RPF0384-Sensible_Food_Storage_pt_1
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00:00:31.000 | I'm going to continue the theme of crisis planning today on radical personal finance.
00:00:36.800 | And we're going to talk about food insurance, also known as food storage, also known as, to use simpler, plainer language,
00:00:44.800 | the simple concept and idea of having a deep reserve of food readily available to you to feed your family for anywhere from a few weeks to a few months to perhaps a year or more.
00:00:54.300 | I had a lot of good feedback on the recent Hurricane show, and many of you said you appreciated some of the practical, tactical tips that I gave that was very helpful to you in preparing for the recent Hurricane Matthew.
00:01:05.800 | So we're going to continue that theme today with a discussion on a sensible approach to food insurance.
00:01:12.300 | [Music]
00:01:28.300 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in ten years or less.
00:01:40.300 | And while also building and maintaining a plan for financial security all along the way.
00:01:47.300 | My name is Joshua Sheets, and I'm your host.
00:01:49.300 | This will be fun, philosophical and tactical.
00:01:54.300 | [Music]
00:02:00.300 | The first half of today's show will be largely centered on a little bit of philosophy, a little bit of background, some discussion of the philosophy behind crisis planning, crisis preparedness, and the reasons why we can harvest some of the emotions that many of you are feeling right now to, and we can use those things for positive good.
00:02:18.300 | The second half of this show will be very, very practical, very, very tactical, and it will feature me just going to be giving you some specific advice from my experience and from my own study that I think will be very helpful to you.
00:02:31.300 | So if you don't like the philosophy, feel free to skip through about the middle half of the show.
00:02:36.300 | And if you like the philosophy, then stay tuned and we'll go practical and specific suggestions towards the end.
00:02:43.300 | Crises are something that we should always pay attention to because they can be very useful.
00:02:49.300 | Inspiration is important.
00:02:52.300 | And you see this often with the recent hurricane.
00:02:56.300 | And I'm building on this because the recent hurricane affected many of us here on the southeastern part of the United States.
00:03:02.300 | It still continues to affect many of us.
00:03:05.300 | And with the integrated national and international news cycle, many of you were paying attention to it.
00:03:11.300 | Hurricanes are a wonderful natural disaster to study because they come with warning.
00:03:16.300 | Some natural disasters like earthquakes don't come with a lot of warning.
00:03:19.300 | Tsunamis don't come with a lot of warning.
00:03:21.300 | Wildfires have a little bit of warning, but often they're so localized.
00:03:25.300 | They're not necessarily regionalized.
00:03:27.300 | The people don't necessarily pay them a lot of attention unless they're in the specific town at which they are -- which the fire is threatening.
00:03:34.300 | But hurricanes can be very large, so they threaten a tremendously huge population and they come with warning.
00:03:41.300 | And this is interesting because it helps to dig into the psychology of hurricanes.
00:03:45.300 | I'm fascinated by how we as humans, for whatever reason, seem to be so poorly practiced in planning ahead.
00:03:56.300 | Hurricane season, of which we who are here in Florida are in the middle of, and frankly all of us, especially on the eastern and southern coasts, hurricane season is not the time to get ready for hurricane seasons.
00:04:07.300 | And yet, when do people get ready for hurricane seasons?
00:04:10.300 | Well, if the gas lines and the food lines and the bare grocery stores of last week are any indication, they get ready right when the storm is threatening.
00:04:17.300 | That's not the time to get ready.
00:04:22.300 | Unless you weren't ready before, but the better thing is to get ready long before.
00:04:27.300 | But I do want to use some of the inspiration that I'm feeling and that many of you are feeling right now to focus on some very practical aspects of financial preparedness.
00:04:37.300 | This show is not a prepper or a survivalist show.
00:04:41.300 | Although I've had various preppers and survivalists on the show, and I think that it's worth considering the philosophy of the prepper shows as able to be integrated into financial planning.
00:04:53.300 | Many people discard that kind of idea and say, "Well, just talk about the 401(k) allocation."
00:04:59.300 | I try to do that.
00:05:01.300 | I try to talk about these more advanced topics.
00:05:04.300 | But we need to spend more time on the very practical questions of life.
00:05:09.300 | I happen to notice an article in USA Today this last week, which the headline came out as this.
00:05:16.300 | "Nearly 7 in 10 Americans have less than $1,000 in savings."
00:05:22.300 | Read that again.
00:05:24.300 | "Nearly 7 in 10 Americans have less than $1,000 in savings."
00:05:31.300 | Now, this data comes from a survey that Bankrate.com did and performed, and then they used this and published this.
00:05:40.300 | I have not seriously looked into their survey methodology, the sample size, how they selected the sample, what the questions were, things like that.
00:05:48.300 | And this data should be compared to the Federal Reserve data.
00:05:52.300 | But in order to get a more accurate depiction because I think that headline is significantly – it may be accurate with their survey data, but that would lead you to believe that 7 in 10 Americans – if you aren't specific with the language, it would lead you to believe that 7 in 10 Americans have less than $1,000.
