When a company declares bankruptcy, the court appoints an executor or liquidator to oversee the business while it is in bankruptcy and the liquidation of its asset. The liquidator for FTX just filed their first report with the court and, according to this article on Zero Hedge, “boy is it a doozy.”
The company didn’t know how much money it had or where it was. No one knows how much cryptocurrency it held, where it is stored, and what happened to it There is no accounting of how many bank accounts it had, or even how many employees . They appear to have broken all kinds of bookkeeping rules, financial laws, and had a failure of common sense. The report makes me wonder how they existed as an ongoing concern as long as they did. I suspect the average small business with just ten employees is operating better than this financial giant.
What, you may ask, does this have to do with prepping? Well, some mistakes made by the leaders of FTX are like mistakes people make while managing their own affairs. If your financial life is in an equivalent state of chaos, you can learn some lessons here.
First and foremost, anyone of us may die or become incapacitated at any time, leaving others to try to manage, account for, and dispose of our assets. We should make it as easy for them as possible.
Second, keeping track of your assets, including precious metals, cryptocurrency, and guns is a good idea but can be challenging. Failure to do so could cause those assets to become lost or unrecoverable.
Third, having a budget and good financial controls will make your life easier and help you stay in control of your finances.
Let’s look at these in greater detail as they might apply to preppers.
Around age 50, you begin to realize that people all around you are dying. Your parents and other family members in the generation ahead of you are just one example. We’ve had friends our age get massive heart attacks, die of cancer, and become victims of ALS. After cleaning out your parent’s attic, trying to sort through their assets, and determine who gets Aunt April’s tea set, you begin to realize you need to do some purging and planning of your own.
I recommend everyone, prepper or not, have a will. Even if you have one spouse and one kid, you should have a will to make things easier on them. If you have young children, be sure to appoint a guardian for them. If you have a large life insurance policy or an estate of $1 million or more, I would recommend a trust in addition to the will.
Along with the will, you should have a document granting someone else Power of Attorney so they can sign for you should they become incapacitated or otherwise unable to do so. You may also want to have a living will sometimes called an advanced medical directive, and a health care power of attorney. This will prevent your family members from fighting over whether to let you die a natural death or keep your body alive if you become are brain dead.
Without these documents, a good chunk of any money you had hoped to leave to your heirs may well get eaten up by legal fees. Dying without a will also means a judge will decided what happens to your estate.
Tracking Your Assets
Some of the cops I used to work with had bank accounts they called “squirrel accounts” because they would squirrel away money from working off-duty. That way, they could spend money without their spouse tracking every penny. If you have bank or other accounts your family isn’t aware of, it’s a good idea to make a written record and store it in a sealed envelope for your executor. While you are at it, include a written list of important passwords.
If you have stashes, caches, or hidden gold, cryptocurrencies, silver, or guns, share that information with a close family member who does not live with you, just in case. Alternatively, you can put it in a sealed envelope and store it in a safe deposit box or ask you attorney to hold on to it. When I put things in sealed envelopes, I sign my signature in colored ink over the envelope seal and then put tape over that. This makes it difficult for someone to open the envelope undetected.
If you own an LLC or have a gun trust, this information should also reside with someone who can keep your confidences. Its not unusual to have real estate owned by an LLC, so make sure there are legal plans on what happens to the LLC and the real estate if you die as the sole member of the LLC. I recommend an attorney help you with this.
If you are lucky enough to own a healthy small business, then make sure you have a plan covering who inherits as well as who will run it. Or, if you want it sold, specify that as well.
Gold, Cryptocurrency and Guns
Let me stress how important it is to tell someone about your gold and cryptocurrency assets. If you are the type of prepper that hides stuff in wall, behind electric outlet faceplates, or buried in the back yard, make sure someone knows that. If you have a hardware wallet, take some steps to make sure that the people who clean out your desk once you aren’t around don’t toss it because they don’t recognize its value. Right now, this is one problem the liquidator for FTX is facing. No one knows what happened to their cryptocurrency. Unless you are intentionally hiding your assets from the government or ex-spouse to prevent seizure or taxation, you don’t want to be in this boat.
If you have multiple firearms, I recommend you keep a list of each one and its serial number. If someone beaks into your car and steals your Glock 17, you need to give the police the serial number. Otherwise, when the gun is used to commit a crime, the police will track it back to you and you’ll have some explaining to do. It might be a good idea to take a digital picture of your gun to show how it is configured plus a close up showing the serial number.
If you want to leave your guns, or any other personal items, to specific family members, write this down and leave it with your will. Your executor can only honor your wishes so your brother gets your 1911 and your daughter gets the Colt Woodsman if he knows that’s what you want. Having your wishes in writing reduces arguments.
Financial Controls and Budgeting
I don’t blog about this enough, but I think you should strive to live life debt-free. Yeah, I get it, you need a mortgage to buy your first home. At some point, however, you should pay off your mortgage, buy your cars for cash, and never let your credit card balance go unpaid long enough you are required to pay interest at 20 percent or more.
One way to do that is to develop a budget, hone it down, and then stick with it. Then track your spending. If inflation busts your budget, you’ll be able to see where your spending is rising and make adjustments.
I give myself a maximum amount to spend every month. I also limit myself to buying one gun a year. So far this year, I haven’t bought a gun, but I bought a new upper and a new 1-8x Vortex scope, so I am counting that.
Living on a budget means sometimes you buy something expensive early in the month and then have to watch every penny for the rest of the month. Other times, the end of the month comes along and you have leftover money. The smart thing to do would be to save it, but you can also use some of it to reward yourself and save the rest.
Budgeting also means planning so you can save for big purchases. If you know you are going to need new tires this year and they cost $1,200, start saving $100 a month and in a year you can afford new tires.
Let’s say you want to buy a house bu interest rates are too high. That’s OK. Keep saving your money. One day, either the rates, the housing prices, or both will come back down and you’ll be in great shape to buy your house.
It’s also a good idea to have an emergency fund you can tap into to make repairs or pay for other emergencies. This way, if your front tire blows out and you need to buy four new tires because you have an all-wheel drive vehicle, you can tap into it rather than putting the charge on your credit card. Dave Ramsey recommends your emergency fund have enough to support you for six months. I can’t argue with that. It would make getting laid off, as discussed in yesterday’s post, easier to handle.
Your Impending Death
No one likes talking about their impending death, but you need to get over that and face it head on. It is, after all, inevitable. Whether you get gunned down saving a group of school children and die a hero, get killed in a head-on collision with a drunk and die a victim, die from cancer or another disease, or live to a ripe old age, isn’t something we can predict or control. All we can do is make it as easy as possible on those who we leave behind. One way to do that is to have your affairs in order. If we knew the date of our demise, that would be easy, but since we don’t we must keep our finances in good order and our assets defined, and let our family know we love them every time we leave the house.