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How to live on 10K a year or less

How to live on 10K a year or less

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    Liveon10 K Liveon10 K Document Transcript

    • How to Live on $10,000 a Year…or less… (Even in 2008!!) © 2005 - 2008 George A. Ure www.urbansurvival.com September 6, 2008 (Second Edition) Page 1 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Table of Contents Table of Contents ................................................................................................................ 2 Preface to the Second Edition ............................................................................................. 4 Introduction ......................................................................................................................... 5 Introduction ......................................................................................................................... 6 Mindset Is Hardest .............................................................................................................. 6 A California Example ......................................................................................................... 7 Learning from Ratios .......................................................................................................... 8 A Quick Math Refresher ................................................................................................... 10 Defining the Elements of Lifestyle ................................................................................... 11 Picking Where to Live ...................................................................................................... 11 State Tax Considerations .................................................................................................. 14 Federal Tax Considerations .............................................................................................. 14 What You Have to Give Up .............................................................................................. 16 Section 1: Transportation .................................................................................................. 18 Say Good-bye to Status ................................................................................................. 18 Rethinking Status .......................................................................................................... 20 Assessing Transportation Needs ................................................................................... 20 Make Payments on Time .................................................................................................. 22 What Kind of Car? ........................................................................................................ 22 The Used Car Myth ........................................................................................................... 23 Section 2: Housing ............................................................................................................ 24 Haunting Craigslist.org ................................................................................................. 24 Find a Really Cheap Town to Call Home ..................................................................... 25 How’s Our Progress? .................................................................................................... 26 Is it Time to Move? ........................................................................................................... 27 Paying Off Debt ............................................................................................................ 28 The Predatory Nature of Debt ....................................................................................... 28 Section 3: Food Costs ....................................................................................................... 29 Important Advice on Drinking ...................................................................................... 32 Beer ........................................................................................................................... 32 Wine: ......................................................................................................................... 32 Hard Liquor ............................................................................................................... 32 Conclusion: ................................................................................................................... 33 Section 4: Communications .............................................................................................. 33 Section 5: Medical Expenses ............................................................................................ 34 Section 6: The House of Your Own ................................................................................. 36 Section 7: Psychological Aspects of Change .................................................................... 37 Steps of Major Change.................................................................................................. 38 Less than $10,000 ......................................................................................................... 39 The Evil of Interest ....................................................................................................... 40 Predatory Lending ......................................................................................................... 40 Where the Housing Bubble Came From ....................................................................... 41 Adding Up Your Interest Payments .............................................................................. 43 Page 2 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 66 Tips From the Government .......................................................................................... 44 Transportation ............................................................................................................... 44 Insurance ....................................................................................................................... 45 Banking/Credit .............................................................................................................. 46 Housing ......................................................................................................................... 48 Utilities.......................................................................................................................... 49 Other ............................................................................................................................. 50 To Summarize ................................................................................................................... 51 Bonus Section #1: Leveraging Up from $10,000.............................................................. 52 Bonus Section #2: How to Build Anything...................................................................... 54 The Hidden Recipe ....................................................................................................... 54 Important Disclaimers and CAUTIONS ....................................................................... 56 Carpentry....................................................................................................................... 57 Plumbing ....................................................................................................................... 60 Electricity ...................................................................................................................... 62 Drywall ......................................................................................................................... 64 Tool Shopping............................................................................................................... 65 Planning Tools .............................................................................................................. 66 Cutting: - General ......................................................................................................... 66 Cutting - Wood ............................................................................................................. 66 Cutting - Metal and Plastic ........................................................................................... 66 Joining (*including Unjoining) .................................................................................... 67 Unjoining: ..................................................................................................................... 67 Finishing ....................................................................................................................... 67 Other Shop Items .......................................................................................................... 68 House and Farm Reconstruction ................................................................................... 68 Afterthoughts .................................................................................................................... 70 Page 3 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Preface to the Second Edition Since the first edition of this eBook was published in January of 2005, more than 12,000 copies have been sold to people – like you – who were interested in reducing their cost of living. Many have offered additional suggestions on ways to reduce expenses and to them we’re grateful for the feedback and for being willing to share with us and future readers. As the times have changed, so has the economy of the United States – the playing field we are all on. Foreclosures are becoming commonplace, and in 2008 were up 65% compared with previous annual rates. The number of Americans losing their homes is both astounding and a national disgrace. The cost of living has continued to soar, increasing at the grocery store much faster than the “officially reported” rates. We have asked, many times on the www.UrbanSurvival.com web site about this, but the answer is simple and twofold. First, the government has an incentive to under report inflation because it drives government costs: Social Security and Military Retirements are just two large budget items that come to mind. Further, economic policymakers are loathe to use the entire Consumer Price Index (CPI) number, preferring to base their “guesses” about what’s ahead on the so-called core rate of inflation. That’s inflation minus the cost of food and energy. I don’t know about you, bu5t I think it’s hard to live without both. Last, but certainly not least, economists are starting to agree that the U.S.A. may indeed be headed into a recession in late 2008 – or worse, a Depression. If you think my comments to the idea of a Second Great Depression that may be implied by the contents of this eBook are “alarmist”, please consider the words of Reagan-era inflation-fighter former Federal Reserve Chairman Paul Volker told members of the Joint Economic Committee of Congress on May 14, 2008 about the recent banking crisis that to me seems to be gathering steam: “It is recognition of those extreme and unsettling market disturbances that conceptually has justified official intervention in free markets. That intervention has taken the form of regulation and supervision and of providing an official “safety net” for systemically important institutions, in the past almost entirely limited to commercial banks and traditional thrift institutions. Faced with the evident threat of a potential cascading breakdown of an already heavily strained financial institution, the Federal Reserve, drawing upon long dormant emergency powers, recently felt it necessary to extend that safety net, first by providing direct support for one important investment bank experiencing a devastating run, and then potentially extending such support to other investment banks that appeared vulnerable speculative attack.” Page 4 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • If the best brains in Washington are worried, you might wish to prepare for difficult times ahead. We start with how to save money, how to get land, a home and independence, and then a second bonus: A brief overview on how to build things. Page 5 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Introduction The purpose of this book is to fulfill a request by a couple of readers of www.urbansurvival.com who have asked for additional information on living cheaply. Not that we have actually done everything that is covered in this eBook, but much of it we have. Or, our kids have. There’s more to this collection of ways to live less expensively than just our personal experiences, though. Many of the suggestions have come from talking with friends, acquaintances, and just by keeping our eyes open. As usual, we’ll write with our paradigm shaping world view which is defined by the seven major systems of life: food, shelter, transportation, communications, environment, finance, and energy. The biggest problem involved with living on a very small income is not the “nuts and bolts” of how to do it: After all, if your income falls precipitously, you won’t have any choice in the matter. Mindset Is Hardest What will take the most work is the “mental” aspect of living beyond frugal. Millions of Americans have gotten used to an unsustainable lifestyle – made unsustainable by several factors that have overtaken most families, almost un-noticed. For example: Jobjacking – more commonly called “off-shoring” by the politically correct, has • continued to erode millions of formerly high paying jobs. Among these, computer software design must be counted, as it has been moving to India, led by companies like Microsoft. And who can blame them? Costs are lower, due to the illusion of a strong dollar, perpetrated by corporatists in order to play the spread on the hourly cost of labor between countries, and besides, code is code. The Housing Bubble – The illusion is that your house has gone dramatically up in • value. What’s closer to the truth is that the purchasing power of money has gone down, which means, bottom lining it, that inflation is showing up in some portions of the housing market. Most folks don’t bother thinking about the dynamics here, preferring instead to just consider their good fortune, but the fact of home price inflation is more closely correlated with the ability of the Federal Reserve to pump money into housing easily, than any other factor. Hence, with low rates, refinancing became addictive in the worst sort of way. Continued Illegal Immigration – Like it, or not, the fact is that the government of • Mexico is continuing its policy of reconquista, or the taking back of the American Southwest which the United States purchased in historical time. Thus, when an illusory boom took place in the housing industry in big cities like Phoenix, El Paso, Houston, San Antonio, and elsewhere, the odds were high that at most of the workforce on many new housing projects was (and is) illegally in the country. Page 6 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Concentration of Information – At the same time the country has needed an • aggressive, free, and investigative press, there has been a continuing concentration of media in the country. The number of truly independent community radio stations in the country has continued to decline, falling victim to lower cost satellite feeds of programs such as Rush Limbaugh – that have all but replaced the community-oriented stations. Similarly, the decline of open-air VHF television stations is limited because millions of people are too lazy to put up a TV antenna and opt instead for cable or satellite systems that carry a hefty monthly bill. Telecommunications – We find that here too, millions of families are buying a • tremendous amount of excess capacity – excess to their daily needs. It’s not unusual to find that in many households there are at least two cellular phones, a landline for the relatives to call on, plus an internet service which is DSL or cable modem. Then there’s call-waiting, call forwarding, umpteen speed-dials, and even picture phones for the most gullible – and did I mention a wireless headset with Blue Tooth™? Don’t get me wrong, I’m not here to be a latter-day Luddite (I’m a self-confessed technology addict, not someone who hates or fears it), but if you even think your income might be going down in the next couple of years, you might want to do some objective number crunching. A California Example Let’s look at what a typical single person with a good income is paying today – and for the purpose of the discussion, let’s take a person with a $50,000 income, a good social life and all the “right” accoutrements – a late model car, the “right” connectivity, the “right web site” and the “right clothes.” It’s expensive being “right”. Here’s what the budget might look like in California: Page 7 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Income Side of things Annual Income $ 55,500.00 Tax Rate 29% Actual Income $ 39,405.00 Monthly Income (spendable) $ 3,283.75 The Expense Side Rent on a nice apartment $ 1,600.00 Telephone $ 38.00 DSL $ 29.00 Gas $ 25.00 Electricity $ 40.00 Cable $ 45.00 Car Payment $ 399.00 Furniture $ 200.00 Insurance $ 110.00 Gasoline $ 70.00 Bank Card Payment $ 150.00 Food $ 450.00 Medical $ 130.00 Total Expenses $ 3,286.00 Net Outcome $ (2.25) You could certainly argue that this overstates the cost of living in Los Angeles, but based on talking to a lot of people here, this is not far from the truth. There are differences, from case to case to be sure, but there are probably 2-3 million people here in the Tinseltown environs that are living this close to the edge. Since the first edition of this eBook, the condition of the California housing market has deteriorated remarkably. Home prices in some areas have declined by 20, 30 and even 40%. The difficult choice for many of America’s ‘New Homeless” is whether to keep paying for homes that were over-priced in the first place, or simply walk away from an unsustainable debt and start over, at the bottom of the economic ladder. We’ll delve more into this decision later on; to it’s appropriate to mention it in passing now. Learning from Ratios So how do we approach a personal budget problem like this one? The answer comes in two parts. First, get a notebook and write down every cent you spend. I don’t mean when you remember, I mean you need to make a commitment to a 75¢ tablet and write down every single penny you get and how it is spent. There may have been a time when you could afford not to be money conscious but that’s gone. Along with house flipping, low mileage SUV’s and cheaper paper products and the salmon fishing industry. Page 8 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • In the new world of personal finance you absolutely must engrain in your personality a new money consciousness. The second step, once you develop some of your own data, like the numbers in the table of our hypothetical California person, is to apply some simple accounting ratios where possible and then use these to help formulate your thinking. We can begin by taking the figures from this first table and substituting percentages. This results in the following: 100% Monthly Income (spendable) $ 3,283.75 The Expense Side Rent on a nice apartment $ 1,600.00 48.7% Telephone $ 38.00 1.2% DSL $ 