00:06:12.300 | But what it simply talks about is nearly 7 in 10 Americans have less than $1,000 in their savings account.
00:06:19.300 | So I didn't make the time to dig into it.
00:06:21.300 | I just want to use that headline as illustrative of the idea that while many of you are thinking about how do I allocate a million dollars in my 401(k) and while many of you are thinking about how do I manage these eight rental properties, the majority of US Americans, including many if not – I don't know the data on my audience, but many of you listening are not in that situation.
00:06:44.300 | And we need to approach things a little bit differently because when you look at money, money should serve and work primarily for the basic needs.
00:06:54.300 | And there's no need so basic as food.
00:06:57.300 | There are three current events that I think will be helpful in giving you some motivation and that make me want to tackle this subject today.
00:07:04.300 | One, I already mentioned, Hurricane Matthew.
00:07:06.300 | If any of you were affected by Hurricane Matthew this last week, you may have had the experience of going to a gas station and facing gas lines, long lines of people who are angry with you if you have many cans that are trying to fill up or you may have faced the experience of going to buy bottled water and there not being much or seeing at least empty shelves on the news if not personally.
00:07:26.300 | This is good because this is motivation.
00:07:28.300 | And if you've sensed a bit of that fear or that idea of how do I take care of my family in the face of a hurricane, I want to harness that and I want to use that fear as motivation today for you.
00:07:38.300 | Second big thing that's happening is the election.
00:07:41.300 | And depending on which side of the political spectrum you personally lie, it's very likely that you are currently experiencing a sense of foreboding and a sense of doom at the apocalyptic nature of the forthcoming presidential election.
00:08:01.300 | Well, let's use that and let's harness that because your sense of doom is probably overstated.
00:08:07.300 | If the person that you don't want to win wins, it's probably not going to be as bad as you think.
00:08:13.300 | But let's still harness that and let's use that emotion for positive.
00:08:17.300 | And then the thing that I've really paid attention to the last week has been so interesting to see all of the headlines, especially as they're related to the election and the underlying economics of the election, et cetera.
00:08:29.300 | I've made no secret of the fact over the past few years I am personally planning and preparing for a very difficult coming few years.
00:08:37.300 | I feel sorry for whoever wins the US presidency.
00:08:41.300 | They will face a very difficult presidency in my opinion, very, very difficult period of time.
00:08:47.300 | So, we need to be paying attention to that.
00:08:51.300 | But the saber rattling and the headlines and the news of potential war that have been coming out with Russia between Russia and the United States are really, really remarkable in the way that they are being reported.
00:09:06.300 | CNN headline article, Russia from two days ago, October 12, Russia and the US move past the Cold War to unpredictable confrontation.
00:09:16.300 | International – excuse me, this is Russia Today which is a – well, it's a Russian news source.
00:09:22.300 | But October 12, Russia and US will engage in "global war" unless the "proxy" Syria conflict is resolved.
00:09:32.300 | ABC News from yesterday, October 13, Russian television warns of nuclear war amid US tensions.
00:09:40.300 | Article from the DailyMail.com comes in in light – in the wake of a Russian announcement to foreign officials recommending that their families return to Moscow.
00:09:49.300 | Headline, "This is another step towards war. Russian citizens" – that was a quote – quote, "This is another step towards war" close quote.
00:09:55.300 | Russian citizens react with fear to reports that Moscow has ordered officials to fly home all relatives.
00:10:03.300 | Here are their short little leading summary statements at the beginning of the article in case you're not familiar with these headlines.
00:10:10.300 | Officials said to have been told to bring relatives back to the motherland.
00:10:13.300 | Citizens reacted with a mixture of fear and gallows humor over reports.
00:10:17.300 | Comes amid worsening relations between Russia and US over Syria crisis.
00:10:22.300 | Russia has moved – quote, "moved nuclear capable missiles nearer to the Polish border."
00:10:27.300 | Now, I find the subject of geopolitics very, very difficult to understand.
00:10:34.300 | And this saber rattling by Russia is very, very difficult for me to comprehend.
00:10:40.300 | I'll share with you my philosophy of how I process headlines like this.
00:10:44.300 | I'm intimidated by the subject because I don't fully understand the parties.
00:10:50.300 | I don't fully understand the motivations.
00:10:51.300 | I don't fully understand the root of the conflicts.
00:10:54.300 | I don't have – this is not something I pay attention to on a daily basis.
00:10:58.300 | So I don't feel confident in even having an opinion on a subject like this.
00:11:06.300 | So don't look to me for advice on how significant these headlines are or how insignificant these headlines are.
00:11:14.300 | I simply don't know.
00:11:15.300 | I am not competent to have an opinion on this subject.
00:11:19.300 | But there are lots of things that I don't – that I'm not competent to have an opinion on and here's how I handle those things.
00:11:27.300 | And I think this is helpful.
