Saturday, December 31, 2022

Windfall planning

Let me propose a mental exercise. Don't worry. It will not hurt.

Suppose Biden's handlers decide to give every adult in the US $1000 in 2023 as an "inflation adjustment".

Further suppose that the stimulus is likely to increase inflation as more dollars will be chasing existing goods and some workers sitting on the sidelines might decide that they do not need to return to productive work for another month or so.

Some people will use it to buy lottery tickets. Others booze and cigarettes. Some will purchase shoes. Still others might visit an all-inclusive resort. Others might pay down a credit card.

The question on the table is: "If you were to receive a $1000 windfall, what would you invest it in?"

To make it interesting, why do you think your choice would either "retain value" over the 2yr-to-10yr time horizon or become very difficult to replace in that time-frame?

We would probably invest in a newer vehicle for Mrs ERJ. Her 2008 minivan has 300k miles on it. A seven-year-old, base-optioned, smallish SUV like an Equinox or Escape or Sportage would probably be right in the sweet-spot. Even better if it was from down-South where they do not salt the roads. 

I have to admit that I am leery of the turbo-charged engines they are cramming into vehicles now. I am even more leery of that all-electric options that seem to be flooding the field.

---added later---

One of the key characteristics that separate the financially competent and the poor is that the financially competent see income-and-expenses on a continuum while the poor are perpetually surprised.

The basic instinct of a poor person is to "Spend it quick, before it disappears". Windfalls come in and PRIOR COMMITMENTS rise up like the kraken's tentacles out of the deep. the windfall disappears like urine sinking into a sand-dune with no (perceived) benefit to the poor person's lot in life.

Poor people do not mentally "book" the expense when it is made but when it is paid. And since human wants ALWAYS exceed budget, poor people are always surfers on the back-side of the wave, paddling like crazy-mad to just stay even.

The financially competent have plans for windfalls. We know they happen sometimes. And the worst time to plan is when the bullets are whizzing over head or you have 10, crisp, new Benjamins in your paws.

Far better to do it while those are still hypotheticals.


  1. Ammo. Fill in a couple of calibers that are a bit thin. Balance in FMJ for practice, as shooting skills are perishable.

  2. I looked at those vehicles a couple years ago; I'd suggest you stay away from the small US SUVs of recent years and go up a step to an Edge, Traverse, etc - they are about the same price but more solid, more reliable, and can carry or tow more.

    As for me, I'd probably put it towards a small solar system, though precious metals or long term storage foods would be serious contenders, but I'm weakest on backup power so I'd likely focus there.

  3. Last go round will be a pattern for the next, took the cash to a LOCAL gunshop, did a no-haggling exchange. Key point, build local relationships. Relatonships will pay more 'interest' and are inflation resistant investments.

    A little East of Paris ....

  4. $200 Ammo
    $500 Generator
    $275 Misc food, materials, prep gear
    $25 Whatever decent cigars I could find

    1. Good luck on that generator, we just purchased a new Honda. 2200 for $1400 to replace the one that had ten years service on our off grid homestead charging batteries a couple hours every couple days. We are far enough north that solar doesn’t cut it too much of the year!

    2. Plenty of generators in the $500-$600 range.
      I need one for survival use, not everyday living.

  5. I’d probably cash the check and reserve it to pay for bulk firewood or gas and propane. Local wood cutters appreciate no having to drive 40 miles one way to the nearest bank so they can pick up groceries at he local store and I’m no longer able to haul all I need out of the woods.

  6. The average person has trouble seeing beyond next month. Many can't see beyond next week. When you can't see what the future may bring it's tough to plan for it. Personally an extra thousand bucks would likely be used to acquire more gold/silver. I have money, still earn plenty and have no debt to speak of. Savings in banks is pointless with the current inflation rate. So acquiring something tangible that can't be inflated away is never a bad idea.

  7. This is going to happen in Canada soon. Maybe buy a Gen?

  8. "Spend it quick, before it disappears" is actually a right and proper response in high inflation.

    Perhaps pre '64 us silver coinage. Easily recognizable, likely to retain it's value (or better), and unlikely to be outlawed.

  9. I'd probably lay in some more heating oil: I know I'm going to use it, and it's not likely to get cheaper or more available.

  10. Joe problem with a used vehicle in the 2K range (1k per adult x both of you) is your buying other people's problems. That's why it's for sale. Better to fix the problems you know in my experience.

    Now if a few of you are cooperative enough to share vehicle use and repairs then you have more of those 1K "Freebees" to combine for a better group vehicle. BTW in my decades there have been NO Freebees as Uncle Sam figures out how to take it back by taxes (and you continue to PAY for it years after you forgot the freebees) or inflation.

    In this case freebees makes ALL my savings and fixed income LESS Valuable and thus maybe more dependent on Uncle Sam's ongoing "adjustments"?

    If you've 2 years food set aside and water purification set up, I'd suggest a Chaos Kit.

    Most folks I know would be hard pressed to respond well to being awaken at O dark 30 with a power outage, snowstorm and a crash from a branch through a large window.

    Let alone angry youths (Sarc) doing random vandalism, robbery like Buffalo "Enjoyed" last week. Windows go fast when things get weird.

    Running around in the dark looking for working flashlights (Headlamps far better), sheet plastic, nails-duct tape tools and etc. while sleet and snow rages around the living room. OH, were you wearing clothes enough? OH, did you have shoes on as cut feet really suck right now?

    OH, do you have a realistic PLAN to get that glass out of the wall-to-wall carpeting as to prevent ongoing glass-feet-paws problems? No vacuum cleaner until power restored.

    Home repair items are REALLY HARD TO GET when things get weird. Ask anybody after a hurricane. Lowes might not be available due to above mentioned "Youths".

