Beyond the Emergency Fund: The Frugal Pantry Project

This is the second article in a five-part series on preparing your household, “Beyond the Emergency Fund.” For five consecutive Mondays, we’ll look at a variety of preparedness methods such as food and water storage, alternative power sources and ways to prepare for specific types of household emergencies.

Last week we discussed the importance of having enough potable water storage on hand for each person in your family in the event an emergency disrupts the flow of public water systems. Moving right up the order of importance, next we’ll discuss food storage – something that can be costly in terms of dollars and storage space.

The 72-Hour Emergency Food Pantry

The initial phase of any good emergency plan is one that covers your family in the event you are cut off from facilities and rescue for 72 hours. In most localized, regional emergencies (floods, earthquakes, hurricanes, etc.) help should arrive within three days. That is not always the case, but in terms of survival preparations, you can usually count on some relief within 72 hours of a disaster.

So first things first. Most people should have enough food on hand to survive three days without a trip to the store. However, if you are the type that shops every evening on the way home from work, you might want to put a little money aside and start your own food pantry at home.

When preparing a 72-hour emergency cache of food, the easiest thing to do is pick up a few extra non-perishables on your next grocery trip. Canned vegetables, dried beans, rice, peanut butter, and canned tuna are a good start. You can add in other snacks to build complete meals if you wish, but remember, chances are you’ll be operating without power and could be heating foods and water on a grill or over an outdoor flame.

Don’t forget to toss in a manual can opener to easily open canned goods. We picked up an extra one and tossed in our pantry next to our emergency food storage because in an emergency we didn’t want to have to be digging through the kitchen drawers looking for our can opener.

The Two Week Plan and Beyond

Scaling up a bit in scope of disaster scenarios, now imagine a regional disaster has occurred and basic services have been disrupted. Foods disappear from grocers’ shelves within three days, and resupply is impossible thanks to impassable roads. Now what?

The answer is a larger, two-week emergency supply of foods. Planning two weeks of meals for each person in your household seems daunting. Remember, when calculating water needs we used the rule of thumb one gallon of water per person per day. Similarly, you might estimate each family member’s basic caloric requirement, and then multiply by 1.5, considering in a survival situation you may be moving, rebuilding, scavenging, etc. and burning more calories than usual.

In our case, I’ve planned using 2,000 calories per person per day. That number is probably a little high, but accounts for tougher conditions than we are used to living with, when we might be able to lounge around and get by on 1,200 – 1,500 calories.

All Calories Are Not Created Equal

It might seem easy to come up with 1,500 calories worth of food by eating rice, pancakes and canned veggies and fruit. The problem is, that type of diet is severely lacking in two main types of foods essential to survival: fats and protein.

Rather than reinventing the wheel, I’d suggest checking out The 5-Gallon Bucket Food Storage Project created by Jack Spirko (creator of one of my favorite sites/podcasts, The Survival Podcast). Even if you don’t follow his storage methods, his ideas on planning for proper carbohydrates, fats and proteins in survival food stockpiles are important.

Prepackaged Long-Term Storage Food

If you aren’t up for creating your own food buckets you might want to check out long-term food storage vendors. I have personally tasted (and stocked) Mountain House foods. In fact, our pantry now includes a number of #10 cans from Mountain House, including foods like rice, green beans, beef stroganoff, spaghetti, chili mac with beef, granola cereal, etc.

The #10 cans have a 25-year shelf life if stored according to the directions (basically kept in a cool, dry location). I’ve also heard good things about companies such as Food Insurance and Shelf Reliance, but I have yet to try their products.

Here’s a look at our emergency food pantry – still in the early stages:

The Frugal Pantry Project (long-term storage) – a few #10 food cans, a lantern, flashlights, spare batteries and a few packs of beans and rice

Buying foods in this form is expensive, but the nice thing about such a long shelf-life is that you don’t have to focus on expiration dates and rotating stock as much. With a 25-year shelf life, we can basically buy a few #10 cans each paycheck, store them and forget about them until we need them. I suppose in 15 years or so I might crack one open and make sure it is still edible.

The bottom line when it comes to food storage is to start small. Consider the various disaster scenarios for which you’d like to be prepared, and their likelihood of occurring. For instance, a local natural disaster such as a tornado or a flood is more likely than a large scale, apocalyptic nuclear attack. Not saying we shouldn’t be prepared for both. However, I like to prioritize emergencies and plan accordingly.