29.00 0.9% Gas $ 25.00 0.8% Electricity $ 40.00 1.2% Cable $ 45.00 1.4% Car Payment $ 399.00 12.2% Furniture $ 200.00 6.1% Insurance $ 110.00 3.3% Gasoline $ 70.00 2.1% Bank Card Payment $ 150.00 4.6% Food $ 450.00 13.7% Medical $ 130.00 4.0% 100.1% Total Expenses $ 3,286.00 Page 9 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • A Quick Math Refresher “Hold on a minute! What’s this percentage stuff? I forgot how that worked…” A few readers will have forgotten, so here’s the dime-store math course: The term “percent” simply means “per one hundred” – centum being the Latin word that references “hundred”. It just means if your bills added up to 100-cents, how many percent (cents) would go toward this or that. The first step is to add up all of your numbers into a total. Let’s use three items: Housing $200 Food $300 Clothes $ 50 Total: $550 To get the Percent, Divide the Item by the Total. If you have trouble remember it, just remember “DIB-T” (Divide Item By Total). To get the Housing percentage, you divide the item ($200) by the total ($550) on your handy calculator and you see .3636… After you do the division (DIB-T) move the decimal point two places to the right and you get 36.36 percent. Percents are important because they give you an easy way to visualize your spending. If you cut a pie in half, each half of the pie is 50 percent. Similarly, if you divide the pie into four pieces, each piece is 25% percent. Cut the pie into ten pieces and each piece is 10 percent. When you’re thinking about your spending, figuring up percentages makes things easy as “pie”. Just remember that 100 (percent of the pie) divided by the number of ‘slices’ gives you the size of the slice. In our example above, we can quickly visualize the idea that our housing expenses, being 36.36% is very close to 33% of the pie – so we can keep in mind the idea that “Housing is just over one-third” of my budget. Page 10 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Defining the Elements of Lifestyle Now flip back to that southern California budget on page 7. If you think this is an extravagant lifestyle, I’d suggest you meet and talk to some people who actually live in Southern California. This is, if anything, a pretty conservative list. There are many things missing, such as a party budget or beach fund. This is a bare bones budget. For example: There’s no cell phone bill. All of my kids have been through the “cell phone phase” but now, at ages 27 and 30, only two have phones – and one is strictly for business. There’s also nothing in the budget for a cable bill or for Pay per View (PPV) movies. Lots of other things are missing, too. Clothing. Entertainment, like going out to dinner or to a theme park. And there’s no sign of a hobby unless the person we’re considering happens to be a web-connected geek. There’s another little oddity in this list of expenses: No refrigerator. This may seem strange, at least it will if you live in a more “normal” part of the country, but one of the shocks about moving to southern California (if you’re not from there) is that it’s customary there that when you rent an apartment, even if you have great credit and a good payment history, you’ll probably have to buy your own refrigerator. It’s things like this that you have to be looking for all the time – as in this case, just keeping food fresh is an expense that with delivery we find is $400-$550 for a modest frost-free variety without the fancy stuff like the ice maker and the cold water dispenser. As ocean shipping costs go up, and as steel prices surge in the wake of world demand, not to mention the big 2008 earthquake in China, refrigerators are likely to keep getting even more expensive. When my wife and I bought our (very modest) home (a modular one at that) I took the 1990 frost-free refrigerator as a “gimme”. But, turns out that to replace it today would set us back $1,200 to $1,500 for an equivalent unit at today’s prices. And that’s just in six years! Picking Where to Live One of the key choices you have to make, when you get serious about living on $10,000 per year, is that the premier place to live on $10,000 is the American South. I could go on and on about the reasons, but here are just a few ideas to noodle around: First is the cost of energy. When you look at energy prices is the South, they tend • to be less than in the North. Why? The U.S. gets about 20% of its oil from Venezuela and the majority of that product is refined in the Gulf Coast states. As an example of what this means in energy prices, we noticed over Christmas 2005 that gasoline around our home in rural East Texas was running about $1.83 - $1.87 a gallon while at the same time on the “left coast” subjects of the Republic Page 11 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • of California were being treated to gasoline that cost $ 2.23 - $2.27 for the same grade. OK, part of the reason might be the additives. In Arizona and California, your “premium” grades are typically 91 octane and there are air pollution fighting elements added. But in Texas, when you fill ‘er up with premium, you’re likely as not to get 93 octane. We have to assume that the reason for the price spread is the cost of transportation – either up the Mississippi for the Midwest states, or just stuck in traffic for $30/hour driver time trying to make deliveries here in SoCal. As the price of oil has recently passed $127 on the futures market, the price of • gasoline seems headed above $4.00 a gallon. Still, it’s a bit cheaper in the South close to the Gulf of Mexico product centers and Southern oil refineries. Just as gasoline is a tad less expensive, and so is winter heating, summer cooling • costs in the South somewhat make up for the savings. Electricity is relatively cheaper in the Pacific Northwest, but once again, the cost of moving fresh foods and other items to market is impacted by fuel prices. In the Northwest, you can grow a garden about three to four months less than in the South just due to climate. Clothing is also cheaper in the South. If you live in Florida, for example, you • might find south of Boca Raton, as we did, that you can get through a winter with nothing more than a windbreaker for a jacket. A light jacket is all it takes to winter over in Southern California, too unless you have to wait for a bus in the winter there. It’s a little chillier up in the desert states like Arizona, because they don’t seem to retain as much heat at night, but it’s nothing compared to the cost of clothing required to winter over properly in someplace like Michigan, Wisconsin, or Montana. You can see the data in the Department of Labor’s regional CPI figures, but not many people look at them to see what the implications are. Here’s how the South shapes up: Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual HALF1 HALF2 1994 142.5 142.9 143.6 143.8 144.3 144.7 145.0 145.5 145.8 145.9 146.0 146.1 144.7 143.6 145.7 1995 146.7 147.4 148.0 148.4 148.8 149.1 149.2 149.7 149.8 150.5 150.4 150.3 149.0 148.1 150.0 1996 151.1 151.5 152.4 153.2 153.5 154.0 154.0 154.1 154.5 154.9 155.1 155.1 153.6 152.6 154.6 1997 155.7 156.1 156.5 156.7 156.6 157.0 157.0 157.1 157.5 157.8 157.8 157.3 156.9 156.4 157.4 1998 157.6 157.8 158.2 158.5 158.8 159.1 159.3 159.5 159.5 159.8 159.6 159.6 158.9 158.3 159.6 1999 159.9 160.0 160.6 161.5 161.6 161.7 162.2 162.6 163.2 163.6 163.5 163.6 162.0 160.9 163.1 2000 164.1 164.8 166.5 166.7 166.7 167.5 168.0 168.0 168.5 168.5 168.6 168.4 167.2 166.1 168.3 2001 169.3 170.2 170.6 171.4 171.7 172.2 171.6 171.5 172.2 171.7 171.0 170.3 171.1 170.9 171.4 2002 170.6 171.0 172.1 173.1 173.2 173.5 173.6 173.8 174.2 174.9 174.9 174.6 173.3 172.3 174.3 2003 175.1 176.4 177.5 177.4 176.8 177.2 177.3 177.9 178.3 178.1 177.5 177.5 177.3 176.7 177.8 2004 178.2 179.1 180.1 180.9 182.0 182.9 182.6 182.6 182.8 183.7 183.7 183.3 181.8 180.5 183.1 Page 12 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Now compare this with the Northeast: Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual HALF1 HALF2 1994 153.2 154.0 154.3 154.4 154.2 154.8 155.2 155.9 156.1 156.4 156.7 156.3 155.1 154.2 156.1 1995 157.1 157.6 158.0 158.3 158.5 158.9 159.2 159.7 160.0 160.3 160.5 160.5 159.1 158.1 160.0 1996 161.4 162.2 162.8 162.9 163.0 163.1 163.4 164.0 164.6 165.1 165.4 165.7 163.6 162.6 164.7 1997 166.2 166.9 167.3 167.1 166.8 167.0 167.6 167.8 168.4 168.7 168.5 168.4 167.6 166.9 168.2 1998 168.8 169.1 169.3 169.5 169.4 169.6 169.9 170.5 170.6 171.3 171.2 171.2 170.0 169.3 170.8 1999 171.4 171.6 171.9 172.8 172.8 173.1 173.4 174.1 174.8 175.5 175.5 175.5 173.5 172.3 174.8 2000 176.2 177.6 178.5 178.5 178.4 179.0 179.8 179.9 180.7 181.2 181.5 181.3 179.4 178.0 180.7 2001 182.2 182.8 183.7 184.2 184.6 185.3 185.0 185.1 185.1 185.0 185.0 184.2 184.4 183.8 184.9 2002 184.9 186.1 187.0 187.8 187.7 187.8 188.3 189.3 189.5 189.9 190.1 189.6 188.2 186.9 189.5 2003 190.5 191.7 193.0 192.6 192.7 192.8 193.5 194.3 195.0 195.4 195.1 194.9 193.5 192.2 194.7 2004 195.9 196.8 198.6 199.4 199.9 201.1 201.0 201.0 201.2 202.5 202.6 201.9 200.2 198.6 201.7 Or, the Midwest: Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual HALF1 HALF2 1994 141.5 142.1 142.6 142.9 143.3 144.0 144.3 145.2 145.6 145.3 145.8 145.7 144.0 142.7 145.3 1995 146.1 146.7 147.3 148.1 148.3 148.7 148.8 148.9 149.4 149.6 149.5 149.5 148.4 147.5 149.3 1996 150.2 150.8 151.7 152.3 152.7 152.9 153.2 153.4 154.0 154.4 155.0 155.3 153.0 151.8 154.2 1997 155.5 155.9 155.9 156.1 156.3 156.7 156.6 157.2 157.5 157.7 157.7 157.3 156.7 156.1 157.3 1998 157.6 158.0 158.4 159.0 159.4 159.5 159.8 159.5 159.9 160.1 160.1 159.8 159.3 158.7 159.9 1999 160.4 160.5 161.0 162.2 162.2 162.5 162.9 163.2 164.3 164.3 164.6 164.4 162.7 161.5 164.0 2000 164.9 165.9 167.1 167.0 167.5 169.7 168.8 168.2 170.0 170.1 170.3 170.2 168.3 167.0 169.6 2001 171.9 172.1 171.7 172.8 174.2 173.8 172.5 173.0 174.6 172.6 172.5 171.9 172.8 172.8 172.9 2002 172.1 172.5 173.6 174.7 174.8 175.3 175.3 175.8 176.2 176.3 176.1 175.5 174.9 173.8 175.9 2003 176.2 177.8 178.6 177.8 177.7 178.4 178.1 178.8 179.5 179.1 178.9 178.4 178.3 177.8 178.8 2004 179.4 180.2 181.0 181.5 182.9 183.3 183.2 183.3 183.6 184.5 184.8 183.8 182.6 181.4 183.9 Or the West: Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual HALF1 HALF2 1994 148.1 148.3 149.0 148.9 148.8 148.9 149.5 150.1 150.6 151.0 151.1 151.2 149.6 148.7 150.6 1995 152.0 152.4 152.8 153.2 153.5 153.6 153.5 153.7 154.1 154.6 154.4 154.3 153.5 152.9 154.1 1996 155.3 155.8 156.4 157.1 157.6 157.5 157.9 158.0 158.6 159.1 159.2 158.7 157.6 156.6 158.6 1997 159.6 160.1 160.8 161.1 161.1 161.0 161.1 161.5 162.1 162.8 162.8 162.8 161.4 160.6 162.2 1998 163.0 163.2 163.3 163.6 164.3 164.2 164.3 164.8 165.1 165.5 165.8 165.8 164.4 163.6 165.2 1999 166.4 166.9 167.3 169.0 168.7 168.3 168.9 169.5 170.0 170.4 170.4 170.5 168.9 167.8 170.0 2000 171.0 172.0 173.5 173.7 174.0 174.3 175.2 175.9 176.6 177.2 177.2 177.1 174.8 173.1 176.5 2001 178.3 179.3 180.1 180.4 181.3 182.0 182.0 181.9 182.5 182.5 182.3 181.6 181.2 180.2 182.1 2002 182.4 183.2 184.0 185.1 184.8 184.5 184.7 185.3 185.7 185.8 185.8 185.5 184.7 184.0 185.5 2003 186.6 188.1 189.3 188.8 188.5 188.1 188.4 189.2 189.6 189.4 188.5 188.3 188.6 188.2 188.9 2004 189.4 190.8 192.2 192.3 193.4 193.3 192.9 193.0 193.8 195.0 195.1 194.2 193.0 191.9 194.0 These spread will change over time and inflation, but the gaps are there to study. The South and then the Midwest is where living tends to be least expensive in America. Highest price area? The Northeast. Second most expensive is the West. Page 13 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • To summarize the geographical decision where to live, it boils down to this order of preference: 1. The South. Yes, there are some people in the North who make fun of the South and the more relaxed southern lifestyle, but you know what? It’s pretty darned good. 2. The Upper Midwest. Although things get cold, we see in the numbers that things are not terribly more expensive than the South. Reason? The Midwest is the breadbasket of the country and as a result, food prices can be expected to be lower. 3. The West is perhaps 10 percent more expensive over a number of years, and unfortunately, the easy to get figures at http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=dropmap&series _id=CUUR0400SA0,CUUS0400SA0 don’t break the West out into Northwest and Southwest – probably because you’d see some embarrassing differences. 4. Last choice? Living in the Northeast. Everything is expensive there. State Tax Considerations With any luck, if you’re reading this, you will have a source of income amounting to $10,000 or more per year after taxes. Maybe you’re retired military. I remember when Elaine’s brother Panama Bates was going through the decision “Where should I live?” he correctly looked at state tax rates. In Washington, Texas, and Florida, there is no state income tax. He found El Paso inexpensive, but not a perfect place. To make up the economic differences, because all states overspend their budgets (they are governments, right?) the income-tax free states do have higher sales taxes, property taxes, and usually a higher fuel tax. But for now, Texas, Washington, and Florida are great if you have a fixed, taxable, income. If you can get into the position where you own property, these states offer reasonable tax breaks for senior citizens, defined as over 65. Federal Tax Considerations Although pop culture and mass media tend to idolize “Being Rich”, when you sit down and do a little figuring, it turns out that in some ways living on $10,000 a year or less is a much more efficient way to live than the high income option. Consider the person who is working for $5.00 an hour, and who works a 40-hour week 50-weeks a year. I did the calculations based on the 2007 tax year and this person would have to pay only $126 in federal income taxes. Think about how little “overhead” that makes the Federal Tax burden. At $5 an hour, that means all your taxes are paid in 25.2 hours of work. Page 14 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Just to see how that compares, let’s see how much work would have to be done by someone making $50 an hour for 2,000 a year. The answer: They would have to pay $19,688 in Federal Taxes (based on a 2007 return). That means they will have to work 393.76 hours just to pay Federal Taxes! True, they may be able to go out and buy a lot more things than a person on the low income side, but as we will show later on in this book, you can get creative and come up with a pretty darned good lifestyle if you’re willing to look at the world in an unconventional way. That starts with understanding that having a low income does have a few advantages, not the least of which is that you work a lot less to support government and, because you will have a lot less, you’ll have a lot less to lose should the economy ever turn horribly bad – as it may in coming years. Property Costs When Elaine and I were shopping for a place to pick out for retirement, the reason Texas filtered up to the top of the list over Florida was simply based on a combination predictive linguistics that made living well above sea level a desirable long term goal and what we were seeing with “our own lying eyes” about the Florida housing market. The predictive linguistics project of www.halfpasthuman.com has been making all kinds of inferences of people drowning and dying off by the millions, perhaps as early as 2009, although the death tolls from the Myanmar cyclone and the China earthquake in 2008 were pretty serious, too. We were skeptical of such a gloomy outlook, but who would have thought over half a million would be killed or injured in a 2004 tsunami, either? Not a pretty picture, to be sure, this die-off talk, but with global climate change coming at up like a railroad train out of control, and Peak Oil, too, I figured that someplace with several hundred feet of elevation and 150-miles inland would be a safer long-term investment in terms of passing on to the kids than would anything down close to sea level. And Texas land was a lot cheaper, which meant we could get more for less – always a good thing to be mindful of. The second criteria had to do strictly with the number of people within a small contained geographical area that were bidding up land prices. The cost of undeveloped land in South Florida continued to escalate, and the undeveloped land in the Panhandle, while somewhat more affordable, is still pretty darned pricey. Since the Housing bubble started to collapse, prices have started to come down, however, I don’t expect Florida rural real estate will be worth buying until 2010 and then only if the Global Coastal Event(s) have been and gone. There may not be much except marshlands where Florida now is, if the predictions are right. As an aside, we looked at property in the mountains of Arizona as well and we were shocked to see what the proximity effect of both Phoenix and Los Angeles has done to Page 15 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • property prices in this area. For what we purchased the whole 13 acre spread for in East Texas, we would get only a smaller piece of raw land, less than 2-3 acres in Arizona! Because you’re smart enough not to be excessively focused on making piles of money – and focusing more on quality of life -- I would suggest serious consideration be given to places like Oklahoma, Arkansas, Missouri, and Alabama, but again, remember that long term, water levels around the globe might rise, and in any event, a big tsunami offshore which could wipe Florida off the map is a much less far-fetched notion today, than it was the day before the earthquake that killed 200,000 people in a matter of a half hour in Southeast Asia. Remember our warnings about the La Palme (Cumbre Vieja) Volcano in the Canary Islands and how it could send a wall of water over the U.S. East Coast with little or no warning. What You Have to Give Up You can do it – and even get by with less – if you’re determined. When you make the decision to live on $10,000 per year, or if circumstances make the decision for you, there are a few things that you have to plan on doing without. Write this down somewhere: Living in a complex society costs everyone very nearly the same. But what we each pay varies by the currency we choose to operate with. One currency is cash, but another is time, and another is physical effort, while yet another is health. Living in a complex society is a continuous series of trade-offs based on what you have the most of at the moment of any particular transaction. If you have time on your hands, a bus ride or a walk is a fine thing. Find yourself under stress to get to a key presentation before the board of directors? Don’t be talking to me about any leisurely walk! This is the life of speeding tickets, parking tickets, parking garages, car insurance, and the other hassles of fighting it out for the “top dog” spots. Are you tired a high housing costs? In order to cope with housing costs, are you willing to entertain ideas like giving up some of your privacy and splitting the costs of an apartment or house with someone else? The trade-off will be some privacy. If you’re not willing to trade privacy for cost reductions, then we’ll have to look at alternative housing options. Is there someone who might have a place to live in exchange for your doing some work? Another thing you might be required to change your perspective on will be time. If you have plenty of money, then you can literally buy time. The way you buy time can be illustrated by the