a guard dog/helper.
Zoe is already a pretty good guard dog. Being a German Shepherd, it’s in her genes. As far as her being a helper…. does collecting socks count?
11. Insulate your house, make it tighter, and/or add some sort of passive solar heating.
Since we are currently renting, there is little we can do here. We have been encouraging our family to take advantage of Government grants to improve efficiency.
12. Buy a solar thermal hot water heater, solar voltaic panels, or wind generating capacity.
As for #11. Brendan’s parents have recently installed solar hot water and I’ve been encouraging my Mum to do the same. In Australia, with ample sun, these system work fantastically.
13. Install a water collection system. (If water is to be used for drinking, you will need to have the right kind of roof and will need to take proper precautions. It still may not be legal.)
As for #11 and #12. Brendan’s parents and my sister have water collection systems. I think Mum is also putting one in.
14. Buy tools for a new trade. (For example, wood working or making leather goods)
Brendan has been purchasing most of the tools he needs for a bicycle repair business. I’m yet to decide on a trade that is interesting to me and would be useful in the future, although I have a collection of crochet hooks now. Does that count?
15. Buy a gun and ammunition (For catching rabbits, if nothing else).
Nope. Not legal in Australia (unless on property), so we’ll be giving this one a miss.
16. Buy a more fuel efficient car.
Upon return to Australia we have plans for a very fuel-efficient diesel vehicle. We aren’t sure what yet, but efficiency is paramount in my mind.
Does anyone have any more ideas about things worth investing in now?
Photo by: alles-schlumpf