With monetary emergency funds we try to get that first $1,000 stashed in case of a car repair, or busted pipe in our home. Will this prepare us for unemployment or a serious medical event? No, but that doesn’t mean we can’t get started. Similarly, I think it is prudent to have a few backup food and water supplies at home to get you through that likeliest, 72-hour emergency.

Once that first-level emergency food plan is in place, build from there until you have a level of emergency stockpile that makes you feel comfortable. How will you know when that point has arrived? When you can envision practically any type of emergency and sleep comfortably knowing you have done all you can do to prepare.

What Will Retirement Look Like for Younger Generations?

Earlier this week, I read the thought-provoking post at Get Rich Slowly, What Is Retirement? J.D. wrote about a recent camping experience with a few buddies and shared some of their conversation on the subject of retirement. One of the friends pointed out that he already thought of J.D. as “retired,” since he left his corporate job a couple years ago and now worked on his blog full-time. While J.D. does enjoy some schedule freedom, he still “works” at his writing craft. It does make you rethink the definition of “retirement” though, doesn’t it?

a flying lesson by my camera and me on Flickr

Shifting Views on Retirement

When I was a kid, my personal view of retirement was skewed significantly by the fact my grandfather retired from the Marines at 47, my grandmother was mostly a homemaker (particularly in her later years), and my mom was a single mom working 50+ hours a week in corporate America with no retirement in sight.

As I got older, I had friends whose parents were teachers, nurses and factory workers who had dedicated most of their adult lives to a single employer and retired from their chosen occupation. It wasn’t long before I recognized that was becoming the exception.

As our economy shifts away from manufacturing (something I personally find very sad), and into service, I think people will be more likely to change jobs dozens of times in their lifetime. I’m a bit of an exception to the rule myself. I’m in my 30s, but have worked for only two employers in my adult life (with a bunch of part-time gigs at different companies before that).

How Does this Relate to Personal Finances?

With all this job-hopping, the emphasis on personal responsibility for your financial future cannot be emphasized enough. Add in the question of social security’s solvency, the disappearance of the corporate pension, and the possibility of state bankruptcies, and you can easily see we are walking a financial tightrope with no safety net.

Younger generations must be more engaged with their finances than the “set it and forget it” generations before them. It used to be acceptable to plow all your money into 401k mutual funds and company stock. Ever heard of Madoff, Enron, or those target-date retirement funds with overly-aggressive allocations for soon-to-be retirees?

Forty year-olds with five previous employers may be sitting on five different 401k plans with bad administrators cutting into their profits with costly administrative fees. Rolling all those 401ks into an IRA might make sense, but the process can be overwhelming. And there’s always the temptation to cash out when you leave an employer – something that looks appealing, but can easily cost you nearly 40% in taxes and early withdrawal penalties. Ouch!

I’m not against 401k plans, particularly those that offer a matching contribution from employers, but if I had to choose, I’d much rather invest in a Roth IRA. Roth IRAs offer more freedom in terms of investment elections, and they offer the advantage of tax-free growth on earnings (you can even withdraw your Roth IRA contributions any time, penalty-free, in a pinch). And because Roth IRAs may be opened and maintained independent of your employment status with a particular employer, they make a lot of sense for younger generations of workers likely to bounce around the employment world before needing retirement funds.

Do I Even Want to Retire?

Back to the post from J.D; is he really retired if he still works several hours a day? I don’t think so. Has J.D. chartered a course of more personal freedom, rather than being chained to a desk eight hours a day, five days a week? Absolutely.

Perhaps we should change our definition of retirement. Or, maybe we should just expand our definition of self-employed. Were it not for a need to earn additional income, I’d say a full-time writer is mostly financially independent. That is, they no longer need to work for money to cover basic life expenses.

I believe most of us will enter a stage of semi-retirement when we get a little older. We’ll live off a combination of savings and part-time earnings, and be able to afford it by getting out of credit card debt and paying off the mortgage well before exiting full-time employment. Couple that with a frugal existence, and it wouldn’t take all that much to enjoy a lifestyle of more personal freedom.

Imagine getting to travel when most people are working. Imagine spending more time with your kids and grandkids – perhaps even homeschooling them if that is something that interests you. Imagine taking up a new hobby during the day, or volunteering more of your time. It’s all achievable, but not without some sacrifice up front.