problem of getting around Southern California with and without a car. With a car, if I want to go have lunch with a friend in Orange County, 35 miles south of where we live, I jump on the 134, to the 101, to the 110 and in 45 minutes I’m there. But without a car? I might have to wait 20 minutes for a bus, then a 10-minute bus ride, then Page 16 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • a 10 minute wait for a train, then a 30 minute train ride, then a 10 minute wait for another train, a 25 minute ride, 10 minute wait for a bus, and a 12 minute bus ride. Let’s see; that adds up to something more than 2-hour each way. The car buys me time in that without it, I would pay more in time and physical effort. Can I change the oil on my own car? Of course. But there are people who trade paper money for the time spent by others changing their oil for them. Getting the picture of how these trade-offs work? To borrow a few “slap upside the head” statistics from the American Society of Landscape Architects http://www.asla.org/lamonth/messages_links.html : Seventy-four percent of Americans are not regularly physically active; 28 percent • do not get any physical activity at all, according to the Active Living Network. The average American walks only about 400 yards per day—less than five city • blocks. Today there are nearly twice as many overweight children and almost three times • as many overweight adolescents as there were in 1980. During roughly the same time period, children’s walking trips to school have • declined 60 percent. According to a recent issue of US News and World Report, three-year-olds spend • about 79 percent of their time in sedentary behavior—often watching television— and only about 20 minutes a day in moderate or vigorous active play. Three out of five older children—ages nine to 13—do not participate in any • organized physical activity outside of school. Up to 25 percent of cars on the road during the morning rush hour are providing • school transport. The good news? If you are planning to live on $10,000 per year, you will have a much better opportunity than six-figure people (with incomes of $100,000 per year and up) to have robust health through exercise. You will have time – and in many cases it will be necessary to get exercise by walking and doing things – whereas the high dollar people are too busy producing incomes to take time off for exercise. They will simply buy the efforts of others even if it means working 10-weeks a year just to pay the taxes on that privilege. I don’t know if I can adequately share the “cosmic joke” the Universe is playing out here, but we have poor people complaining of a lack of money and not wanting to exercise while at the same time we have high income people paying good money to buy exercise that they would have coming out of their ears if they didn’t pursue the high dollar life. Go figure. I’m sure the Universe has some Big Lesson in mind here, but just what it might be we only get hints at from observing the absurdities around us. Page 17 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Section 1: Transportation Say Good-bye to Status There’s another thing that living on $10,000 a year will require – as if giving up some of your privacy is not enough – you’ll have to part with some of what is called “status.” Status is North American society is a slippery thing to define. At times, it is flaunting of one’s wealth – such as being the one parking the purple Cadillac Escalade in the handicapped parking at Albertsons without a handicapped sticker and no visible ailments. It’s just a way of showing on one’s conspicuous consumption. (Lot’s of SUV’s are flaunted this way.) Not that you won’t have status. In my mind, the art of living on less than you bring in is a sign of a responsible, forward-thinking, bright, conscious, aware, neat person. Especially when the person involved is not prone to the usual social maladies that are associated by the great unthinking masses with low income. To put it another way, the correlation between quality of person and level of income is far from absolute. This is not to say that there aren’t a lot of poor people who aren’t slobs. From what I’ve observed, about 75% of the time, people who have low incomes are decidedly slovenly? But there is that 25% that is low income for reasons that aren’t related to slovenly. For example: • Some of the low income people we know live in extremely cheap housing because they are not able to gain employment at much more than the minimum wage. • Other low income people happen to have particularly unattractive physical looks, and because we live in a “glamour” oriented society, they are passed over for all kinds of jobs. • In general, low income people don’t have high self-esteem or self-confidence, which in turn results in them giving up rather than face continued rejection. Having noted all of this, there is some fraction of low income people that are low income for reasons of conscience, for reasons for physical ability, and a host of other reasons. Some deal with emotional distress, family issues, or even divorce. Society doesn’t take the time to judge people individually – we live in a world that’s too busy for that. A little side story about status may be in order. Since 2001 we’ve been driving our Daewoo Leganza around with numerous dings and dents in it – some covered with metal duct tape. It’s partly been an experiment to see how people treat us. We’ve gone to some of the best restaurants in Hollywood in it – we have shown up for business meetings in it, and in general, we have not tied our personal self image to the appearance of the car. OK, maybe Elaine isn’t as happy being seen in it, but to be honest, the trade-off is that people driving the Escalades will sometime let us in to a tight traffic situation when they Page 18 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • statistically wouldn’t if the car were perfect. They figure that we have less to lose – and they’re right! Call me cheap, or call me thrifty, but the repairs to the car’s body (mostly inflicted by my youngest daughter while she was driving the Daewoo at college for a year) will cost about $1,000 to repair, and I haven’t been in a hurry to spend money. Why would any rational person put as much money into repairing a car as it’s worth? Sure, we could be tooling around in a recent vintage Porsche (and who knows, I am still susceptible to a relapse of Porsche 911 driver addiction). But for now, running the Daewoo in a least-cost mode continues to make sound economic sense. It has needed nothing but tires and brakes, beyond the youth-inflicted damage. What I did get out of the experience and have been watching is people’s attitudes toward the car. Very interesting. I found a delightful web site at www.carvalu.com which deals with the hype and substance of buying a car. By clicking around a bit, I put in my personal values (I won’t bore you with what they were, because you can take the test yourself) and their system gave me a selection list that started off like this: Results per YOUR Preferences New 2004 Your MSRP Make/Model Value* Honda ELEMENT soft top $16,095 $16,049 Jeep Cherokee WRANGLER soft top $16,354 $15,915 Toyota RAV4 $18,879 $19,504 Honda CR-V $18,911 $18,604 Isuzu RODEO $19,899 $21,393 As it looks to me, anything with a red in the right-hand price column is something where my values are not as high as the asking price. So I need to go do the list to find vehicles that show black in the right column. Strangely, or not so strangely, the Rav – 4 has been one of the vehicles I have through about, along with the Isuzu Rodeo. The one with the biggest appeal to my values, further down the list was the Mitsubishi Montero Sport. If status was up my personal needs list a bit further, I could have fallen into the Escalade or the Navigator. But reliability is one of my “must haves” and so that knocked a lot of product off the list. OK, we’ve discussed cars and how to reduce the cost of them (drive old ones) but if we’re going to get real about living on $10,000 a year or less, forget the car. Sure, they are useful, but only if you break the link between who you are and the Automaker’s advertising mantra that insists that a car is what you are. That’s plain hogwash. Page 19 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Rethinking Status I mention cars under the heading “status” because so much of how people, especially young people, define themselves as a car. This is especially true in Southern California where it’s easy to drive through any “poor” neighborhood (as we accidentally did on Saturday while living there) and noticing that even in the poor neighborhoods, most homes had a shiny new “pimped out” ride parked out from shaming our “semi-beat” Daewoo. In order to live on $10,000 a year, you will probably need to give up on the idea of owning a car and live by walking or using a transit pass to get around. If you think back to the person who we used as an example earlier: The car payment was a dollar away from $400, the gasoline was $70, and insurance, required by state law, was $110 a month. That means owning a decent car in California requires you to make at least $6,960 – and that’s before taxes, and any allowance for repairs, oil changes, tires and such. The mirage of status is that a car is mandatory. If you’re in the 29% tax bracket, it means you need just about $9,000 pre-tax in order to pay for your automobile. Given even a modest amount of car trouble, we have already smashed the budget just by owning a car! Assessing Transportation Needs If you seriously plan to live on $10,000 a year, as all three of my kids have, you need to spend a lot more time structuring your whole life because making the $10,000 nut requires a certain harmony. We’ll talk more about housing costs later on, but for now, let’s imagine that we have a fixed income and making our $10,000 level is not an option - it’s a requirement of life. Write this Down: Your dependence on transportation is a function of where you live, where you work, and where you really need to go. If you have a job that is less than a mile from your home, you can eliminate the need to own a car for commuting. That’s where most accidents happen, anyway. And, short commutes, which are easiest on gasoline consumption, are hardest on an engine, which never has a chance to heat up thoroughly, which tends to increase maintenance costs. If you live within a couple of blocks of a reasonable supermarket, you ought to be able to walk back and forth to the grocery store. Because you will be carrying your food home, you will likely eat less and you’ll sure as heck spend less. You will also not have to worry about getting your doors dinged in the parking lot. Just for the sake of experimenting, I went walking one morning while we were living in Burbank, California to get food. I picked up a couple of bags of pre-cut, pre-washed Page 20 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • lettuce – a bit of shrimp to throw on top of it and a small steak for dinner. About $10 a day and I can live like a king. You may not appreciate some of the one-pot cooking recipes, but they work, they have nutritional value, and $10 a day for food will put the annual bill at $3,650. We can live with that. Just removing the car will make a dramatic impact on our hypothetical Californian’s income picture. Here’s the change: Income Side of things Annual Income $ 55,500.00 Tax Rate 29% Actual Income $ 39,405.00 Monthly Income (spendable) $ 3,283.75 The Expense Side Rent on a nice apartment $ 1,600.00 Telephone $ 38.00 DSL $ 29.00 Gas $ 25.00 Electricity $ 40.00 Cable $ 45.00 Furniture $ 200.00 Bank Card Payment $ 150.00 Food $ 450.00 Medical $ 130.00 Total Expenses $ 2,707.00 Net Outcome $ 576.75 Remember, just doing without a car – living close the office and walking, your savings could top $6,921 after tax and $8,928.09 pre-tax. Naturally, we don’t expect a person to be entirely confined to walking – although it’s great for your health once you get through the few aches and pains of working up to 3- miles of walking on a daily basis. There’s plenty of money for a monthly bus pass ($50 or so in most cities) or simply bus rides when it’s raining. We can also build a scalable transportation system of transportation costs. I’ll assume that anyone can walk three miles a day and that a grocery store is within hiking range. The transportation choices then become… Type of Transportation Monthly Annually Pre-Tax Bike $15 $180 $232.20 Occasional Cab fare $20 $240 $309.60 Moped payment and insurance $100 $1,200 $1,548.00 Car $300 $3,600 $4,644.00 Page 21 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • A couple of things need to be said about insurance. If you get pulled over and you don’t have insurance, as required in most if not all states, you’re toast. Fines, court costs, keeping cops in business – all that sort of stuff. Write this Down: If you are living on $10,000 a year, don’t make STUPID mistakes by trying to cheat the law. It will always catch up with you. If the local bike law says you have to wear a helmet, buy the damn helmet because if you don’t, you will end up buying the helmet plus paying the ticket. Same deal with the moped. And the car if you’re a budget buster. There are some ways to save on insurance. The first thing to do is buy only the state minimum. It’s usually not too bad. If you have some hidden assets, like property or anything traceable like securities, then what we do is buy the $300,000 liability and put an umbrella for more on top of that. But, only if you’re going to bust the $10,000 budget. The key to insurance is get quotes, know state minimums and make the payments on time. Make Payments on Time Write this Down: If you are living on $10,000 a year, there is a full-court press on to screw you over in every possible way with interest payments. So, if you do spread out your insurance payments, don’t accept more than a $5.00 a month surcharge for the time payment option. If you have a bank card, which has a $500 or $1,000 limit on it, don’t use it for regular bills like insurance. The bank card is for real emergencies. Pay your bills on time because you can’t afford to have any late payments if you’re going to live on $10,000 a year. More on this when we get into the finance section. What Kind of Car? If you are richer than $10,000 a year and want to drive a car, fine. But remember that it can look like hell and still be perfectly safe and well-maintained under the hood. Twice in my life I have purchased nearly new cars which are little foreign imports and then driven them about 100,000 miles – the implied throw-away point – before going on to the next one. When you look at a car, think of it like an airline executive things of his Boeing jets. (Remember, I’ve been there…) It all works out to a cost/per/seat-mile equation. Consider how three cars look when you stack them up side by side. A small stripped down Suzuki, a mid-sized Toyota Camry, and decked out Chevy SSR toy car. Page 22 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Car Analysis Cost Item Scion Xa Toyota Camry Chevy SSR Price well equipped $ 13,795.00 $ 25,945.00 $ 42,555.00 W/Tax & Prep @ 10% $ 15,174.50 $ 28,539.50 $ 46,810.50 Montyhly pmt 60 mo 0% $ 252.91 $ 475.66 $ 780.18 Mileage 35 29 17 Mileage Costs @100K $ 8,571.43 $ 10,344.83 $ 17,647.06 One Tire Costs 60 90 130 Tires X 8 $ 480.00 $ 720.00 $ 1,040.00 Five year insurance prem $ - $ 1,500.00 $ 3,000.00 100K Operating Cost $ 24,225.93 $ 41,104.33 $ 68,497.56 Residual value @ 25% $ 3,793.63 $ 7,134.88 $ 11,702.63 Net Operating Cost $ 20,432.30 $ 33,969.45 $ 56,794.93 Cost/mile $ 0.20 $ 0.34 $ 0.57 The lesson here is what? Owning and operating a car in a best case will set you back 20.4¢ per mile while the toy car will set you back almost 60¢ a mile. The Used Car Myth A lot of dealers will try to tell you that a 2-year old car is a better deal. But, it’s not necessarily true, for anyone but the dealer. Dealers do a tremendous job of pushing down prices on trade-ins because most people are too lazy to sell a car themselves. They then turn around and mark up the car so that when you look at a cost per seat mile basis, you do just about the same on a brand new car, versus a 2-year old car – unless, of course, you find a two year old car with zero miles on it. If a 2-year old car has 35,000 miles on it, you might as well straight line the depreciation to the 25% residual area, and figure only 65,000 miles in your penciling. Suddenly, a lot of trade-in cars, and off-lease cars look little better than a new car plus you have to add in the risk of not knowing the car’s true history. Suddenly, cab fares and bus passes make a lot of sense, don’t they? When someone asks me if it’s possible to live on $10,000 a year, I ask them if they think a car is part of the bargain. It’s not. Welcome to the world of cabs, busses, Greyhound and Amtrak. Page 23 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Section 2: Housing If there’s one area that seems to gobble up money unmercifully, it’s housing. In our California example, our hypothetical reader was enjoying a great apartment, but it was $1,600 after-tax dollars a month. Can we do better? You bet! If you are willing to walk around your intended neighborhood a bit, you can find a lot of places where there are rooms to be rented, many with their own entrance, and at a fraction of the formal apartments in price. Haunting Craigslist.org You can start by looking at the community bulletin board at the grocery stores. One of the best kept secrets of the ‘net is www.craigslist.org. This is where a lot of thrift minded people hang out. If I was looking for a general place in LA, and was willing to trade in some privacy? I would find ads like these under the rooms/share heading at http://losangeles.craigslist.org/roo/ : $450: I have a room coming available Feb 1st as my current roomie has to move for family reasons. It includes all utilities, DSL, and you can share my landline phone if you wish. It is a 2 bed room 1 bath apt with secure parking and 50 yards away from convenience stores and eating places. If interested please call Rick at 818-882-6970 or 818-693-5544 on my cell. I am manager of the complex I live in so that is always a welcome advantage for roommates. --- Or this one: $400: Nice, clean (but relaxed) people wanted to rent nice rooms in 4 bedroom Santa Ana house-centrally located near Trader Joes, Target, South Coast Plaza, OCC. Share bathroom with 3 other housemates. Share utilities (usually between 70-100 $$ per month) DirecTV, TIVO, Wireless internet (cable) Washer and Dryer in-house Small but private backyard Small amount of storage space available in garage Safe street parking, right in front of house, with occasional driveway parking available. --- We like to keep the house clean, but don't mind it feeling lived in. Looking for cool, friendly, open minded, level headed, relatively happy people with stable income to come and live with us. Please enjoy doing your own dishes, and if you cook, please clean up after yourself. Current residents are straight, but this is a queer friendly house. No pets, unless they are the human kind, and we can discuss that (just kidding.. I think). Page 24 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • One female and one male living in house now, one room is available immediately, the other room avail Feb 1st. --- $400.00 each room, per month plus portion of utils 1st month + 250.00 security deposit required. Looking for someone to commit to at least 3 if not 6 months. Hope to hear from you!! Now, these are some example from one of the most expensive housing markets in the country – Los Angeles. If you are willing to share with a couple of room mates, consider a cheaper city. Albuquerque, New Mexico sports offers like these at http://albuquerque.craigslist.org/roo/ : “$400: Big Room (265 sq ft) with skylight, private bath and private entrance. Share kitchen and washer/dryer. Located near Jackalope and bus lines in Santa Fe. Prefer Quiet, solvent, good-natured Non-Smoker. --- $400/month + security deposit + share utilities. Call for more details. --- Find a Really Cheap Town to Call Home Even cheaper in Albuquerque? Sure! “Hi, my roommate is leaving Feb 1st. We have a very large apartment/house. It is an artists paradise because of lots of light and ample space for work. 360 deg views. The price certainly does not correspond to quality as I would probably never myself answer an ad for a $250 room. We have all utilities/amenities, utilities paid. This is probably one of the sweetest deals in Santa Fe if it is appropriate for you. I am a scientific researcher, working at an institute in town; my roommate is an aspiring actor. We are always ready for party but also do not want a party animal in the house. There are limits to debauchery if one wants to work during the day. We try to keep the place clean and you would have to participate in cleaning with us every now and then. We are not anal about it though. All in all, if you are a professional, a student, artist, not minding to live with other people - Have your own room, of course - can convince us that you are a responsible, clean, fun, and relaxed person, then this is the place for you. The price you cannot beat and the place is very nice. It is really great for parties since it is so large. We do not have parties every week, don't get me wrong. We are really quite quiet in general and focused on our respective work. A girl would be really nice to apply for this place, but of course we do not discriminate against men - hell we are men. Page 25 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Ok, send an email for start. Or just call. We can talk. Adios. “ On the other hand, in some places like Santa Fe you can find real deals on small apartments like this one: “$350: Small Studio Apartment Available Immediately. Bathroom, Kitchenette, and Laundry on premises. $350 covers all utilities also. Call today for an appointment. 