00:11:29.300 | I think this is rational.
00:11:30.300 | I think you might find this philosophy useful when you face subjects that you don't understand.
00:11:36.300 | It's at least been helpful to me.
00:11:38.300 | The way I approach a difficult or contentious subject that I don't understand is number one,
00:11:43.300 | I go and I try to listen to the people who do have opinions on the subject.
00:11:48.300 | I search out an expert or somebody who is at least presenting themselves as an expert.
00:11:53.300 | I try to just simply listen to them.
00:11:55.300 | I try to listen without forming an opinion.
00:11:59.300 | I try to pull back from forming an opinion or expressing an opinion about the subject.
00:12:03.300 | Generally, there are people when you look at any subject who are going to be experienced and who are going to be experts in that subject.
00:12:13.300 | And so I search them out and I try to listen to them because we should start by listening carefully to the experts.
00:12:19.300 | If possible, I try to consume opposing viewpoints and if possible, I try to find articles that have been written to counter each other
00:12:27.300 | or I try to find a debate if some subjects are very long, things that go on for decades.
00:12:32.300 | Well, in that situation, I try to go and find a formal debate on the subject.
00:12:35.300 | Debate is really valuable because it will show you the most important issues very quickly.
00:12:40.300 | If it's more modern day like something like this is, I just try to search and find rebuttals and consider the people who are saying certain things and listen to both sides.
00:12:53.300 | And then what I do is because I have no influence whatsoever over something like Russia and US being at war.
00:13:03.300 | I have no influence.
00:13:04.300 | I have – my opinion is meaningless.
00:13:08.300 | So there's no reason for me to think about my opinion.
00:13:11.300 | What I think about is what would I do if I did have an opinion?
00:13:15.300 | What would I do if I believed that nuclear war were imminent?
00:13:21.300 | And what would I do if I believed that nuclear war between Russia and the United States is impossible?
00:13:28.300 | And I think about what I would do and the costs of taking certain actions.
00:13:33.300 | Then I try to hedge my bets for my own personal safety, the stability of me and my family and figure out what I can do based upon the price that I'm willing to pay.
00:13:46.300 | That way I can focus on what I can actually do and affect and change instead of the things that I can't.
00:13:55.300 | If this path – if we go down this path over here to the left, then that's going to result in my doing ABCDE.
00:14:04.300 | If we go on – or my needing to do – excuse me, my needing to do ABCDE.
00:14:08.300 | If we go to the right, then that's going to result in my needing to do XYZ.
00:14:11.300 | Now, am I willing to do those things?
00:14:13.300 | And anything that I can, I try to hedge my bets and maybe I can prepare for both of those since I just don't know.
00:14:19.300 | Now, I'm not going to move based upon the threat of nuclear war.
00:14:24.300 | I'm not going to move and buy a missile silo in the middle of Kansas at this point in time because I'm fearful of nuclear war.
00:14:31.300 | That would be an example of where the cost is simply too high for me to prepare for something like that.
00:14:38.300 | And maybe you want to do that.
00:14:41.300 | I'm not prepared to do that at this point in time.
00:14:44.300 | It doesn't mean I think it's a bad idea.
00:14:47.300 | It just means that I'm not willing to do it.
00:14:49.300 | So what am I willing to do?
00:14:51.300 | And that's where something like food insurance comes in.
00:14:55.300 | Having a pantry filled with food is useful if I get – if you in the north get snowed in this weekend or if I face a rainstorm this weekend,
00:15:03.300 | I just have a bunch of people show up to my house unexpectedly for dinner.
00:15:06.300 | But it's also helpful in terms of nuclear war.
00:15:09.300 | And it's one of those things that's easy to do in the sense that there's no downside.
00:15:15.300 | When you weigh that risk versus return calculation and you look and say, "Well, what is the risk of me having food?
00:15:23.300 | Well, I have food that I'm going to buy anyway and I can save money on it," which when I go through one of the reasons,
00:15:30.300 | one of the big reasons why you should – I think you should consider adapting the approach that I take.
00:15:34.300 | So there's no downside.
00:15:37.300 | What's the downside?
00:15:38.300 | I'm going to eat it or I'm going to need it and it's going to be helpful if we go through a significant economic crisis a la Venezuela.
00:15:46.300 | So when there's something that's so easy and so – has such little cost, that's the type of thing where when I put that into my risk/reward calculation,
00:15:55.300 | I say, "Well, what if this is right or what if that's right?"
00:15:58.300 | If there's no downside, I'm just going to prepare for that potential outcome.
00:16:03.300 | This is the same type of thinking that you should apply to every other area of your life.
00:16:08.300 | When it comes to something like life insurance, you say, "OK, the cost for me to get a million or a couple million bucks a term,
00:16:14.300 | life insurance is somewhere between $30, $40, and $50 a month.
00:16:18.300 | Well, if I get the life insurance and I die, what's the benefit?"
00:16:23.300 | Benefit is a few million bucks.