I remind my kids, and any other young person I meet, to avoid making the big financial mistakes early on. If you do, you’ll have limitless opportunities to enjoy the next few decades of your life, while your peers will be paying for their mistakes.

Weekly Roundup: Reader Feedback Edition

This fall, I plan to begin work on developing additional content packaged to sell here at Frugal Dad. Over time, I would like to transition out of certain types of advertising and limit ads here to my own products, and private advertising deals, exclusively.

I’ve written about a lot of topics over the last three years, so coming up with something to focus on – that might also have commercial appeal – is difficult. That’s where you can help.

What topics would you like to learn more about? Which topics do you think might be of interest to the casual first-time visitor here at Frugal Dad? Perhaps a get out of debt guide? Or maybe a kids and money themed activity book? Are there seasonal opportunities – graduation, Christmas, weddings, summer home preparation, etc? Thanks in advance for helping me brainstorm.

The Frugal Roundup

The Family That Saves Together. Trent’s family reminds me a lot of my own. I’ve always thought the best way to instill certain values in children is by modeling it for them on a day-to-day basis. (@The Simple Dollar)

What is Retirement? I used to think retirement was a gold watch and a big send-off. Now, I think it’s a big non-event. I suspect most of us will be transitioning from fully-employed to semi-retired to downright unemployed for much of our lives. (@Get Rich Slowly)

5 Ways The Recession Has Changed Consumerism In America. Hey, I never thought I would see all of the “warnings” on credit card statements either. (@ My Dollar Plan)

Making Time For The Details. Just a quick reminder to keep things in check. (@brip blap)

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What To Do When Your Beneficiaries Are Minors

The following is a guest post by Neal Frankle. He’s a Certified Financial Planner and blogs at Wealth Pilgrim. Neal writes about taking action steps to improve clients’ financial situations and finding balance at the same time.

If you name minors as beneficiaries of your trust and/or your IRA you face a unique dilemma.

You may want to leave money to the kids. But you may fear they don’t have the experience or maturity to make smart decisions when it comes to cash.

This can be especially difficult when there are no adults that you trust enough to put in charge of the money.

What should you do?

Let’s resolve this problem by first looking at the trust money.

If you name minors as beneficiaries of the trust, you will have to find an adult that can administer the assets (at least) until they reach the age of majority or longer. You don’t have a choice.

This person doesn’t have to be the parent or guardian of the children but it must be someone you trust and someone over age 18.

Keep in mind that you can change this person as often as you like. Your trust is a living/breathing document. Nothing is cast in stone.

You can also name a professional trustee – although I don’ recommend it.

And remember – a miracle could happen. You might live long enough for the minor to become a responsible adult. This is exactly what happens most of the time.

What I’m saying is, when it comes to your trust, don’t get worked up over nothing. Do the best you can. Name the best trustee you can. Consider this issue well while you’re drafting your trust but don’t worry about doing it perfectly. You can always make changes later.

Your IRA beneficiary is a different story. If you name a minor as a beneficiary or contingent beneficiary, special rules apply.

If your IRA beneficiary is a minor when you die, the minor must set up a beneficiary IRA (because the minor (hopefully) isn’t your spouse). Different financial institutions treat this issue in various ways.

Some companies will allow the minor to set up the beneficiary IRA. When the minor does this, she’ll have to name a “custodian” who is over 18 years of age. This is the IRA equivalent of a trustee. This custodian signs the application and makes decisions about withdrawals on behalf of the minor.

The problem is that your financial institution will probably allow your minor to name anyone he or she wants as “custodian” of the account.

You may not want this.

For example….let’s say your 17 year old daughter names her 19 year old boyfriend as custodian. Is that really what you had in mind?

I don’t think so.

The solution?

Take care of this now.

If you name a minor as beneficiary (or contingent beneficiary) in your IRA, amend the beneficiary document now. You can simply spell out (on that document) who you want the custodian to be for your minor beneficiary. While the financial institution isn’t obligated to honor your request, they probably will.

Problem solved…if you take action.

Note from Frugal Dad:  Neal and I have discussed this very matter on several occasions as our family’s situation changed a bit after my mom’s death last year. We had to appoint a new trustee/guardian for our kids as part of the painful (but necessary) process of updating our wills. Because probate/estate law can vary from state to state, I highly recommend consulting an attorney and/or a certified financial planner in your area to help draft the proper documents.