480-6189 Nice Area with plenty of Off street Parking.” My point on the Housing section is to open your mind up to really being serious about finding a place. If you don’t have internet access, you can still find these deals by going to a library and getting on a computer there, going to www.craigslist.org, picking the city and then snooping around a bit. How’s Our Progress? In the financial section, I’ve cut down the furniture expense to a mere $100 a month because when you’re in a small place, or sharing with roommates, the only furniture you’ll need will likely be a bed ($400) and a chair ($150) and maybe a desk. But for $100 a month you could furnish the digs looking like the Taj Mahal. Look what we have done with our “comfortable Californian” by getting rid of the car and finding a $600 roommate situation: Income Side of things Annual Income $ 55,500.00 Tax Rate 29% Actual Income $ 39,405.00 Monthly Income (spendable) $ 3,283.75 The Expense Side Rent on a nice apartment $ 600.00 Telephone $ 38.00 Bus Pass $ 60.00 DSL $ 29.00 Gas $ - Electricity $ - Cable $ - Furniture $ 100.00 Bank Card Payment $ 150.00 Food $ 450.00 Medical $ 130.00 Total Expenses $ 1,557.00 Net Outcome $ 1,726.75 Page 26 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Imagine – saving more than you spend! Holy smokes, is that a great prospect? I mean if you’re willing to take a bus and find a roommate. You may not like how we’re getting there, but we have already whittled the annual cost of living down to $18,684 – and if the person can keep getting to work on schedule, they can now bank $20,721 a year, and in a few short years, they will be able to buy a place where they can live for food and taxes only. Let’s say 4-years is the time line, OK? If a person had started saving up 5-6 years ago, and had actually followed this plan to salt away some money, they would have enough to purchase outright a small “starter” home like this one: link. The payments on this would be only $293 with a modest down payment, too. Provided you had a reasonable source of income, you’d be able to move into brown recluse country and ditch the lousy roommates. Would I be anxious to go to this extreme? No. But is it possible? Sure. Just wait till our next installment where we tackle the rest of the expenses. This e-book was first published in two parts for readers of the www.urbansurvival.com Inside Report series, so for them a bit of restatement as we write up the second half of our report… Is it Time to Move? In the first half of our attempt to live on $10,000 a year, we started paring down the budget of a typical Southern Californian, by whacking away at housing and transportation costs. Now it’s time to cut other areas to see how close to our $10,000 a year budget we can get. One thing which should jump out at you from last week’s efforts is that with a housing expense of $600 a month there would be just too little left over to live on if we were living on the $10,000 budget. Housing at that rate would gobble up $7,200 a year leaving $2,800 for everything else. No good. The ways out of this box are either a) move to a cheaper city (try Albuquerque) or b) continue searching in the LA area for something around $300-$350 a month. That’ll be hard to find in LA, but a $250 room and share of utilities (probably $50 a month or so) makes sense and is doable. Our Southern California candidate may elect not to move because with a $55,000 top line, they are in an amazing position, even if they fork out $600 a month for a place to live. They are still able to save more than $18,500 a year. As we pointed out earlier, give yourself 5-years of that and you can buy a comfortable spot in any number of pleasant rural to semi-rural settings in the South where live is less expensive, if for no other reason than energy costs. Page 27 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • But for the purpose of this booklet, let’s not worry about the income line – our objective is to find a way to live on $10,000 a year – and so if you really are on that small amount of money, you will have to move somewhere cheaper. Think Albuquerque here. Naturally, when you move to such a place, prevailing wages will not be nearly as high, and so to put this into something approaching reality, let’s assume that our subject has his/her wages cut exactly in half because their skills just aren’t priced the same in Albuquerque. The financial picture morphs to something like this: Incom Side of things e Annual Income $ 27,500.00 T Rate ax 29% Actual Income $ 19,525.00 Monthly Income (spendable) $ 1,627.08 The Expense Side Rent on a nice apartment $ 350.00 Telephone $ 38.00 Bus Pass $ 60.00 DSL $ 29.00 Gas $ - Electricity $ - Cable $ - Furniture $ 100.00 Bank Card Payment $ 150.00 Food $ 450.00 Medical $ 130.00 Total E xpens es $ 1,307.00 Net Outcome $ 320.08 We’re now living on $15,684 per year. This is getting close, but there’s more to go. And, notice I didn’t change the tax rate. In actuality, there’s been another thousand, or more, saved by being in the lower tax bracket. Paying Off Debt There’s no way to over-emphasize the need to pay off debt. The reason is that it is an area where life can all too easily spin totally out of control resulting in a crisis that has soul wrenching implications. The Predatory Nature of Debt To be sure, there are times when you will want to use debt in order to get something you really need. Elaine & I have a virtually unused credit card that is only there for emergency use such as a big car repair bill, should one come along, or the odd online purchase. Even then, whatever is on the horizon will only be 2-months from being paid off. Page 28 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Because we have a perfect credit history, the card rate is relatively low. But, the less money you make, the more likely you are to pay a higher rate. If you make $20,000 a year, you can count on a rate of 18% to 20% in most states. This outright sucks. Let’s see what happens just by paying off the credit card, now that our hypothetical person has moved to Albuquerque: The Expense Side Rent on a nice apartment $ 350.00 Telephone $ 38.00 Bus Pass $ 60.00 DSL $ 29.00 Gas $ - Electricity $ - Cable $ - Furniture $ 100.00 Bank Card Payment $ - Food $ 450.00 Medical $ 130.00 Total E xpens es $ 1,157.00 Annual expes nes: $ 13,884.00 Net Outcome $ 470.08 You do see what our biggest expense is now, right? Food… Section 3: Food Costs You know that $450 monthly food budget? It needs to be whacked down to about $300 per month – or less. Can it be done? Absolutely! Reduce the food budget to $300 a month will still let you live very well. But, you will need to resort to cheaper cuts of meat and you might also want to learn the “art of the one potter”. One-potters are a tradition in my family, not so much because we were poor (although we were not well-heeled when I was growing up) but because they are quick, easy to make, and hard to ruin. Some examples: Take 8 ounces of any pasta product that strikes your fancy. $1.00 - $1.50 *(I like to use Chinese egg noodles, but this works with things like spaghetti, wide flat nobles, linguini, or whatever else is on sale. In blind taste testing, I can’t tell the difference between a flat alfredo noodle that’s a store brand at 99-¢ a pound, or the $3.99 pound of ‘fresh’ noodles in the freezer section. Likely, neither can you. Taste-test everything. It’s OK to use Campbell’s cream of mushroom soup if you prefer it to the store brand (which may not taste as good), provided that you understand that things like salt, sugar, flour, noodles, and so forth are much cheaper as the ‘house’ brand than the ‘name’ brand and the results are indistinguishable. Now back to our cheap noodle dish… Page 29 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Boil 3-4 quarts of water. Dump in the noodles a bit beyond al dente. The reason for slightly over-cooking the noodles is that we’re going to be throwing in a can of Cream of Mushroom soup. If the noodles are even slightly undercooked, they will tend to soak up too much of the liquid so the second serving will be a bit on the dry side. Overcooking the noodles a bit keeps them from sponging up as much. Drain noodles and toss back into the pot. Throw in a single 10 ¾ -ounce can of condensed cream of mushroom soup. Toss in 1-tablespoon of mayonnaise, a dash of garlic and a few shakes of tarragon if the spirit so moves you. Shake or two of Worcestershire sauce, too. Now toss in a can of your choice of something meaty: A can of white chicken (About $3.50 if you shop) or a can of tuna fish (I like solid albacore white in spring water) $1.50 $2.00. You can use those pouches of tuna instead if you like. Gordon’s clams (minced or chopped) work fine – call this clam linguini to your friends and with a glass of cheap white jug wine, they’ll love it. If not, more wine! Warm the whole thing up stirred up pot of noodles, mushroom soup, meat and whatever spices, for about 3-minutes while stirring the heck out of it with anything from a wooden spoon to a pancake turner. Divide the result into two piles – eat one pile now and put plastic over the other and pop it into the fridge. Eat within a day or two. If it looks a little dry, put 3-4 tablespoons of milk on it before nuking and stir it up. No milk? Water or chicken broth then. This is but one example. There are dozens of others. You can get broccoli fresh on sale, pour some hollandaise sauce (the mix it yourself envelopes are great) and a can of chicken over it and bake. Wonderful eating. Call it Chicken Divine. A shake of Parmesan on top of it toasted under a broiler and no one will know how cheap you are. I know I could go on sharing recipes but that’s not the objective. One more? OK. Start early on Saturday morning. Find stew meat on sale. Buy 3-4 pounds of it. Toss the meat into a pot. On top of it quarter 2 large onions (white onions are sweeter than yellow, which seems backwards to what it should be) then a whole celery cut into 1” hunks. About 2-3 pounds of carrots follow. Then on top, you put as many red or Yukon Gold potatoes as you can fit into what you should have figured by now is the largest damn stock pot you can afford (or borrow). 12 quart or larger size is best. Next you sprinkle in some spices. Maybe a quarter to half teaspoon each of thyme, oregano, and 4-5 whole Bay leaves. Remember to fish these out before eating. And a good shake of garlic powder (not garlic Salt! That makes meat tough). Not enough garlic – more garlic. Last, but not least, dump in the cheapest bottle of red wine you can find. It should sort of was the spices down toward the meet, onions and carrots. Page 30 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Slowly bring this concoction to a boil and simmer for 4-hours or so. When the meat becomes tender, to the point where you can slice it with a fork easily, which it will, add a pound or two of whole mushrooms that have been cleaned and sliced. Cook for another 30-45 minutes. This is burgundy beef stew if you used cheap burgundy, but it could just as easily be bouef stew en Shiraz, or Stew Merlot. Some Italian seasoning and Chianti makes it Roma Stew… To hit the $300 monthly food budget, you will need to eat less meat and more veggies. This is a good thing anyway. And, when you do eat meat, look for inexpensive cuts like pot roasts, stew meats, and get used to deboning chicken yourself. And, get used to cooking in economic quantities – enough for two to four people for many recipes – and then freeze or refrigerate the leftovers because they will taste just fine later. When I make my stew, I can usually munch on it for 3-4 days which is how I justify the expense. General Food Guidelines 1. Veggies: Eat lots of veggies, but don’t get pre-prepared lettuce bags and such. On a per-salad basis they are 2-3 times more expensive than cutting up a head of lettuce yourself. Besides, this way you can rinse it longer and get more pesticides off it. Splurge on a good bleu cheese dressing, if you will… 2. Meats: Price is everything! Vow never to pay more than $3.99 a pound for fresh meat no matter what! Learn instead to slow cook, roast, braise, and invest in a copy of “The Joy of Cooking” which belongs by the Bible in any home. 3. Dairy: Cheap butter is better than any margarine. Go read the articles on trans- fats that are available on the net. Especially: http://www.nexusmagazine.com/articles/oilingamerica.1.html (and part two of the same piece) Reduce your milk consumption. It was designed to be consumed by young cows, not middle aged humans. Cheeses are good though…but again, price is everything so go lightly. 4. Grains: Cook with them. Make your own bread. My absolute favorite bread is called Cuban Bread which my late father used to make weekly after he spied the recipe in the old National Observer, published for a while by Dow Jones. The recipe can be found at http://www.fatfree.com/recipes/breads-yeast/cuban-bread and lots of other places, but making bread is this incredible art form – and there is nothing like fresh Cuban bread (it’s like the best French bread ever) 10-minutes out of the oven. Crispy on the outside, moist and yummy on the inside…yup, nothing like it ever came precooked for flash frozen in the dairy case… 5. Fish & Seafood: I like canned Tuna, but the mercury problem is real, so I am slowly weaning myself of it – maybe once or twice a month I will go nuts with my one potter. On the other hand, a third of a pound of small bay shrimps, commonly on sale for $3.99 a pound here in Southern California lately, thrown into a bleu cheese dressed salad is about as fine a meal as any… Page 31 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 6. Spices: If it has been a while since you cooked (rather than nuking things) you can make your own teriyaki sauce (soy sauce, ginger powder, sugar, dash of garlic and a shot of sake) and we try to keep Hoisin sauce around. Often called “plum sauce” this stuff is magic on BBQ’s meats. Or you can make your own mu shu whatever using thin pancakes or flour tortillas (very cheap!) and toss some Hoisin sauce on it, just like you would the real stuff. Learn to appreciate the cultures that have come to America and have had to eat cheap because they didn’t have the money to spend. Mexican food is good and cheap. You can buy a big bag of flour or corn tortillas for next to nothing. They keep better than fresh bread, can be eaten in a million ways, and they are a good core element (like noodles/pastas) for budget oriented cooking! Important Advice on Drinking Everyone has their own views on drinking, but I think it comes down to two things. First is health. If you are interested in drinking and health, stick with two glasses of real red wine a day. If you are drinking as a social thing, then consider the costs. You may already know the famous formula: One beer = 6-ounce glass of wine = 1 ½ ounce shot of hard liquor. But, have you ever really run out the numbers? Here we go: Beer Beer costs about $7 - $8 for a ½ case of 12 cans. I like Natural Light because it has fewer calories, but beer is all about taste. For this (watered down sissy beer with no character) brand it works out to 7 divided by 12 or $0.583 cents a can. Notice that this is cheaper than many kinds of soda pop? NEVER BUY POP FROM A MACHINE! It triples the price! Wine: Wine comes in 750 ml bottles, unless you buy jug wine. So when you buy a $7 $8 bottle of wine, you’re getting 25.5 ounces, which is only 4-glasses of wine at 6.375 ounce glasses. Yuk. $1.75 a glass. Less for jug wine, but still spendy. Beer’s looking very cost effective! Hard Liquor I really enjoy a vodka and water or rum and water after work. Lots of water and ice. So here are the economics. A 1.75 liter bottle of Seagram’s Smooth runs $19 on special here in Southern California. Each 1.75 liter bottle has 59 ounces. Using a standard 1 ½ ounce shot, this is 39-drinks plus a half count left over. $19 divided by 39 drinks is $0.487 per drink. A two drink cocktail hour is a buck and home versus $10 for the same thing (or more) when out. Page 32 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Conclusion: In order of cost effectiveness, hard liquor wins, followed by beer, followed by wine in a distance third place. We can live on about $8 a day worth of food and have $2 a day left over for drinks, if that’s how we choose to spend. Those cocktail hour drinks can be doubles and still hit our number. Where are we now? Let’s take out that $100 a month for furniture – we’ve already paid for the bed and what few clothes we need. Incom Side of things e Annual Income $ 27,500.00 T Rate ax 29% Actual Income $ 19,525.00 Monthly Income (spendable) $ 1,627.08 The Expense Side Rent on a nice apartment $ 350.00 Telephone $ 38.00 Bus Pass $ 60.00 DSL $ 29.00 Gas $ - Electricity $ - Cable $ - Furniture $ - Bank Card Payment $ - Food $ 304.17 Medical $ 130.00 Total E xpens es $ 911.17 Annual expes nes: $ 10,934.00 Net Outcome $ 715.92 Wow! We’re getting close. Let’s consider… Section 4: Communications There are two pieces of monthly spending in the communications area. One is the