00:16:26.300 | That's a huge benefit to my family.
00:16:27.300 | It allows me to assure that all of my financial goals and hopes and dreams are accomplished.
00:16:32.300 | What's the cost?
00:16:33.300 | Well, $30, $40, $50 a month.
00:16:36.300 | If I'm out $30, $40, $50 a month over the next 15 years or 20 years and I don't die, is that going to make a dramatic difference in my life?
00:16:45.300 | Well, it's not going to make a dramatic difference in my life.
00:16:48.300 | It could make a small difference but not dramatic.
00:16:51.300 | Whereas the benefit of having the insurance is there, I'll go ahead and buy insurance.
00:16:56.300 | Just a thoughtful, rational way to approach a financial decision.
00:17:00.300 | If you put that type of thinking up against something like gambling, let's say that if you roll the dice on one gambling opportunity that you have
00:17:13.300 | and there's a small chance that you'll make a lot of money but there's a large chance that you'll lose all the money that you have,
00:17:21.300 | most likely the risk-return calculation is not going to be worth it.
00:17:27.300 | That huge amount of money, it could be life-changing but probably not as life-changing as the risk of losing all your money that you already have.
00:17:37.300 | Big difference between gambling on a roll of the dice versus buying life insurance or buying food and setting it by.
00:17:47.300 | Food is a currency just like money.
00:17:52.300 | When money is working, food is a commodity.
00:17:57.300 | When money is not working so much, food becomes much more than a commodity.
00:18:05.300 | It becomes more valuable than currency.
00:18:08.300 | I encourage you and I've encouraged on the show in the past, pay attention very carefully to the headlines that are coming out of Venezuela
00:18:16.300 | and have been coming out of Venezuela for the last year.
00:18:19.300 | If you would like to see first-hand or second-hand a current modern-day economic collapse, that's a good one to study.
00:18:31.300 | It's also a good one to study to understand what the end result can be of a poorly managed socialist system.
00:18:41.300 | As you study the country that you live in and you study the direction of that, you'll have to wait to guess and consider the direction of the country that you live in.
00:18:53.300 | So study situations like that as a case study so that you can understand what you would need to do to protect yourself
00:19:01.300 | if the country that you live in goes through a period of time like Venezuela has been going through for the last couple of years.
00:19:09.300 | Look at the hurricanes, look at Venezuela, and pay attention to these things.
00:19:15.300 | Now, I want to give you some practical reasons to store food.
00:19:21.300 | The number one reason why you should store food is...well, these are not ranked in order of priority.
00:19:28.300 | The number one reason on my list, the one very practical reason for you to store food, is that you can simply save money.
00:19:35.300 | Remember, any time you can save money, get the same outcome, a full belly, at a cheaper cost, there's no reason not to.
00:19:45.300 | And a basic practice to put into use in your life is to buy when things are cheap.
00:19:56.300 | If you study the work of frugal living experts, my favorite has always been Amy Decision from her publication, the Tightwad Gazette,
00:20:05.300 | one common theme that you will see of people who are experts at getting more for less is they buy when things are cheap and they don't buy when things are not cheap.
00:20:18.300 | How do you do that?
00:20:21.300 | When it comes to food, the simplest concept is when something's on sale, you buy a lot of it, and when something's not on sale, you don't buy it.
00:20:30.300 | Now, obviously, you need certain items on a consistent, continual basis.
00:20:35.300 | So, in order for you to have those items all the time, you need to stock up when they're cheap.
00:20:41.300 | The best way to find out and identify if something is cheap is to maintain your own, what's called, a price book.
00:20:49.300 | You can do this with a physical book.
00:20:51.300 | There are some apps that do it, or you can just do this mentally.
00:20:54.300 | I have tried doing it with a physical book and failed because I never followed through and completed it completely.
00:21:00.300 | I have also tried doing it with a couple of apps that I searched for.
00:21:04.300 | I have failed with those, but I've gotten pretty good at doing this mentally.
00:21:08.300 | The simple idea is for each product that you regularly consume, whether that's eggs or peanut butter or lunch meat or loaves of bread, you should look at that product and consider what the per unit cost is.
00:21:24.300 | Then, if you were going to pursue this path consistently, you would create a price book.
00:21:30.300 | A price book is a simple notebook.
00:21:32.300 | On the front page of that notebook, you would keep it in something like alphabeticals.
00:21:38.300 | Let's say it was apples.
00:21:39.300 | If you – I switched to peanut butter because I don't know the price of apples.
00:21:44.300 | You would use peanut butter and you write peanut butter at the top of it.
00:21:48.300 | Then, whenever you go to a store and whatever store you go to, you will make a note of what the current price is of peanut butter.
00:21:58.300 | If the price is say $2.50 for a 16-ounce container, you will make a note of that in your notebook.
00:22:06.300 | You're at Publix today.
00:22:07.300 | It's $2.50 for a 16-ounce container.
