What to do with the money? Spend it?

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

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7 comments

  1. A good list Mia. I would add:

    – Diary animals (goat, cow, or sheep, just two, to give you experience in care, feeding, and milking) assuming you have the space

    – Storage. Lots of storage. From a root cellar to air tight barrels. I would hate to lose hard won food to pests

    – Books (for entertainment), I already have a good library of favourite books, but will keep adding to it

    Regarding guns and ammo, you can put them back on your list. Anyone is allowed to own firearms in Australia (assuming good character) if they have a gun safe, a license for the type of firearm owned, and are a participating member of a shooting club, or have permission to shoot on someone else’s property. I intend to get my shooters license (again) this year once the cottage is complete and I have somewhere to bolt down the gun safe.

    There is a lot of game around where I live (pigs, goats, rabbits, and kangaroos). Too good a source of easy protein to pass up if it becomes necessary.

  2. Great list of ideas!
    I know we have already saved a lot of $$ by just stocking up on our most used items when they are on sale.

  3. That’s a thorough list.

    An alternative to having a gun is a bow, it has the virture of been quiet and you could learn to make your own arrows. Also learning some trapping skills could come in handy. Bullets may not always be in plentiful supply.

    Investing in a solar oven and a canner would be good, free cooking and a way to preserve all those goodies you’re going to grow.

  4. interesting… I hope you won’t be offended, but your list reveals that you don’t have children. I have three – ages 16, 6, and 4. As someone who has benefitted greatly from money left to me by my grandparents, I feel that I have a moral obligation to leave some cash to my kids…. as long as I have any reasonable expectation that cash in the bank is worth anything at all. Is putting money into long term investments for my kids a gamble? Well of course it is. That’s why I won’t commit more than, oh say, 25% of my net woirth to such investments. The rest will be spent – not all at once! – on the tools and skills I feel are likely to help provide me and my descendants with a decent quality of life. We have a small homestead – ten acres – and are slowly furnishing it with the basics of power generation (solar and wind), water storage, livestock and thier needs (fences, barns, equipment, etc), tools for large scale gardening and food storage. Gathering materials and learning skills is a long term process – I estimate ten to fifteen years. Which is also about as much time as I think we have left in a “normal” lifestyle.

  5. @LS and Nevyn: Thanks for the suggestions. All good ones. I didn’t realise we could own firearms in Australia. I thought they all got handed in after Port Arthur. I probably should have paid more attention!
    @Lori: Thanks!
    @Aimee: Welcome. Thanks for your comments. You’re right. We don’t have children yet, so we are making our plans based on getting ourselves set up and if children do come into our life down the track then I hope they will benefit from their parents’ planning. Don’t get me wrong, I still hold some cash. I’m not spending it all. 🙂 I am also investing it in other areas which I haven’t mentioned in this post, but might in a future post. I was simply using a list posted on The Oil Drum as a conversation starter, so I wouldn’t say it’s comprehensive. It sounds like you have a great plan for your families future.

  6. @Francesca – The Oil Drum is frequented by mostly North Americans. They do have a fascination with guns over here in the US. The Second Amendment to the United States Constitution protects the right to keep and bear arms, and Americans feel very passionately about this right. I couldn’t understand it at all, having come from Australia, but now that I’ve lived here for a couple of years I can now understand where this has come from and why it is so important to them.

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