phone and the other is the DSL bill. Tell you what we’re going to do here. Chuck the cell phone. We’ll check with one of the roommates and see if we can’t use their phone for occasional calls for $15 a month. We might even be able to use the dial-up service of someone like www.peoplepc.com for $12 a month. But instead, let’s use the library computer at the public library down the street. OK, we could get a pay for minutes only phone at Wal-Mart. And, if there’s a neighbor with DSL we could offer to buy them a wireless router if they will let you use the access point. See how good being cheap is? Page 33 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Because we’re worried about subsistence level living, and trying to do it for $10,000 a year, we can get within spitting distance of our goal by purchasing a laptop and wandering around the city with it until we find a wireless hot spot. Then, you will have access to the internet, good bandwidth, and not pay a dime for it. Elaine and I were once looking at apartments in the Burbank area (2005) and one of the things I have been thinking about it setting up a high speed wireless network when we find someplace. What I would do is buy a $30/month DSL connection and then allow 2- 3 others in the apartment complex to piggyback – and charge them $10 a month each, so I either get my DSL for $10 or free, depending on who signs up. I know it’s probably against some law (being thrifty is good for your personal economy, but not for government, after all…), but I have a personal law against losing money… Ask your neighbor, for example, if they would be interested in splitting a wireless link – and then use the wireless encryption protocol (WEP enabled) with a long password to foil the war drivers - the folks who wander around looking for wireless access points. Or, simply drop by a Starbucks and have a short coffee and access from there… The hotmail.com and yahoo.com email centers are free, so what did you really need your own ISP for anyway? If you need the net, do it cheaply! A 56 k dialup still works, you know. Shop the computer discount stores online for equipment. Even in 2008 a brand new laptop with wireless G capability and a decent screen and hard drive could be had for under $500. Don’t waste money of spendy operating systems either. The new version of Kubuntu Linux is out with the K.E. interface, and once you have that and OpenOffice.org’s latest business platform, all that’s missing is Mozilla’s Linux version of FireFox and you’re there – a complete open-source setup that might use XP in boot to get at the hardware drivers. Section 5: Medical Expenses The last section we’re going to deal with is probably the most controversial – it’s medical expenses. In our attempt to get our budget down previously, we have not taken out the $1,560 which is shown as the employee contribution to the medical plan. But clearly, if we’re to actually hit our $10,000 a year goal, at least in the short term we need to consider whether keeping up our insurance is a good deal. Let’s run through some of the “facts of life” about insurance. Insurance does nothing more or less than act as a “group purchasing agent” • wherein a large number of people pool their funds and the sick get to take more out than they put in. The healthy people underwrite the cost of treatment of the poor. Page 34 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Insurance companies do not do this for “free”. There’s a tremendous amount of • overhead associated with running an insurance business, not the least of which is the cost of acquiring customers. We won’t pick on insurance agents, because we’ve actually looked at starting an insurance business in Texas when we return. A little home-based business that would do auto, farm, and casualty kinds of things. But suppose, if you will for a few minutes, that we step back and look at how much the $130 a month contribution would be worth if compounded for some period, such as 40- years. Are you ready? $240,000 by the time you figure interest into the calculations – and this is for the employee contribution only, over a working lifetime. It’s even worse the longer you work. If you start working at 16 and work till 65 (because the double dealers at Social Security have changed the rules on us) you will work 49 years. And by then, with interest the self insurance account is at $425,000 plus or minus a surgery, tummy tuck, face lift, or gum surgery along the way. Importantly, this doesn’t count the employer contribution, either. Which means there are as many as a million dollars of money/interest/overhead in your medical portfolio. That ends up going to insurance company profits and their shareholders… Now I’ll give you a bet to take: Do you pay for insurance, or does it make sense to self- insure? It makes a lot of difference what kind of general health you are in. While I could lose some weight, Elaine is fit as a fiddle. And, because we are extremely careful people – we don’t have “accidents” generally, and we eat as close to unprocessed as we can, the odds of us getting a serious illness might be regarded as less than others in the general population. My mother, with the same “Danish side of the family weight” will be celebrating her 90th birthday this year and Elaine’s dad lived into his mid 80’s – and living a much harder life. I won’t make any recommendations, but if you had purchased gold coins with the idea of self-insuring, you would see the benefits. While I won’t recommend that you quit insurance, and spend the money on a gym, some walking shoes, and underwriting an outdoor sport (sailing anyone?) there’s a lot to be said for the non-pill lifestyle. I get a few ribs from colleagues when my gout (common in my genetic background) acts up. But I would rather take black cherry extract pills than Alopurinol just on the basis of one’s a natural remedy and the other less so. People don’t seem to keep clear, when discussing items like Medical Insurance, the notion that companies are not in business as social endeavors. They are in business to make money – and to this end – insurance premiums buy insurance execs a large number of perks, not to mention fancy cars and big buildings – because they charge a hefty fee to spread risk around, don’tcha know? Page 35 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • A bit of calcium (a Tums now and then) and 15 minutes of sun a day taken outdoors on your face will do wonders for your disposition. There’s a reason for the old saying a “sunny disposition” right? And there’s no disputing that happy translates to healthy over the long term. Section 6: The House of Your Own Living so cheaply may not appeal to many people, yet if our hypothetical example could hang on to the vision of a better tomorrow, within 7 years there would be enough saved to plunk down $75,000 which in many places in the mid South, Texas, Oklahoma, Arkansas and Louisiana, would buy you an extremely comfortable place to live and even prosper. At the heart of prosperity and health, at least as I see the world, is the idea that a person of even modest intellect should hang on to things of value such that worrying about having a roof overhead and a meal on the table shouldn’t occupy any “head space” at all, once properly attended to once. That brings us to the free and clear approach to living. Our example would have to live in Albuquerque for 6.9 years and actually save everything possible each month, about $900. A married couple would find it easier going because in some ways, two can live as cheaply as one, provided they are willing to temporarily suffer through the roommates or the small sparsely studio furnished apartment and doing without the car. Few are willing to voluntarily renounce what GM and Ford have sold us from the cradle; namely the concept of the “freedom of the open road.” It’s just nowhere near free. Nevertheless, we had arranged the budget of our hypothetical person living in Southern California and making $55,000 a year such that $1,726.75 a month was available for savings. That’s less than four years of saving and even bad roommates may be tolerated for some period of time when saving for a “greater cause” than just day-to-day consumption in life. Once again, even a moderately bright person can figure this stuff out, but there are so many goodies competing for our attention and budgets, that it’s rare to see someone actually “walk the talk.” Would it be too great a sacrifice to suffer through three years, though? Just 36-months of living close to the bone? If so, you’d have a nest egg of $62,000. That would get you into a $60,000 house and land where your annual property taxes would be the only expense, making retiring even on skinnied out Social Security possible. There are many reasons to get out of Big Cities – because when the country hits the skids economically, that will be where most of the troubles will be. And most of the law enforcement including, perhaps martial law if the banks run into trouble and a few hundred thousand people at a time in each big city realize that they have just been screwed out of their life savings by the bankster class. Page 36 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Amazingly, if you can save up $50,000, you can find workable places to live in small towns and get enough land in the deal to make at least a subsistence level existence out of farming or ranching. The single best resource for finding a very affordable place to live is www.unitedcountry.com which Elaine and I used to find our home in East Texas. In May 2008, just $50,000 would buy you a 14 acre home in Gilliam, Missouri featuring a small lake, being on a state highway, with its own well (darn, no water bills!) close to town and only 25 miles from Marshall Missouri. The home on it was a small A frame constructed in 1985 and there was a shop building, too, so you’d have some room to work on whatever moves you. Although jobs are a little tougher to find in the rural parts of the country, there’s always something to do. A school bus driver might make $6-$7 an hour, work 4-hours a day and make enough to pay taxes. Once you have your own land, the cost of food can drop dramatically if you’re willing to work it. On 14-acres and a state highway, you might be able to set up a small You-Pick vegetable operation – and there you have it – ways to start making money on your own start popping up all over the place for the prepared mind. It’s not like the homes are around. 20 acres in Glencoe Arkansas, an unfinished cabin on 15 acres in Arcadia Missouri, and the list goes on and on. If you have an aversion to mobile/modular homes, you should think about building your own home. It’s something that you can do at any age, although I wouldn’t start a 5,000 square foot super-house much past age 70…I think at that age I would be content building a 1,600 square foot single level home. And alternative construction techniques? They’re all over the place. I like earth-built homes especially: http://www.undergroundhomes.com/ and http://www.earthshelteredhome.com/ Another approach would be to explore the large variety of kit homes on the market, or visit www.pacificyurts.com and put up the ultimate in portable tents. Section 7: Psychological Aspects of Change The very idea of having to live on $10,000 a year for any length of time is not a very appealing proposition. Yet, it may become necessary for any numbers of reasons, including a collapse of financial markets, the collapse of the housing market (which may have already begun in some cities such as Detroit and Philadelphia. Or, you could wake up one morning and discover that your job which has supplied the high income Page 37 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • underwriting your consumptive binge has either been offshored or eliminated by a new technology. The issue facing most people is that when confronted by a large-scale change in their life, is that they don’t realize that reaction to change is predictable. You can rage against a changing condition at some point, but if it’s something a such a large magnitude that nothing a group of humans can do to resist, then you’re going to have to accept the change at some point. Steps of Major Change You’ll be able to find the specific steps involved in the change process many places on the web, but here are some of the highlights: 1. DISRUPTION: The first clear indicator of massive change is that something in your life becomes disrupted. Something falls out of its previously set expectations. Maybe you expected your job to be around forever, or you just took it as an article of faith that your existing overpriced home would continue going up in value. Whatever the specific, the first step in change is you notice something bigis no longer the way it should be and it’s very unsettling. Think back to those people on the beach looking at the tsunami about to come ashore and kill them. There was disruption – and so intense that it caused people to become paralyzed with the magnitude of the change. It was outside of their expectations and that resulted in numbness – the inability to react to change – which ultimately caused thousands to die. 2. DENIAL: If a change is too large, or if you don’t fully comprehend it, the second reaction is denial. Like the people on the beach, your mind will say something like “No, this is just too big – therefore this cannot be happening…” Or, in a more realistic example for most readers, you might read that housing prices in your city have just dropped a big. The process of denial is best explained as denying the facts because they don’t happen to fit your preconceived ideas about how things ought to be. 3. RECOGNITION: As some point, and again, this is whether you are standing on the beach looking at the tsunami, or whether you are looking at real estate prices on Main St., a little voice will go off in your head to announced “Oh,oph. New data that we can’t deny – something had changed – what should we do about it?” 4. VISIONING: If the first problem is actually internalizing the source of change – as the people on the beaches experienced – the second step in the change process is visioning the coming future with the change taken into account. In the case of the housing bubble, you may recognize that housing prices do not always go up, and as a result, you will then start a series of mental “what if?” calculations. 5. INITIAL ACTION: Depending on how you visualize the future, the next step is to take action to cope with change. In some cases, the decision to act will come too late, as it did for the thousands on the beaches in Southeast Asia. Or, in the case of the housing bubble, your action might begin with a strategy designed to cope with the change, but expecting that the previous expectation set will return. You Page 38 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • might tighten the belt just a bit, but secretly hope that the housing bubble hasn’t really popped yet and things will eventually get around to resuming their old upward trend. 6. CHANGE IMPACTS: In the case of the tsunami, the change impact was too fast for most to survive. Even if the initial reaction had been to run up the beach toward a hill, for many it was simply too late. Too much time had been spent looking at the changing condition of the sea, then denying that it could really mean a tsunami, and visioning, such that by the time the moment of action was recognized, the clock had run too far. Or, in the case of the housing bubble, it will just happen and your strategy will be tested. In the event you got the initial action wrong, the outcome will be economic loss. 7. CLOSURE: At some point the new set of conditions embodied within the change will become the new status quo or way things are nowadays. It may be a life destroying change, such as the tsunami survivors finding they no longer had homes, fresh water to drink, and no food. Or, it could just be that housing prices drop and don’t recovery – and at some point, the houses on the market all drop dramatically as the recognition of the change becomes universal and it’s the new status quo. Less than $10,000 For many individuals, even the modest income of $10,000 may be too much to expect going forward. If we cancel out all the unnecessary expenses, we can come up with a strategy to get down to almost any level of income, but when a change of that magnitude comes along, the reaction of many people is to enter into denial, thereby compounding the problem with debt. As we have shown, you can get your income requirements down to about $8,800 a year, but it will require things like dial up networking, owning a home and paying only property taxes, and growing some of your own food. The one sleight of hand is that to get to this kind of level, you will need to have sufficient capital to actually buy a home outright. Living in a mobile or modular home may strike you has a particularly distasteful thing, but if you’re serious about working out a low income plan for yourself, the magic of capital cannot be overstated. In our worksheet below, it allows you to own a home, even on minimum wage: Page 39 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • The Expense Side Allowance for property tax $ 100.00 Telephone and dial up $ 70.00 Bus Pass $ 60.00 DSL * Gas $ 25.00 Electricity $ 45.00 Cable $ - Furniture $ 50.00 Bank Card Payment $ - Food $ 304.17 Seeds and materials $ 50.00 Medical * Total Expenses $ 704.17 Annual expesnes: $ 8,450.00 Living on $8,450 a year? Sure. But you will have a much different lifestyle to be sure. The Evil of Interest Most people who are reading Inside Report don’t have to worry about living on $10,000 a year – yet. I expect a larger portion of readers than the general public, have already secured their future through unusually high incomes and ownership of property, plus reduction of debt. Still, there are quite a few, perhaps several dozen, that subscribe – or have been given subscription because they don’t yet have the wherewithal to build a security future. What’s the one thing every reader has in common? I doubt you have ever added up all the interest you pay in life – and therefore have not calculated the cost of living ipact of paying interest. Interest, as you know from my past writings, doesn’t do anyone any good, except the lender who engages in usury – asking not only compensation for the declining power of the dollar because of the sickly manipulations of fiat money by the Fed, and compensation for risk, but also wanting to make money off the debt of another human. Predatory Lending Predatory lending is the practice of making money at the expense of other people’s misery. As the Center for Responsible Lending notes: “Predatory lending strips billions in wealth from low-income consumers and communities in the U.S. each year. Borrowers lose an estimated $9.1 billion annually due to predatory mortgages; $3.4 billion from payday loans; and $3.5 billion in other lending abuses, such as overdraft loans, excessive credit card debt, and tax refund loans.” http://www.responsiblelending.org/ Page 40 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • But seriously, how many bank customers ask “What’s the highest rate you charge low income people for credit cards?” and then make a decision on selecting a bank based on socially responsible behavior? Hint: None. In an excellent paper on how predatory lending practices actually increase the chances of foreclosure, a recent (1/25/2005) paper suggests: “When it comes to subprime lending, of which predatory lending is a subset, the