00:22:10.300 | Now, divide that out into the per ounce cost and you now know that peanut butter is 16 cents per ounce.
00:22:16.300 | Put that in at the top of your price book or the top of that page.
00:22:20.300 | Next day when you're at Walmart or at another location, look to see what the cost of their peanut butter is.
00:22:26.300 | You need to compare like with like.
00:22:28.300 | So, try to find the type of attributes of the product that you are actually interested in and make a note of that.
00:22:35.300 | If you go to Walmart and find out that the per ounce price is 13 cents an ounce, then go ahead and write that down in your notebook.
00:22:44.300 | Now, the key is to look and to keep a record anytime you're at the store of what the lowest per ounce price is on the product that you're interested in.
00:22:53.300 | And what you may find is that you can go to Walmart and buy it for 13 cents an ounce or you can go to Publix and buy it for 16 cents an ounce.
00:23:00.300 | But once every six weeks, Publix puts it on sale as a buy one get one.
00:23:05.300 | And now all of a sudden, you can get it for 8 cents an ounce.
00:23:09.300 | Well, whenever you see a product that is listed at the lowest price on your page of all the prices that you've recorded, that's when you stock up.
00:23:18.300 | And that becomes your new price point at which you buy.
00:23:22.300 | So if you experience that Publix sells peanut butter for 8 cents an ounce when it's on buy one get one, anytime you see peanut butter on buy one get one, you get 10 or 15 or 20 jars.
00:23:34.300 | And you don't buy it unless it's at that lowest price.
00:23:38.300 | That's the concept and the essence of a price book.
00:23:42.300 | What that naturally leads to is you're stocking up when things are cheap and you're having a deep reserve of that item in your pantry, both of which are good things.
00:23:55.300 | Now, this is what professional stock investors will do as well.
00:23:58.300 | Professional stock investor, let's say they're approaching a valuation approach to their investing.
00:24:03.300 | They'll consider the company that they're looking to invest in and they'll consider that they think the company is worth $15 per share.
00:24:13.300 | And they add that $15 per share to their buy list.
00:24:18.300 | And they might place an order that'll sit there and be wait to be fulfilled when the company's stock price reaches $15 a share or they might just keep an eye on it.
00:24:26.300 | But when the stock reaches $15 a share, that's the point at which they will go ahead and buy.
00:24:31.300 | So you can see that the concept is exactly the same that's applied to peanut butter at the grocery store as compared to purchasing and investing in individual stocks, at least if you're using the methodology of valuation.
00:24:43.300 | You have a price at which you buy.
00:24:46.300 | And when you reach that price, you buy as much as you can afford.
00:24:50.300 | So by wrapping your mind around the idea of having a significant amount of food in your pantry, you will naturally start to focus on the per unit price.
00:25:00.300 | And you'll naturally start to seek out the best deals.
00:25:03.300 | And you'll naturally start to cut your costs in your food budget.
00:25:08.300 | Practical reason to store food, number one, just to save money.
00:25:14.300 | Number two, you will face in your life at some point in time fluctuations in income.
00:25:21.300 | When your income fluctuates, you will benefit by having the things that you need already set aside in your house.
00:25:33.300 | The Bible teaches in one of the Proverbs and in one of the versions, which I like in this application, it says, "The wise store up choice food and olive oil, but fools gulp theirs down."
00:25:48.300 | It's from Proverbs chapter 21.
00:25:50.300 | "The wise store up choice food and olive oil, but fools gulp theirs down."
00:25:56.300 | As you start to gain income, you want to set aside significant amounts of that income into the things that you need to match your life.
00:26:06.300 | And when you do crisis financial counseling with somebody who's going through a significant crisis, the first thing that should be the highest on the priority of what to spend money on is food.
00:26:17.300 | If I'm working with somebody who's behind on their bills and they don't have enough money, they're out of a job or they're not earning enough to make it, we say, "Forget about your credit cards.
00:26:28.300 | Forget about your fund money, anything like that.
00:26:33.300 | The first thing you do is buy food.
00:26:35.300 | And if you just have enough money to buy food, you buy food.
00:26:38.300 | Second thing after food is lights, utilities, keep your house functioning.
00:26:44.300 | Third thing is transportation so you can get to work.
00:26:47.300 | Fourth thing is your housing situation, your rent, your mortgage payment.
00:26:52.300 | Only after those four things are covered do you address anything else.
00:26:56.300 | Hat tip to Dave Ramsey who has taught that to millions of people to great effect, including to me.
00:27:01.300 | It's absolutely true.
00:27:03.300 | The first thing you cover is food.
00:27:05.300 | So putting food on the table is a primary function of the reason that you work.
00:27:08.300 | It's the first priority.
00:27:10.300 | Now, fluctuations of income can come in a catastrophic manner such as I lost my job.
00:27:16.300 | Well, if you have a few months of food set by in the house, then in the case of a job loss, you're not left at the end of your wits.
00:27:25.300 | You're not left with a significant problem in the short term.