Beyond the Emergency Fund: Water, Water Everywhere, but Not a Drop to Drink

This article is the first in a five-part series on preparing your household “Beyond the Emergency Fund.” For five consecutive Mondays, we’ll look at a variety of preparedness methods such as food and water storage, alternative power sources and ways to prepare for specific types of household emergencies.

On the scale of household emergencies, being without fresh drinking water has to be right at the top. While most people can survive weeks with little or no food, none of us can go more than a few days without water. In extreme conditions, such as the heat wave many have been suffering through this summer, that survival time is even lower as excessive sweating robs our bodies of even more fluids and minerals.

Bottling Water by metdevthegamer on Flickr

Storing Water – Inside Storage

Short of building your own water filter, most of us have to resort to storing water. There are a number of ways to store water, but making it safe to drink is another matter. How much water should you have on hand? A good rule of thumb is a gallon per person per day.

Every paycheck, we’ve been ordering a couple Reliance Products Desert Patrol 3 Gallon Rigid Water Containers. At 3 gallons, it is not so heavy that my wife and kids couldn’t lug a couple in an emergency, or if I wasn’t there or was out of commission. These rigid style containers are more durable than gallon water jugs, so they are less likely to leak.

Another idea to consider is to have a back-flow valve added to your hot water heater. If you lose water pressure, this valve prevents water from draining out of your tank and back into the local water supply. I recommend a professional installation by a plumber, because an improper installation could cause bigger problems.

In a pinch, you could tap your water heater as a water source, but I would recommend filtering and/or boiling the water to filter away any materials from corrosion inside the tank, and reduce the chance of bacteria being present.

If you know an emergency is coming (hurricane, flooding rains, etc.) that might negatively affect your public water system, a product such as a Water Bob can be used to collect and store water in your bathtubs. These things hold about 100 gallons of water, and I suggest filling all bathtubs in your home ahead of an emergency. Covering the Water Bob with towels, and keeping the room dark will help prevent light from hitting the water (limiting bacteria growth).

The rain barrel by madmack66 on Flickr

Storing Water – Outside Storage

We are in the process of adding gutters to our home. When the installation is complete, we plan to hook two of the gutters at each end of our home to 65-gallon rain barrels. The rain barrels’ primary purpose will be to irrigate our square foot garden and other plants, but the barrels will also serve as a backup water supply. Again, it’s important to note that standing water must be treated and/or boiled to be made safe for human consumption.

It’s worth noting here that boiling water requires a heat source. While I plan to cover this in much more detail later, a very basic household emergency kit should include the equipment and fuel to boil water.

Just remember, in time, all fuel sources run out. Propane tanks and hand-held lighters eventually empty. Electricity could be cut. Matches get used up. You may have to think more primitive to be ultimately prepared. A large magnifying glass trained on paper or dried leaves can start a fire. A flint strike can throw sparks hot enough to start fire. And of course there is the old stick-rubbing exercise that never seems to work in real life emergency scenarios.

If boiling water is not practical, or you lack a heat source, there are products available to treat water to make it potable. Polar Pure Water Disinfectant is one such product, but there are many options available. Coffee filters are also good to have on hand for filtering out any sediment found in your water supply.

This post has primarily focused on storing drinking water for emergencies, but there are plenty of other uses for water around the house (and ways to find it). There’s cooking and cleaning and – flushing. What’s that little rhyme we’re taught if the water is turned off? If it’s yellow, let it mellow. If it’s brown…I digress.

As I was saying, items like rain barrels are nice to have around for catching rain water to use for crop irrigation, and for other household uses (yes, like flushing). In addition to your rain barrel, you might investigate building a solar still in your own backyard to collect distilled water for drinking. This is actually a fairly safe way to create your own drinking water in a pinch, assuming your collection methods are all sanitary, and there are no toxins in the moisture trapped below your still.

Remember the old rule of thumb: Humans can live 3 days without water, if sheltered, and 3 weeks without food. When survival planning, start with the worst care scenario first and build out from there. Have shelter? Check. Have three days of water for every person in your household (including pets)? Check. Have a one-month supply of water, or a reliable method of collecting water from the environment? Well, that might take some time and money. But the peace of mind is worth the investment.