controlling federal law is the Home Ownership and Equity Protection Act of 1994 (HOEPA), implemented by Section 226.32 of federal Regulation Z, revised in 2002. Under HOEPA, high cost loans are defined as those with either (1) interest rates eight percentage points higher than comparable treasuries (for first-lien loans) or (2) total points and fees exceeding 8 percent of the total loan amount or $400 (subject to annual indexing), whichever is greater. HOEPA also limits the refinancing of high cost loans with another high cost loan within the first year unless the refinancing is “in the interest” of the borrower (Dreher, Langer, and Tomkies 2004). Since 1994, more than 25 states and localities have enacted predatory lending laws that generally set a much lower trigger than HOEPA, require fuller disclosure, or ban a broader array of abusive practices (Mortgage Bankers Association 2004; Kirchhoff 2004).” http://www.kenan-flagler.unc.edu/assets/documents/foreclosurepaper.pdf Where the Housing Bubble Came From In skimming over the paper referenced above, I want to draw your attention to something that should come as a shock – a description of where the Housing Bubble has had its origins – something Greenspan and company at the privately owned misnamed “Federal Reserve” are not anxious to talk about. The paper referenced above notes that: “There is growing interest in better understanding the performance of loans made to subprime borrowers.1 This growing interest is understandable given the surge in subprime lending during the last few years and the greater risks associated with this type of lending. Nationally, subprime loan originations increased more than nine fold--from $35 billion to about $332 billion, in just 9 years (1994–2003) (Mortgage Market Statistical Annual 2004). Within metropolitan areas alone, between 1993 and 2001, the subprime share of all home purchase originations grew from 1.3 percent to 6.5 percent, while the subprime share of refinance loans climbed from 2.1 percent to 10.1 percent (FDIC 2004.) More recent data indicates that 2004 was another record year, with subprime securitizations topping $401 billion (Inside B&C Lending, 2005)” You see that area highlighted? In other words, thanks to subprime lending, the demand for housing has grown 5.2%! While this looks like a “good thing” from the perspective of Greenspan and company, their claims actually exceed their performance in a meaningful way. First, the hype. Page 41 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • From a May 2004 speech by Fed member Edward Gramlich: http://www.federalreserve.gov/boarddocs/speeches/2004/20040521/default.htm Table 2 Homeownership Totals and Rates By Race and Household Income 1994-2003 Millions except as noted 1994 2003 Characteristic Households Owners Rate (%) Households Owners Rate (%) Total 98.7 63.1 63.9 105.6 72.0 68.2 Race1 White 76.6 53.6 70.0 76.5 57.7 75.4 Black 11.6 4.9 42.2 12.6 6.1 48.4 Hispanic 7.7 3.2 41.6 11.0 5.1 46.4 1 Other 2.9 1.5 51.7 5.5 3.1 56.4 Income Greater than median NA NA 78.5 NA NA 83.6 Less than median NA NA 48.4 NA NA 51.8 1. Other includes other races and households indicating more than one race. Rates are calculated from counts of households and owners. Return to table Source: U.S. Census Bureau. In other words, ownership increased from 63.9% in 1994 to 68.2% in 2003 and the rate has no doubt gone up. On the other hand, what about rates? From the previously referenced paper: “It is not difficult to see how abusive or predatory loan terms might increase the probability of default and, thus the start of foreclosure. High fees and other unwarranted charges erode home equity. High back-end ratios, which allow borrowers to purchase more house than they can really afford in the long run, leave little cushion to address crises that may trigger the default option. Prepayment penalties and balloon-payment requirements slow down the repayment of the outstanding principal, increasing the likelihood that borrowers may experience negative equity in the event of a downturn in the market.9 In addition, prepayment penalties can reduce the refinancing and other choices available to borrowers when confronted with a crisis, or of refinancing into a lower cost prime loan as a result of improving their credit record, making the option to default more desirable (Berquist 2004). Borrowers with little ability to accumulate the large payments due on balloon loans are forced to refinance (which incurs fees and other charges), further eroding their equity position. Finally, while recent strong markets have kept the default option out of the money even for highly leveraged borrowers, a slowdown in local or regional appreciation rates will limit their ability to gain equity and could bring the put option back into play.” Page 42 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • The bottom line? In America, if you have a low income, you’re going to be victimized by the banking industry if you borrow money. The only way to really extract yourself from the victim role is to save money, live cheaply and below your means and not be hypnotized into excessive consumption. The housing bubble, it appears, has been largely driven by the mortgage business, roping millions of people into buying homes at the top of a market, who had no business being owners. They bought in to usurious loans that are often 8 points higher than the going prime or fed rate. Adding Up Your Interest Payments We’d admonish you as a project this weekend to see just how much debt is really costing you. Here’s what we’d expect to see on a typical personal confessional: Interest Paid Annually Item Average Balance Annual Rate Annual Amount House mortgage $ 240,000.00 6.2% $ 14,880.00 Bank Cards $ 10,000.00 12.0% $ 1,200.00 Car Payment $ 10,000.00 8.0% $ 800.00 Total $ 16,880.00 Bet you pay more than 12% interest on your bank card, but that’s a different point. The one I’m making here is that the good thing about the house payment is that the mortgage interest is tax deductible. Fine if you’re in the 30% tax bracket or above. However, if you wipe out the car interest and interest on your bank cards, it’s easy to see how it’s like getting a $3,000 a year (pretax) raise just by getting rid of usurious rent on money. Unless you’re using your bank card to buy gold coins, you won’t have anything to show for the spending in 4-5 years anyway. It’s likely most things you gotta have today will be just “junk” five or six years from now. So why bother? Page 43 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 66 Tips From the Government Although much of the time I’m pretty skeptical about government actually “helping” people, there are a few government operations that provide some real, tangible value. The Federal Trade Commission, for example, offers a dandy page with “66 Ways to Save Money” listed, which is reproduced for your convenience here: Source: http://www.ftc.gov/bcp/edu/pubs/consumer/general/gen14.shtm#air Transportation Airline Fares 1. You may lower the price of a round trip air fare by as much as two-thirds by making certain your trip includes a Saturday evening stay over, and by purchasing the ticket in advance. 2. To make certain you have a cheap fare, even if you use a travel agent, contact all the airlines that fly where you want to go and ask what the lowest fare to your destination is. 3. Be flexible, if possible. Consider using low fare carriers or alternative airports and keep an eye out for fare wars. Web Resource: http://airconsumer.ost.dot.gov/airconsumer/publications/bestfare.htm Car Rental 1. Since car rental rates can vary greatly, shop around for the best basic rates. Ask about any additional charges (extra driver, gas, drop-off fees) and special offers. 2. Rental car companies offer various insurance and waiver options. Check with your automobile insurance agent and credit card company in advance to avoid duplicating any coverage you may already have. Web Resource: www.ftc.gov/bcp/edu/pubs/consumer/autos/aut07.shtm New Cars 1. You can save thousands of dollars over the lifetime of a car by selecting a model that combines a low purchase price with low financing, insurance, gasoline, maintenance, and repair costs. Ask your local librarian for new car guides that contain this information. 2. Having selected a model, you can save hundreds of dollars by comparison shopping. Call at least five dealers for price quotes and let each know that you are calling others. 3. Remember there is no cooling off period on new car sales. Once you have signed a contract, you are obligated to buy the car. Web Resource: www.ftc.gov/bcp/edu/pubs/consumer/autos/aut11.shtm Used Cars 1. Before buying any used car: Page 44 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Compare the seller's asking price with the average retail price in a bluebook or other o guide to car prices found at many libraries, banks, and credit unions. Have a mechanic you trust check the car, especially if the car is sold as is. o 2. Consider purchasing a used car from an individual you know and trust. They are more likely than other sellers to charge a lower price and point out any problems with the car. Web Resource:www.ftc.gov/bcp/edu/pubs/consumer/autos/aut03.shtm Auto Leasing 1. Don't decide to lease a car just because the payments are lower than on a traditional auto loan. The leasing payments may be lower because you don't own the car at the end of the lease. 2. Leasing a car is very complicated. When shopping, consider the price of the car (known as the capitalized cost), your trade-in allowance, any down payment, monthly payments, various fees (excess mileage, excess wear and tear, end-of- lease), and the cost of buying the car at the end of the lease. Keys to Vehicle Leasing: A Consumer Guide, published by the Federal Reserve Board and Federal Trade Commission, is a valuable source of information about auto leasing. Web Resource: http://www.federalreserve.gov/pubs/leasing Gasoline 1. You can save hundreds of dollars a year by comparing prices at different stations, pumping gas yourself, and using the lowest-octane called for in your owner's manual. 2. You can save up to $100 a year on gas by keeping your engine tuned and your tires inflated to their proper pressure. Web Resource: http://www.fueleconomy.gov/ Insurance Car Repairs 1. Consumers lose billions of dollars each year on unneeded or poorly done car repairs. The most important step that you can take to save money on these repairs is to find a skilled, honest mechanic. Before you need repairs, look for a mechanic who: is certified and well established; • has done good work for someone you know; and • communicates well about repair options and costs. • Web Resource: www.ftc.gov/bcp/edu/pubs/consumer/autos/aut13.htm Auto Insurance 1. You can save several hundred dollars a year by purchasing auto insurance from a licensed, low- price insurer. Call your state insurance department for a publication showing typical prices charged Page 45 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • by different companies. Then call at least four of the lowest-priced, licensed insurers to learn what they would charge you for the same coverage. 2. Talk to your agent or insurer about raising your deductibles on collision and comprehensive coverage to at least $500 or, if you have an old car, dropping this coverage altogether. Taking these steps can save you hundreds of dollars a year. 3. Make certain that your new policy is in effect before dropping your old one. Web Resources: http://www.naic.org/1regulator/usamap.htm or http://www.consumer.gov Homeowner/Renter Insurance 1. You can save several hundred dollars a year on homeowner insurance and up to $50 a year on renter insurance by purchasing insurance from a low-price, licensed insurer. Ask your state insurance department for a publication showing typical prices charged by different licensed companies. Then call at least four of the lowest priced insurers to learn what they would charge you. If such a publication is not available, it is even more important to call at least four insurers for price quotes. 2. Make certain you purchase enough coverage to replace the house and its contents. Replacement on the house means rebuilding to its current condition. 3. Make certain your new policy is in effect before dropping your old one. Web Resource: http://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.txt and http://www.fema.gov/ Life Insurance 1. If you want insurance protection only, and not a savings and investment product, buy a term life insurance policy. 2. If you want to buy a whole life, universal life, or other cash value policy, plan to hold it for at least 15 years. Canceling these policies after only a few years can more than double your life insurance costs. 3. Check the National Association of Insurance Commissioners website (http://www.naic.org/cis/) or your local library for information on the financial soundness of insurance companies. Web Resource: http://www.pueblo.gsa.gov/acli/index.htm Banking/Credit Checking 1. You can save more than $100 a year in fees by selecting a checking account with a low (or no) minimum balance requirement that you can, and do, meet. Request a list of these and other fees (including ATM and debit card fees) that are charged on these accounts. 2. Banking institutions often will drop or lower checking fees if paychecks are directly deposited by your employer. Direct deposit offers the additional advantages of convenience, security, and immediate access to your money. Web Resource: http://www.frbatlanta.org/invoke_brochure.cfm Savings and Investment Products Page 46 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 1. Before opening a savings or investment account with a bank or other financial institution, find out whether the account is insured by the federal government (FDIC or NCUA). An increasing number of products offered by these institutions, including mutual stock funds and annuities, are not insured. 2. To earn the highest return on savings (annual percentage yield) with little or no risk, consider certificates of deposit (CDs) or U.S. Savings Bonds (Series I or EE). 3. Once you select a type of savings or investment product, compare rates and fees offered by different institutions. These rates can vary a lot and, over time, can significantly affect interest earnings. Web Resource: http://www.pueblo.gsa.gov/cic_text/money/sense/sense.htm and http://www.sec.gov/investor/pubs/roadmap.htm Credit Cards 1. You can save as much as a thousand dollars or more each year in lower credit card interest charges by paying off your entire bill each month or by using a check, cash or debit card for purchases. 2. If you are unable to pay off a large balance, pay as much as you can and switch to a credit card with a low annual percentage rate (APR). You can obtain listings of low-rate credit cards through http://www.cardlocator.com/> or http://www.bankrate.com/ (click on credit cards), which provide information at no charge to consumers. 3. You can reduce credit card fees, which may add up to well over $100 a year, by getting rid of all but one or two cards, and by avoiding annual, late payment, and over-the-credit limit fees. Web Resource: http://www.federalreserve.gov/pubs/shop Auto Loans 1. If you have significant savings earning a low interest rate, consider making a large down payment or even paying for the car in cash. This could save you as much as several thousand dollars in finance charges. 2. You can save as much as hundreds of dollars in finance charges by shopping for the cheapest loan. Contact several banks, your credit union, and the auto manufacturer's own finance company. Web Resource: www.ftc.gov/bcp/edu/pubs/consumer/autos/aut11.shtm First Mortgage Loans 1. Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed- rate loan at 7% annual percentage rate (APR), for example, you will pay over $75,000 less in interest on a 15-year mortgage than on a 30-year mortgage. 2. You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year $100,000 fixed-rate mortgage, just lowering the APR from 7% to 6.5% can save you more than $5,000 in interest charges, and paying two points instead of three would save you an additional $1,000. 3. If your local newspaper does not periodically run mortgage rate surveys, call at least six lenders for information about their rates (APRs), points, and fees. You may also check http://www.bankrate.com/ for mortgage information in your area. Then ask an accountant to compute precisely how much each mortgage option will cost and its tax implications. Page 47 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 4. Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month. Web Resource: http://www.fdic.gov/consumers/looking/index.html Mortgage Refinancing 1. Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more. Ask an accountant to calculate precisely how much your new mortgage (including points, fees and closing costs) will cost and whether, in the long run, it will cost less than your current mortgage. Web Resource: http://www.pueblo.gsa.gov/cic_text/housing/refinance/refinanc.txt Home Equity Loans 1. Be cautious in taking out home equity loans. The loans reduce or may even eliminate the equity that you have built up in your home. Equity is the cash you would have if you sold your house and paid off your mortgage loans. If you are unable to make payments, you could lose your home. 2. Compare home equity loans offered by at least four reputable lending institutions. Consider the interest rate on the loan and the annual percentage rate (APR), which includes other costs, such as origination fees, discount points, mortgage insurance and other fees. Ask if the rate changes, and if so, how it is calculated and how frequently, as this will affect the amount of your monthly payments. Web Resource: http://www.pueblo.gsa.gov/cic_text/housing/home-line/homeline.htm Housing Home Purchase 1. You can often negotiate a lower sale price by employing a buyer broker who works for you not the seller. If the buyer broker or the broker's firm also lists properties, there may be a conflict of interest, so ask them to tell you if they are showing you a property that they have listed. 2. Do not purchase any house until it has been examined by a home inspector that you selected. Web Resource: http://www.hud.gov/buying Renting a Place to Live 1. Do not limit your rental housing search to classified ads or referrals from friends and acquaintances. Select buildings where you would like to live and contact their building manager or owner to see if anything is available. 2. Remember that signing a lease probably obligates you to make all monthly payments for the term of the agreement. Web Resource: http://www.hud.gov/renting/index.cfm Home Improvement Page 48 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 1. Home repairs often cost thousands of dollars and are the subject of frequent complaints. Select from among several well established, licensed contractors who have submitted written, fixed-price bids for the work. 2. Do not sign any contract that requires full payment before satisfactory completion of the work. Web Resource: www.ftc.gov/bcp/edu/pubs/consumer/products/pro20.shtm Major Appliances 1. Consult Consumer Reports, available in most public libraries, for information about specific brands and how to evaluate them, including energy use. There are often great price and quality differences among brands. 