00:27:30.300 | That can help to bring a tremendous security to your family.
00:27:34.300 | That can help to bring a tremendous security to you.
00:27:37.300 | Help you to go out and look for the better job instead of to jump into the job that you got to get right away.
00:27:43.300 | I learned this a lot when I was working on commission, meaning that six years that I was working as a financial advisor, I was 100 percent on commission.
00:27:51.300 | In the beginning years, I would go a month, sometimes two months with a paycheck of zero and then hopefully a very large paycheck after that.
00:27:59.300 | Many of you who work in commission-based work have the same experience.
00:28:03.300 | Well, my wife and I learned that food was always a very easy way that we could manage our budget better.
00:28:11.300 | When I didn't know when the next commission check was going to come in, I would often just leave the money in the checking account and say, "Let's eat food out of our pantry and minimize the amount of money that we're spending every week on food."
00:28:24.300 | It's very helpful.
00:28:26.300 | Helps to smooth out your cash flow, especially when you can choose.
00:28:30.300 | Because you can't necessarily always cover your – you can't set aside for your electric bill in anything other than money unless you have an external power generating system, which most of us don't.
00:28:42.300 | We just have a power bill.
00:28:43.300 | So you need the money for that.
00:28:45.300 | If you have food set aside, you can choose because you know I'm going to get paid in the next month, so I'll go ahead and pay the power bill because you're not worried about eating.
00:28:54.300 | It gives you a tremendous peace and a tremendous – more confidence.
00:28:58.300 | Next reason to set aside food and to have a reserve store of food, severe weather events, especially if those weather events are regional in nature.
00:29:09.300 | Now, you can have a small problem of being snowed in in an ice storm or having no power to your house and you're just stuck in your house for a few days.
00:29:18.300 | Guess what?
00:29:19.300 | You're not going to starve in a few days.
00:29:21.300 | It's not going to be – you might not be comfortable, but you're not going to starve.
00:29:25.300 | Most of us prefer to be comfortable, which is why you plan ahead.
00:29:28.300 | But when you have a large regional event, that can be significant, especially things like large hurricanes, large earthquakes, anything that's regional, and here's why.
00:29:41.300 | The food system in the United States works on the concept of just-in-time transport.
00:29:46.300 | Just-in-time delivery has been a tremendous benefit to many businesses.
00:29:53.300 | In the past, if you were going to be involved in the production or distribution of an item, you would set aside stores of the things that you would need to produce or distribute that item.
00:30:02.300 | A factory would have stores of its supplies stacked outside.
00:30:06.300 | A grocery store would have stores of its food stacked in the back.
00:30:10.300 | Today, with the revolution in modern transportation and in the ability to manage effectively the system of delivery, most of that has gone away.
00:30:20.300 | If you study the car manufacturers, what they will generally have – if they have an assembly plant, let's say that you're looking at a Ford plant or a Toyota plant, they have the suppliers who supply certain numbers of their parts need to be at the loading dock at a certain time on the day.
00:30:36.300 | The parts will essentially go from the back of a truck directly to the manufacturing line.
00:30:43.300 | The logistics prowess of companies now is truly amazing and it's been so fine-tuned with the onset of computerized analysis.
00:30:56.300 | It's been so fine-tuned and it's allowed companies to significantly reduce inefficiencies and to gain a more – build a more profitable business by having their money much more employed.
00:31:11.300 | Same thing happens in your local grocery store.
00:31:14.300 | And we owe a huge debt of gratitude to the managers who do a tremendous job with this.
00:31:19.300 | I watched this even in looking at the recent Hurricane Matthew operations.
00:31:25.300 | I was extremely impressed here in my local area where even though the bottled water was flying out of the stores, the stores' inventory systems were so good that they had trucks on the road within hours and there were new deliveries constantly.
00:31:40.300 | And many of the stores here locally never ran out of the basic supplies because their inventory systems were so fantastic.
00:31:50.300 | It's truly a marvel.
00:31:54.300 | But there can be problems that come in and that disrupt that system.
00:32:02.300 | Those problems are not usually necessarily going to be localized problems because the inventory system is adaptable and companies can look ahead and see those things.
00:32:14.300 | I have a friend of mine that I worked with at one point on a business project and he was involved in selling a certain type of software to large companies to help them with their logistics.
00:32:25.300 | And he described to me his experience in the FedEx Global Control Center.
00:32:32.300 | And he described what it was like to me.
00:32:34.300 | It's just incredible how you have this global command system, command center in – I forget where it is – global command center and they're watching things all over the world.
00:32:47.300 | And they can reroute trucks, reroute planes, reroute trains with their monitoring the weather events, their monitoring all kinds of things.
00:32:53.300 | And so the systems can adapt.
00:32:55.300 | But there's the possibility that they don't.
00:32:58.300 | And if the systems don't adapt, if there's a large regional event and an earthquake and the highways are disrupted, the train tracks are broken, all of a sudden now the whole system can break down.