    Something to think about. Chaos is coming.

    1. Agree about vehicles in $1-to-$2K range. We would add another $8k (probably) to get closer to the middle of the trading range for that class of vehicles.

  11. Tough one, as $1000 isn't much any more. And the announcement of the giveaway would probably trigger even more inflation - just as it did in Weimar Germany. So it would make sense to spend it right away, on things that hold value. We need another AR and some spare parts, so I'd probably do that. If we already had it before the giveaway, I'd use it for farm infrastructure. I need to build a small barn to expand our pig breeding operation. Being able to produce one's own food is a powerful advantage in hyperinflationary times.

  12. We just received a windfall like that via a check from a relative in a Christmas card. We don't have any debt, have some savings and what's left in the 401K after this last couple of years. So we just cashed the check and put it in the safe with some of it's brethren, right next to a few round, pointed projectile hurlers and the projectiles they hurl.

    Thought about a newer vehicle, but I have my truck and my wife doesn't drive anymore so why invest in something that's just going to sit in the driveway all the time.

  13. RE: ""Spend it quick, before it disappears" is actually a right and proper response in high inflation."

    Rather then "spend" I'd vote for "invest" in reliable long-term physical goods that offer value beyond the purchase price - perhaps a quality generator, a reliable and "many parts readily available everywhere" firearm, quality hand tools (for use when there's no electricity to power the others), very well made high quality "everyday" clothing, etc.

    "There's a very nice empty house on the other side of the river we can live in" is workable as long as there is a safe way to cross the river. I suspect we'll all be wading deep water sooner then we expect.

  14. Good thought experiment.
    We keep a list of maintenance and improvements to work on through the year. Helps keep us focused and prioritize efforts.

    Propagating fruit trees and bushes from cuttings is high on that list. Not a huge dollar cost up front, but not change either.

    Seed and fertilizer, especially fertilizers.

    Repair parts for tractor, car, truck. Tires, belts, lubricants, and filters aren’t getting any cheaper.

    Canning supplies are always on the list as budget allows. We’ve been mulling a second pressure canner recently. It would sure speed things up during the fall rush.

    Also bulk sugar and salt. They store well and are essential to putting food by for the winter.

    1. It would be a partial gain to have two kettles going. One is the pressure canner. The other is an open-kettle that you are using to "pre-heat" the filled jars.

      A sense of timing is required. Run the incoming jars in "pre-heat" until the finished goods in the pressure canner drop down to ambient pressure. Then pull the finished goods and move pre-heat to pressure canner.

      It make the heat-up to 14psi much quicker but it will NOT double your throughput.

    2. Get non-iodized salt from restaurant supply houses for use in preserving meat. 33# fits in a 5 gal bucket

  15. You also need to consider some groups have no belief in the future, that tomorrow may never come. I saw this with the Inuits in Ft. Chimo, planning was always short term. They caught salmon or stocked up on caribou more because of tradition. If a snow machine broke, well just leave it. If a boat motor failed, so be it.
    You see the same thing in urban areas. Live fast, take high risks because you're dead anyway.

  16. Some food, perhaps some silver. A home improvement or repair.

    Honestly, I would also take at least a quarter of it and buy up more Loeb Classical Library books. I continually worry about knowledge not being available or being filtered.

  17. Unless someone is in a bad debt position I pretty much believe it should be spent on more lead, because it doesn't matter how much you have, if you can't protect it you don't really own it.


  18. My wife's response was "Give it Back".
    We got the automatic payments in 2021 despite not being eligible, so we had to repay them in our taxes.

    For everybody else, don't forget you'll have to pay taxes on this if it happens!

  19. Medical supplies, comm supplies, and reloading supplies, in that order

  20. I'm not sure, but I would probably do some repairs and tires on my old pickup and lay in more oil and filters for both vehicles. I only drive about 3,000 miles per year since I retired. The truck is my backup transportation for when the car breaks down, and for whenever I need to pull a trailer. Truck is a 1991 and car is a 1997.

    I used the previous stimulus payment to bootstrap a business selling stuff on fleabay. That has been a good investment.

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    Apply the instructions on this site..

  22. Starting a new job next Monday, so right now 1000$ would be for immediate cash flow.
    But for supplies, another 1/2 hog, water filter cartridges, another 100# of wheat.
    For sustainability, add on to the RV's solar system.
    For investment, maybe 2-3 pistols in popular formats. Firearms are at a very low point pricewise right now.
    For home purposes, service the HVAC and clean the ducts, spend what's left on a stack of plywood. Lumber is 70% off last year's highs, so I'd be holding out for a really good price.
    For vehicle purposes, a full-size spare for the wife's Explorer and oil and filters for both our vehicles. My diesel pickup costs almost 300$ just changing the oil and filter and the fuel filters. Maybe serpentine belts for both vehicles too.
    For barter, 500 rds each of .5.56mm and 9mm, spend what's left on .308 or .44.
    For fun, buy a new tandem kayak to replace our old, heavy, leaky, uncomfortable, heavy kayak. It's heavy.

    1. Whoo, barter ammunition is a good answer. If the other party is trustworthy, you can get A LOT of return on this item. First priority is know that you yourself can use it in your own firearms.

      Some five round boxes of 12 or 20 gauge buckshot and/or slugs would have a lot of customers (one of the most common firearms owned, behind rimfire firearms of course). Wouldn't take up too much space either.

      Good thoughts Anon 5:53.

  23. I've learned to budget my property tax payments far ahead of time, due to *surprise emergencies* occurring right near the end of the year.

    An extra grand - I have time to ponder it. Nothing outstanding I can think of and a job loss of several months would be no problem.


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