2. Once you've selected a brand, check the phone book to learn what stores carry this brand, then call at least four of these stores for the prices of specific models. After each store has given you a quote, ask if that's the lowest price they can offer you. This comparison shopping can save you as much as $100 or more. Web Resource: http://www.eere.energy.gov/consumerinfo/saveenergy/save_appliances.html Utilities Electricity 1. To save as much as hundreds of dollars a year on electricity, make certain that any new appliances you purchase, especially air conditioners and furnaces, are energy-efficient. Information on the energy efficiency of major appliances is found on Energy Guide Labels required by federal law. 2. Enrolling in load management programs and off-hour rate programs offered by your electric utility may save you up to $100 a year in electricity costs. Call your electric utility for information about these cost-saving programs. Web Resource: http://www.eere.energy.gov/consumerinfo/energy_savers/index.html Home Heating 1. A home energy audit can identify ways to save up to hundreds of dollars a year on home heating (and air conditioning). Ask your electric or gas utility if they can do this audit for free or for a reasonable charge. If they cannot, ask them to refer you to a qualified professional. Web Resource: http://hes.lbl.gov/hes Telephone Service 1. At least once a year review your phone bills for the previous three months to see what local, local toll, long distance, and international calls you normally make. Call several phone companies, including wireless companies, to find an inexpensive calling plan that meets your needs. 2. If you make very few toll or long distance calls, avoid calling plans with monthly fees or minimums. 3. Check your phone bill to see if you have optional calling services you don't use. Each option you drop could save you $40 or more each year. 4. Before making calls when away from home, compare per minute rates and surcharges for different prepaid phone cards and calling card plans to find the one that saves you the most money. Page 49 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • 5. Dial your long distance calls directly. Using an operator to place the call can cost you up to $10 extra. 6. If you use a wireless phone, make sure your wireless calling plan covers the calls you typically make. Understand promotions, peak calling periods, area coverage and roaming, and long distance requirements to avoid paying too much. Web Resource: http://www.fcc.gov/cgb/wirelessphone.pdf and http://www.fcc.gov/cib/ Other Food Purchased at Markets 1. You can save hundreds of dollars a year by shopping at the lower-priced food stores. Convenience stores often charge the highest prices. 2. You will spend less on food if you shop with a list. 3. You can save hundreds of dollars a year by comparing price-per-ounce or other unit prices on shelf labels. Stock up on those items with low per-unit costs. Web Resource: http://www.urbanext.uiuc.edu/thriftyliving/tl-savefood.html Prescription Drugs 1. Since brand name drugs are usually much more expensive than their generic equivalents, ask your physician and pharmacist for generic drugs whenever appropriate. 2. Since pharmacies may charge widely different prices for the same medicine, call several. When taking a drug for a long time, also consider calling mail-order pharmacies, which often charge lower prices. Funeral Arrangements 1. Make your wishes known about your funeral, memorial, or burial arrangements in writing. Be cautious about prepaying because there may be risks involved. 2. For information about the least costly options, which could save you several thousand dollars, contact a local memorial society, which is usually listed in the Yellow Pages under funeral services. 3. Before selecting a funeral home, call several and ask for prices of specific goods and services, or visit them to obtain an itemized price list. You are entitled to this information by law and, by using it to comparison shop, you can save hundreds of dollars. Web Resource: www.ftc.gov/bcp/conline/pubs/services/funeral.htm Page 50 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • To Summarize To sum up, here are the common sense rules to follow if you’re serious about reducing your expenses – to either $10,000 a year – or whatever figure you set. 1. Don’t work to support a car. If by driving a car you save time which can be profitably spent increasing income or net worth, then by all means own one. We do. But don’t get hooked into the trap of car-for-appearances-sake. 2. Either be the cheapest tenant in the world (this might mean roommates) or own your property outright. As we’ve shown, once you own property outright, you will never want to go back under the yoke of usurious oppression. 3. A person can eat just grand for $8 a day. 4. A person can drink more than is healthy for $2 a day of beer or hard liquor. But wine is a poor investment in everything but health. 5. Medical Insurance is a racket which spreads costs – but charges an arm and a leg to do that. If you have the means, you might want to consider self-insurance for periods of time. Keep your teeth in good condition, though! 6. When you reduce your cost of living, bank it! Put it in gold! Build personal net worth. 7. The housing prices are high now because so many low income families have been roped into home ownership at predatory lending rates. Can a person live on $10,000 a year? You bet. And, after the first 5-years of a voluntarily reduced lifestyle, an industrious person with more than a minimum wage income would be able to save enough to pay for a real home free and clear. We think that’s what being in America is supposed to be about. Page 51 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Bonus Section #1: Leveraging Up from $10,000 OK, so maybe by now you’re convinced: It is possible to live on $10,000 a year (or less) but only if you are willing to make some compromises. But, once made, if you are able to hang onto a well-paying job, and if you can find a reputable bank to put your money in, within a few short years, you will be able to have enough money saved up to buy a home and some land somewhere in America. This is being made all the more possible because the housing market seems to be in the midst of a major periodic bubble bursting collapse. If you can save money now, within a few years you ought to be able to get into a very comfortable economic position. Most people never get this far because they are not willing to commit to the real American Dream and do something about it. But, I’m telling you’re the straight scoop here: It can still be done. Another key to this continuously available upward mobility is to remember the concept of always striving to build your personal net worth. I’m a great believer in the concept of a two-step process to achieve financial freedom. First, own a home and some land – enough land that you can make or grow something with it. The second step? Produce an income from your land. The key on this second point is to build your home and land so that it can function in the very best of times and the very worst of times. Cities don’t offer that. Cities work only in the best of times because in the worst of times there won’t be electricity, there won’t be running water, and the rest of the picture is pretty grim because people don’t act nicely when there are more humans than there is food to go around. Pretend for a moment that you are an upscale person and you want to live beyond the outer ring of urban insanity. What could you do with a semi-remote property that would cause people to actually support your efforts? Rather than saying I want to have a place in the woods in case the stuff hits the fan you might want to say something like In addition to our house here in (name the big city) we also have a very interesting little place out in (name the rural area) where we are (pick one from the following list): ...building a destination resort... ...build an organic farm... ...setting up an artist's colony... ...building a custom furniture/custom machining/small manufacturing plant... ...building a small recording studio for upcoming (name your genre) recording artists... ...building a small winery... Page 52 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • ...(named animal type) breeding ranch/farm... ...growing an orchard... Another way to get past people's inherent revulsion to your planned departure from groupthink is to announce that because of some (pick one from the following list) reason, you have decided to get hooked up on a big internet pipe and do your main income producing function out in the sticks. Might be something like Yes, my wife and I are moving to (rural place) because ... ... I am spending too much time going to and from the office... ...with housing prices down, we have always wanted a place in the country... ...I have asthma and being out of the Big City pollution makes me feel better... ... I want to be closer to my biggest client which is in (name)... ...I want to have some guest accommodations and give seminars about (your expertise)... You see it? You don't pick a fight on your real agenda. Put up a straw man as the reason - and if you can associate the kind of 'sparklies' that people lust after in their own monkey minds, they will leave you alone, or better, they will become actively supportive of your adventure. Not realizing, of course, they are simply supporting your personal revolution. But, that's what the unawares are for, no? --- If I told friends in Hollywood that I'm going to leave L.A. and go off and hibernate in the woods and await the pending financial meltdown of the world in a few years... they would pass me off as a lone nut job. On the other hand, if I were to tell them (as I did) that I have some land and I want to put in a small 24-track and capture some of the up- and-coming Country artists in East Texas then all of a sudden you've transited from 'nut job to visionary. Conceptual Kung Fu. On the other hand, if I tell someone at the local Tractor Supply store that The wife and I have a little place north of town and we raise registered goats that's a far easier thing for them to accept than trying to explain that I know these guys with a time machine and I am a wild-eyed radical linguistics-reading options player and strategic planning consultant... A say what? When I go to town, I don't talk too much about the truth (a few boyz in the local ham radio club have an inkling, but that's about the extent of it). The rest of the town sees another almost 60 farmerly-looking guy wearing the requisite blue jeans and suspenders and a straw hat & cammo jacket. All that's missing is the piece of straw hanging out of my mouth and a plug of chewing tobacco to round it out. Driving a not too old, yet not too new Dodge Ram pick up truck with what looks like a CB antenna on it, along with a ranch name decal, I'd be about the last guy on earth you'd pick out of a lineup to either be a fan of the movie Pi or worried about the real event horizon sketched out by fractal/temporal linguistics. A few well-placed ...'preciate cha's... and jokes about big government and first thing to you, the old boy you're talking to doesn't mind telling you he's got x millions in oil leases outside of town a ways. Page 53 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Conspicuous consumption doesn't play well in the toolies. Lots of the 'good ol boys' are financially a lot more like icebergs than bhig-city show types. Real assets are best below the waterline out of sight. I know, it may sound like an impossible dream - but believe me, it can be done. Bonus Section #2: How to Build Anything The Hidden Recipe I'm a big fan of something I call the recipe book approach to learning. It's not widely used in educational systems, but that may be due to its effectiveness. By using it, even incredibly complicated things become ridiculously simple, and much of what's built as curriculum can simply be tossed out because it's superfluous. Here's the Hidden Recipe to all things in the industrial arts area: There are only a handful of operations on metal, plastics, wood, and what have you that can possibly be done. • You start with a plan and measuring of things. Then... • You can cut things • You can form things and join them • And you can cover things. Many people who are otherwise good home handypersons don't keep these skills 'front of mind' in this simple context, and as a result, they waste a huge amount of time because they get sidetracked with non-essential activity. And, because they haven't started with a simple Big Picture (a sort of construction order of battle), the helpers end up getting yelled at and are told they're 'dumb' when that's almost never the case. They just haven't learned the 'recipe book.' Further, someone with high carpentry skills can get befuddled when confronted with a metal project, someone with metal-working skills gets intimidated by electricity, and the electrician types are sometimes off-put by plumbing. Although parts of that are definitely stink. ---- Our lesson in generalizing industrial arts takes each of the major crafts and says each one does cut, form, join, and cover operations. Usually, planning is done first, although I admit to starting with cutting and working out from there often times, especially when I'm 'ad libbing' a project with no particular constraints. Most sins can be covered in the end anyway with your choice of bondo, filler, putty, paint, resins, and what have you. Slap enough paint on things and they will look fine... Occasionally, a reader will ask me Where did you learn to do electrical work, plumbing, carpentry and welding so prodigiously? The answer is that I am a generalizer so when I Page 54 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • look at a problem posed by any of the crafts, I start by asking do I need to plan, cut, form, join, or cover here --- and since these operations seem to occur mostly in order, if something needs cutting, it will likely then need joining, then finishing. Simple as pie.. --- Take carpentry as a craft. There are only a few things the carpenter can do. If you hand a carpenter a measuring tape and a plan what do they do? They cut wood to size, they can do a little forming with sandpaper, routers, shapers, jointers, and lathes. Then they can join things together with only a handful of choices (nails, screws, glues, and joinery such as dovetails or pegs) and then slap a cover of paint or plastic on it and call it done. The same is true of a plumber. Given a simple plan that says Put a toilet here and a shower there, and a wash basin over there... they will: Measure and layout where pieces go. They will then cut material and then Join material They either finish or cover their work Plumbing is easy in that they don't get involved in covering, except in the sense that a toilet covers the end of a sewer pipe, or a sink and garbage disposal cover the end of a set of pipes in the kitchen. Tile covers the shower walls and floors. Fresh water pipe covers? Faucets, maybe? Electrical tradesmen have just exactly the same process as the plumber and the carpenter: They get a blueprint that has funny little marks on it that might look like these like these: and then they (look surprised here): They run wire from one place to another and then cut it. Or, for short runs they cut it first. They then form the wire by removing a bit of insulation from each end so they can connect it to something. Next they join the wires to outlets, switches, breakers, and fixtures or appliances. Then they put on electrical outlet and switch covers so that you don't zap yourself. There are other trades besides these involved in home building. Three important ones that come to mind are the masons, the dry wall crew, and the carpet installation people. Did I mention the HVAC people? Can't live without them. However, like their brothers and sisters in the trades each of them does a little planning & measuring, cutting, forming, joining, and covering. Page 55 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • This is not to trivialize the importance of their work, rather it's to show you how down at a fundamental level most of what humans have accomplished is pretty darn simple. Even machinists and welder follow similar work patterns - and once you see the work pattern, the rest of it (learning to imitate their tool use) becomes an almost trivial thing. Carpenters cover with paint, electricians with tape and outlet covers, metal workers with anodizing or powder coast, plumbers with tile and toilets, HVAC crews with grills, flooring crews with carpet, and you get the idea. Important Disclaimers and CAUTIONS Doing things yourself is inherently risky. I am not advising you how to do things, only telling you about my personal experiences. I've supervised well over a million dollars worth of commercial build-out and I don't have any problem building anything. I'm not as fast as a skilled tradesman, but I know the recipes. If you are not confident and have not done considerable study, there are lots of ways to hurt yourself taking on projects around the home or ranch. On the low side, this may involve the momentary pain of smashing you thumb with a hammer. Or, should you decide to recklessly use a power tool, you could end up seriously injured, blinded, or DEAD. So consider the risks and remember THIS SITE TAKES NO RESPONSIBILITY FOR YOUR SAFETY AND HEALTH. WHAT YOU DO IS ON YOUR OWN. CONSIDER HIRING SOMEONE WHO KNOWS WHAT THE HECK THEY ARE DOING. THIS SITE IS NOT RESPONSIBLE IN ANY WAY FOR YOUR ACTIONS. Even if you do take on projects GET AND USE THE RIGHT SAFETY GEAR. When working with electricity TURN OFF THE POWER AND TAG IT OUT OF SERVICE SO OTHERS WILL NOT BE TEMPTED TO TURN IT ON WHILE YOU'RE WORKING ON IT. If you are working on your water system MAKE SURE TO TURN OFF THE HOT WATER HEATER BEFORE DOING ANY WORK IN ORDER TO AVOID EXPOSING THE ELEMENTS TO AIR AND BURNING THEM, OUT. When you are done working on your water system, MAKE SURE TO BLEED ALL PIPES OF ANY AIR THAT MAY HAVE ENTERED, INCLUDING AND ESPECIALLY YOUR HOT WATER SYSTEM, BEFORE TURNING YOUR WATER HEATER BACK ON AGAIN. If you are using power tools DO NOT USE THEM AROUND CHILDREN. UNPLUG ALL TOOLS WHEN NOT IN USE TO AVOID ACCIDENTS. Page 56 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • USE PROPER ANSI APPROVED EYEWEAR AND EAR PROTECTION. WEAR GLOVES. WEAR THICK RUBBER SOLE SHOES IF POSSIBLE - ESPECIALLY WHEN WORKING ON ELECTRICAL ITEMS. TRUST NOTHING. Example: If you throw the main breaker on an electrical panel and the power should be off, try shorting from a downstream breaker to the bus bar. If there's a huge arc, and part of your screw driver is vaporized (insulated screwdriver, right?) then the main breaker can't be trusted. Get professional help. If you are not sure about something, ask others for help and advice. Know how to summon aid should you need it. Not just medic, I mean a licensed plumber or electrician if things go really badly... Wear good solid work clothes. Denim shirts are hot, especially long sleeves in late spring and summer, but they provide protection. Wear a dust mask. I have to remind myself about these, and they are a nuisance. But it's your health, so hang onto it. There, now. One last count of fingers and we move on. Carpentry Good carpentry starts with good measurements and accurate cuts. To do this, you want a very good quality tape measure like a Stanley Fat Max tape because they are a solid measure which you can extend out 11-feet or so before it falls down. This means you can, with a deft arm movement, measure a 12' span without calling for a helpter. On the other hand, Elaine has a 26' Stanley Lever Lock that will only extend 81 before falling down. Not that you need to be a connoisseur of measuring tapes, but there is something to be said for testing them before buying. 