00:33:08.300 | Well, in that situation, you're back to depending on yourself.
00:33:11.300 | You can't try it out to publics and get the food that you need.
00:33:14.300 | You need to have some food in the pantry.
00:33:16.300 | And so a severe weather event, especially a severe weather event that's regional, can impact you.
00:33:23.300 | And as a father or a mother, if you are, you know how important it is to have your kids' tummies full.
00:33:34.300 | It makes a big difference to the morale of the house.
00:33:37.300 | Another type of situation that's very, very possible is something like a flu pandemic.
00:33:43.300 | One of the major fears that government planners face is what would happen in the context of a significant viral flu.
00:33:55.300 | Flu pandemics and contagious disease outbreaks have happened systematically throughout history.
00:33:59.300 | Now, here in the United States, we are very good at managing these things.
00:34:03.300 | Think back a few years ago to the Ebola scare.
00:34:08.300 | Think about how tremendous we who are living in a Western society, how good we had it with how well that was managed.
00:34:19.300 | It was truly remarkable.
00:34:22.300 | And again, you should tip your hat to the emergency preparedness people who did a tremendous job of managing that situation.
00:34:30.300 | The devastation that Ebola has wreaked in Africa is worlds bigger than the very small impact that it had here in the United States.
00:34:41.300 | So you can generally expect the best when you live in a Westernized context like we do.
00:34:48.300 | But there are a few small things that can change, and if they do change, a flu or an Ebola virus, things like that, can very easily get out of control.
00:35:03.300 | Well, in that situation, the biggest thing that you face is the need for quarantine.
00:35:11.300 | And so one of the simplest things that you would do is for your own health and safety is voluntarily quarantine yourself and your family.
00:35:20.300 | That's a very effective way of stopping the transmission of disease until it burns itself out.
00:35:27.300 | But how many of us, if faced with a one or two or three month period of quarantine, whether forced or voluntary, how many of us could comfortably pass through that process based upon what's within the four walls of our home?
00:35:45.300 | Not that many.
00:35:48.300 | From there, those are just the simple likely ones.
00:35:51.300 | Look at generalized economic chaos.
00:35:53.300 | Again, study Venezuela. In times of economic chaos, food becomes scarce.
00:35:58.300 | The Wall Street Journal has done a great job of many times posting articles on this.
00:36:02.300 | Their photojournalists have captured some very compelling essays on what's happened down there.
00:36:07.300 | And it's very hard for me to imagine that happening in the United States unless you faced significant stacking up of circumstances, for example, nuclear war and something else at the same time.
00:36:24.300 | But just simply because we have a much more efficient system, the market-based system will supply the needs in a much more efficient way than a centralized system.
00:36:33.300 | But I have to concede that it's possible.
00:36:36.300 | And again, back to that likelihood of threat versus cost of preparing for it.
00:36:42.300 | When you have a threat that is very possible and the cost of preparing for it is actually negative because you actually save money, it's worth considering.
00:36:52.300 | You can go into the more significant events that people are concerned about, regional social chaos like riots, war, government collapse.
00:37:04.300 | You can go into the very significant zombie apocalypse, end of the world as we know it stuff, nuclear war, electromagnetic pulse, coronal mass ejection, asteroid impact, etc.
00:37:16.300 | All that stuff is possible.
00:37:19.300 | A lot of those things I personally look at and say, "Well, I can concede that it's a possibility, but I'm just not willing to do some of the things that other people are willing to do."
00:37:29.300 | But hey, more power to them. That's a lot of times my thinking on it.
00:37:36.300 | But something as simple as food and having adequate food, which is always a first priority and moves you a significant part of the way down towards that type of preparedness, to me is a no-brainer.
00:37:54.300 | I close out the philosophy portion of the show with this important encouragement to you, and then we move to some practical ideas of how to do it.
00:38:08.300 | You cannot trust your personal experience as the primary indicator of whether you should prepare for something, such as whether you should prepare for the need to use stored food or not.
00:38:28.300 | You cannot trust your personal experience to tell you whether you'll need to store food.
00:38:39.300 | The past does not predict the future.
00:38:43.300 | We can learn from the past, but it does not predict the future.
00:38:49.300 | And the challenge of human history is most cycles of human history go beyond your personal experience.
00:39:01.300 | If you've experienced a hundred-year flood in your area, you can't assume that that flood is going to come back in less than a hundred years or that it's not going to come back.
00:39:17.300 | It's called a hundred-year flood for a reason.
00:39:20.300 | The way that you decide what the risk is to your house and whether you should buy flood insurance is not whether or not you've had a flood since you lived there.
00:39:31.300 | The way you determine a risk like that is to study the FEMA flood maps and figure out what flood zone you're in, find out the height of the water for the hundred-year, five-hundred-year flood, and then think about what's been the last time that this has happened.
00:39:49.300 | You can't trust your personal experience for some of these long-term events.
00:39:54.300 | You've got to trust the data.
00:39:56.300 | So this has always been something that I've been very conscious of because of my age.
00:40:00.300 | I've grown up as being 31 years old, born in 1985.
00:40:03.300 | I've grown up in many ways in what I consider to be a golden period of US history and world history.
00:40:12.300 | I've never had something like a US war personally affect my life.
00:40:18.300 | US war, interestingly, I read an article some years ago. Did you know that you can make a strong case that the United States has been at war for 93% of its history?
00:40:32.300 | Research that one if you're interested.
00:40:35.300 | For 222 out of 239 years of US American history since 1976, the United States has been at war.
00:40:43.300 | There's only been 21 calendar years of peace total since the inception of the United States.
00:40:49.300 | Anyway, moving on, my little political jab for those of you who care about such things.
00:40:53.300 | I've never been personally affected by a war.
00:40:57.300 | So when I would talk to my grandparents about what World War II was like and my grandfather was – he served in the military in World War II and he was at D-Day plus three or four or five, something like that, landing on the beach.
00:41:10.300 | He was a meteorologist who was involved in predicting weather for the army invasion in World War II and predicting weather for things like D-Day and the D-Day invasion.
00:41:26.300 | So the role of a meteorologist is very important.
00:41:29.300 | Are we going to be able to make this work?
00:41:32.300 | Are our tanks going to get – not tanks on D-Day but are our tanks in the war effort going to be stuck in mud?
00:41:36.300 | Weather makes a big difference in large wars like that.
00:41:40.300 | But when they would talk about the Victory Gardens and the things, that's all intellectual for me.
00:41:44.300 | I've never seen it.
00:41:46.300 | I've just seen it in textbooks and it's very, very far away.
00:41:48.300 | Even all of the things of the Cold War, I look at these old instructional videos that used to be shown to kids in government schools about how to prepare for nuclear war, how to build a nuclear fallout shelter in your house.
00:42:02.300 | That stuff is so – I mean that's Tom Clancy stuff for me.
00:42:05.300 | I would read about it in Tom Clancy books but I've never experienced that.
00:42:08.300 | But I can't trust my experience to be a reliable indicator of whether or not I should be concerned about such things.
00:42:17.300 | Because if you look at the full scope of human history and if you look at geopolitics on the whole, you see that the actual likelihood and possibility of nuclear war or of significant large-scale global conflict is much higher than my personal experience would lead me to believe.
00:42:41.300 | Right here where I live in West Palm Beach, there's a little island that I like to take the paddle boards out to and it's one of the local party islands where everyone takes their boats on the weekend and anchors up and drinks.
00:42:53.300 | It's called Peanut Island.
00:42:55.300 | And on Peanut Island, it's a bunker.
00:42:57.300 | There's a bunker there where the Kennedy administration, that was their emergency bunker where they would take President Kennedy when he was here on Palm Beach.
00:43:07.300 | If there were nuclear – concern about a nuclear attack, that was the bunker and you can go and tour the bunker today.
00:43:14.300 | It's very interesting. I've done it.
00:43:16.300 | I used to hang out when I was in college.
00:43:18.300 | We used to hang out on the Kennedy property on Palm Beach, the former Kennedy estate right on the water and we'd sneak down there when we were young and foolish.
00:43:27.300 | And we'd sneak down there and just hang out on their property and late at night when I was in college on Palm Beach here.
00:43:33.300 | So, when I see political artifacts like that, when I see artifacts like the bunker, I know that I can't trust my own experience.
00:43:41.300 | I have to look at the data.
00:43:42.300 | I have to look at something that goes beyond my experience.
00:43:44.300 | That's the same thing that you've got to do when you consider something like life insurance, when you consider something like disability insurance, when you consider something like food insurance.
00:43:55.300 | You can't look at these things and say, "Well, no one in my family ever dropped dead of a heart attack," or "No one in my family ever got disabled."
00:44:03.300 | You look at the data and you say, "What would be the impact to me if this were to happen versus if it weren't to happen and is this worth my being concerned with?"
00:44:12.300 | The past is not a predictor of the future, especially your personal past.
00:44:19.300 | But you can learn from the past and especially when things are cyclical, such as hurricanes come, such as winter storms come, such as earthquakes come, such as wars come.
00:44:32.300 | These things are cyclical.
00:44:34.300 | We don't know when they'll happen, but they'll happen again.
00:44:38.300 | And so, your responsibility is to be prepared when they come.
00:44:45.300 | That's what I wanted to share with you regarding the philosophy of food storage, reasons to invest in food insurance.
00:44:55.300 | I've just made the decision I'm going to stop this file and I'm going to release today's show as two separate files.
00:45:02.300 | I was shooting for a 30-minute part one and 30 minutes on part two, but I'm here at 45 minutes.
00:45:07.300 | So, I'll release these two files simultaneously, but for part two of today's show, the practical approach of actually how to practically build food storage for yourself, tune in to the next episode.
00:45:23.300 | Thank you for listening to this episode of Radical Personal Finance.
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