99.9% of people don't even know what to look for - thinking, wrongly that an inch is an inch. Always try to use the same tape on a job. I've tried using one tape on a ladder and a different one on the bench, and it seems like I always get something 'off'' a bit. Shouldn't, I know, but it just seems that way for me. It's important to know why the end tab on a measuring tape is loose. That's because when you are measuring to a wall (as shown below) you will want the metal tab to come in whatever the width of the tab is, so that the measurement is accurate. Page 57 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • On the other hand, when you are measuring to the outside dimension, you want the tape side of the tab to line up with the zero mark on the tape, like so: Cutting of wood is done with a variety of saws, but my favorite two are the saber saw which you can buy all day long for under $50 bucks and a decent chop saw (compound miter with laser) for around $130. Joining is done with nails, screws and glues. I've become a real fan of screws simply because the 18-volt electric drill/screwdrivers are so powerful and easy to use. I've got the nail gun and compressor for joining, but that seems to get used on finish-type carpentry (cabinetry and what have you). The saber saw with a 2 by 4 clamped in place for a guide does a good enough job on plywood and to my way of thinking is less dangerous than a Skil saw (portable rotary 7 1/2 saw) although they work well enough. The most dangerous thing about these portable rotary saws is something called 'kick back' which is when the saw teeth bind up in the wood and the saw decides to come running back at you. Practice extreme caution with all power tools, but this one even more than most. The very last thing you want is a Skil saw kicking back and leaving a gouge up your leg. Table saws can't ever to too big. The three measurements that define how good a saw is are 1) the length from the front of the blade to the front of the table, 2) maximum rip fence setting on the right and 3) the maximum rip fence setting on the left. The rip fence is a guide that will attach to either side of the blade and which provides for extremely accurate/square cuts - ideal for doing things like building those new kitchen cabinets you've been thinking about. And, you can build them much, much cheaper than you can buy them. Page 58 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • The problem with all construction, though, is that it takes time away from what you do to earn money for a living, and so it must always be weighed out carefully. The hand tools that matter when the power goes down: Hammers, nails, and some good hand saws. A #8 and #10 (number of teeth per inch) and in cross cut (for cutting across the grain of wood) and a rip saw (for cutting with the grain) will hold you. Joining wood is no big deal EXCEPT to say that if there's one place you can see the difference between an amateur woodworker and a pro it's in how the joining is done. If you take the time to use clamps or to make a holding jig, your work is likely to come out rather good. On the other hand, if youi 'free lance' the joining, then you're asking for trouble. Invest in some clamps and good glue. A lot of people nowadays are using something called Gorilla Glue - great stuff, but remember not to overdo it because it's a glue that expands as it dries, and so it can require some sanding or trimming if you get sloppy with it especially on furniture-grade joints. If you want to make sure you are getting an even surface to glue to, you can run material over a jointer but for most home building projects, they are a nice toy, but not necessary. When you get into cabinet making and furniture grade work, they become indispensable. Kobalt, and possibly a few other manufacturers, make hammers with magnetic heads so that you can put the nail into the hammer and then whack it into place. That would seem to end smashed thumbs. But, like Pappy used to say, no construction project is complete without a little bloodshed. If you're going to talk the carpentry talk, youi will need to know that a two by two (2 x 2) is really only an inch and a half by an inch and a half. And, by the same token, a two by four is only 1 1/2 by 3 1/2 but it's assumed you knew that. A 'two by six is about 1 1/2 by 5 1/2. Don't ask me why...I didn't make up these recipes. If you ask a carpenter why isn't a two by four 2 inches by 4, they will usually launch into an archaic discussion about how years ago when rough-cut wood was used, it was really 2 by 4 but it shrank with drying and then, making matters worse, there was usually finishing which took dimensions down even more. Basically, if you remember that a half inch on each dimension for finishing you will about have it. A 2 by 4 should be about 3 1/2 wide, while a 2 by 8 ought to be about 7 1/2 wide. And with the price of lumber, a 2 by 12 is just darn expensive, regardless of it's width. If you ever work on a really old house, say something built before 1950, or so, you'll likely find the rough cut lumber really was close to a full 2 by 4 and that makes cobbling on modern appendages to an older home an adventure. Doubly so because most homes in this period used lath and plaster for walls which involved putting up strips of horizontal wood and coating it first with chicken wire and then a good slathering of Page 59 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • plaster. Matching up plasterboard to that and be a challenge. The answer is go slow, use plenty of furring strips to build up the thickness behind plasterboard so that they will come out close, and then tape carefully and match the texturing applied to both surfaces. What makes joints stick out are three things. The first - and obvious - is the level of the material. The second thing is the quality of the joint. And third is the texturing and painting. If you get a smooth finish and texture paint across a joint you can make old and new blend nicely. Skip a step and it looks like crap. Not to be overlooked in building a house/barn or whatever is the electrical & plumbing. I always tell people that they should get a very good book on electrical before taking it on themselves because if they get it wrong, they can burn the house down or worse, end up dead. With plumbing, on the other hand, all you will get it wet, be swimming in crappoly and part of your house ruined. There's a concept in the telephone company that's good to borrow: The line of demarcation. In the telecom world, that's where the telco stops it's work and the customer takes up the responsibility. My personal lines of demarcation around my house are as follows: Water (Incoming) I can handle everything on the house side of the meter and shutoff. Sewer/Septic: I can handle everything, but prefer to sub out everything below floor level. Call it lazy, but I've done the low work and it's not fun. Electrical: Everything on the house side of the main breaker. Again,. you can ruin a whole house by getting this stuff wrong, or electrocuting yourself, so best thing to do is find a friend at work who has been thinking about the same kind of home/farm/residential improvements that you are thinking about and then work together on them. Easier to learn with a friend. Plumbing CAUTIONS: Turn the POWER TO YOUR HOT WATER HEATER OFF before doing any plumbing work to avoid exposing the elements to air which can cause them to overheat and burn out. Before restoring power, make sure all air has been bled from your water system to avoid element burn out. TURN OFF WATER AT THE STREET OR AT THE HOUSE INFLOW VALVE. Drain the system. --- Once again, this is a plan, cut, form, join, cover operation. Actually, I like to do two rounds of cut/join/cover with plumbing. The first round is to do all the sewer/drain pipes Page 60 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • first. You might ask why, but the answer is simple if youi think about it: If something goes wrong, where will the water go if you start with supply pipes first? DWV pipe (drain/waste/vent) is simple to install. About the only thing you may not be familiar with are things like how to put in a toilet mount, attach the pipe and how to measure and so on. Here's where you can get a more advanced book than this overview of the process. But, once you get some of the basics down, it's easy to cut and join plastic pipe. As I found out on a recent project, though, make sure you use fresh cement. Once the 'hot' solvents have evaporated, the joints are no where near as strong and the chance of leaks goes up remarkably. The key thing with any sewer or drain pipe is to make sure that it always has a slant to it (generally, the more the better) because a greater slant means the drain will tend to move things along faster. On the kitchen sink, you can never have a sink that's too big, or a good enough garbage disposal, so don't cheap here. Another thing which get's your goat, but makes for a happy spouse is to budget about $200 for the kitchen faucet. Something with a soap dispenser, a good rinser and a pleasing look to the eye pays dividends year after year. Similarly, don't go cheap on the strainer baskets. Yes, the little plastic ones for a dollar or two will work, but I'll spend the $15 for a good metal set any time. I just like the quality feel of such things. If it's a rental unit, then a different decision is a given... With the supply pipes, there's no real mystery. PVC is generally used for the cold water and CPVC for the hot, but check with the local parts houses to see what's done in your area. Some people like to use sweated copper for their plumbing, but there's a little more work to putting it in and California has made such a big deal about lead from soldered copper that PVC seems a better choice nowadays. I come from a family of fire fighters, so plasterboard scraps and a propane torch are not a big deal. But, if you don't know what you are doing, don't use a propane torch in an enclosed space It is not chic to burn down your house while it's under construction. Occasionally, if you have an older house, you'll run in to galvanized iron or steel pipe (back iron pipe is still used for gas lines frequently) so if you're cutting, be prepared to do some threading of pipe so you can get fittings onto it. You can buy a 3/8 to 2 pipe threader set for about $70 at Harbor Freight (link). Rather than doing a lot of pipe threading, though, the easiest answer is to find the right adapters and transition to PVC or CPVC when you can. You'll still end up with a couple of pipe wrenches to twist things about, but a big vice and pipe threader can be saved. Gas most places requires metal piping, Page 61 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Be sure all your pipe connections have pipe dope on them. I find pipe dope (known more properly as Teflon Enriched Pipe Thread Sealant) more reliable than the Teflon tape which you can buy in 99-cent rolls. I just seem to have better luck (read: fewer drips) with pipe dope. Generous use of brackets to hold pipes is in order. Nothing I hate more than noisy plumbing. Besides, pipes that move eventually wear and that's like asking for a leak somewhere in the future - an usually at the most inconvenient possible time. Stores have PVC pipe cutters available which look like garden snips on steroids, and they cost around $20. But me? Give me a saber saw and a piece of sandpaper to finish the edge. The actually joining part is usually done in four steps after plastic pipe is cut to length: Sanding off any rough spots, test fitting, application of primer, then cementing and the final join. Like I said, it's not really complicated. Electricity CAUTIONS: DON'T MESS WITH ELECTRICITY IF YOU DON'T KNOW WHAT YOU'RE DOING. MAKE SURE THERE'S SOMEONE AROUND WHO CAN GET HELP IF YOU SCREW UP. Make sure the power if off any time you are working on electricity. Tell everyone in the area that you are turning the power off. Then tag the box OUT OF SERVICE - DO NOT TURN ON so everyone will be alerted that work is being done. If you do not know what youi are doing, get a professional to do it for you. Wiring up a shop, barn, or home is not a terribly complicated matter, but again, before you work on anything, make sure the power is off, that you have tested to make SURE the power is off and that you have a very good idea about what you're doing. Otherwise, hire a professional, or take some classes at a local community or vocational school to get your skills built up. Wiring goes in just like plumbing: Holes in the studs work just fine. Page 62 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • The idea is (yet again) cut, join, and cover. Properly done, wiring that you put in should be nice and need because if it is ever inspected, one of the tipoff's that an amateur has been doing wiring is that it looks 'unprofessional. On the other hand, if the wiring is put in such that turns are nicely squared off and there's adequate (if not arty) use of insulated staples, it gives the job a look of craftsmanship. Here's a 60 amp sub panel that I put in for my office & shop. Notice how the wires are all secured with a staple within 6 inches of entering the box and that feed through bushings are used? These things would not be in the National Electrical Code without a reason, so remember, your wiring is a reflection on your skill level. My personal experience with wiring goes back to age 12 when I started soldering on radio gear as a kid. But, hobbyist electronics are way different than industrial or residential wiring. One thing that it helps to know is how many breaker panels are laid out on the inside and the difference between a 110 Volt circuit and a 220 Volt circuit. The key thing to know is that a 110 Volt circuit is between the neutral bar and the breaker while a 220 Volt circuit is generally between two circuit breakers. It's terribly important to make sure you use grounded outlets a and understand how the ,switches and outlets are color coded. The silver screw on a switch or outlet is for the white wire and the white wires are connected to the neutral bus in the box on 110 Volt circuits. The green wires go to the grounded neutral bus, too. But on a switch or outlet, the ground wire (bare wire or green) goes to the frame of the switch or outlet). Page 63 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • I tend to be very conservative on wiring. Although I understand that 15 amp circuits are being wired with #14 wire and 20 amps are being wired with #12 wire (the smaller the number,- the bigger the wire) I've made it a personal practice not to wire with anything smaller than #12. Just a preference. As long as you're running cables around, don't forget before buttoning up the walls (if youi are indeed covering them -- in a shop it's optional) to run wiring for your computer, telephone, and television about. I had a terrible experience when I built my Perfect Home Office I didn't check the wiring once I had put it in. Turns out that two runs of my phone cable were bad, forcing me into using wireless phones where I didn't want to. The lesson? Light everyting up before you button up the walls. Test the phone, computer, and television wiring BEFORE the walls get covered and work on wiring becomes nearly impossible. Drywall Putting up drywall is an art in itself, but it's made easier if you remember to put the ceilings on first so that the ceiling presses down on the sidewalls, like so: You'd think this kind of stuff would be obvious, but no, it's not. The cutting of plasterboard is done by scoring through the paper (good side up) then breaking over a sharp corner - a 2 by 4 works fine. Then, cut through the paper on the back. Drywall can put put in with either ring shank nails or screws. My preference is for nails because the better plasterboard nails have dimpled heads and rip the paper less than do Page 64 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • screws. When I use screws, I usually find I have to go around with a hammer to drop everything down below the layer of the surrounding material so they will mud up good. There are two kinds of plasterboard - tapered and plain. If I am after a really first class kind of job, I will put 4 foot by 8 foot sheets up horizontally because why? Because that leaves most of my tapered edges around waist height for taping. Easier than bending and climbing for everything. For cutting in holes, break down and spend the 7-bucks on a plasterboard saw. It is designed to be shoved through the board and then saw, so things like outlets and cutouts for trim are simply done. Likes like an 8 long knife with teeth on one side. Tapered board is easy to use, but you've got to plan on three passes over it with the tape joint compound (a/k/a mud) to get it right: A little finish sanding to get residual blade marks is usually required, but the biggest secret to taping is many small layers, and get rid of imperfections why they are wet. If you wait until the mud dries, you will be sanding till the next coming of (pick your deity here). Making a good tape joint is an art form. About the time you get your first room or two done, you'll see why the pro's often cover their evidence...I mean work with a blown on surface covering. A good layer of texture covers a multitude of sins. Elaine asked me about the new mesh tapes instead of traditional paper. Yes, they work. But I didn't find them any easier than 'normal paper perf tape. Tool Shopping Any darned fool can spend thousands of dollars and have a great shop. The trick is to spend the least to get the most done. Again, we can be guided by the Plan, cut, join, finish idea when we go shopping. Page 65 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Planning Tools Carpenter pencils (get dozens, these walk off all the time) Grease pencils 'Sharpies' (permanent markers) 12 adjustable square 25' or 35' Wide - super high quality measuring tape (Stanley Fat Max or similar) Engineers paper Tracing paper Plumb bob with 20 feet of string Adjustable square Framing square (24 x 18 or larger) Long metal straight edge (4' aluminum measuring stick is great) Scratch awl (ice picks do fine, too, but a carbide point is nice) Library card Home design software (Punch Super Home Suite is really useful) Cutting: - General Pocket knife Sharpening stone Box/carpet cutter with spare blades Cutting - Wood Hand saws: 8 and 10 teeth per inch (both cross cutt and ripping, use cross cut on playwood) Skil saw (count fingers before and after use) Hand Drill (18 v battery is fine for most things) plus good set of bits Brace and bits (a crank kind of drill) Spade bits for big wood holes Table saw with assorted blades Router with bits Router table Drill Press, drills Planer (mills wood to custom thicknesses For cabinetry add jointer and belt/disk sander Jig saw with wood blades Chop saw (compound miter saw with laser guide) Wood lathe Shingle hammer Engineers hammer (4-5 lb. sledge) Folder saw horses (to hold work) Assortment of files (metal working) and rasps (woodworking) Cutting - Metal and Plastic Hack saw and assorted blades Vices (one wood, one metal/general with anvil) Page 66 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Jib saw blades for metal (Skil Big Ugly blades are great) Power hack saw Cold chisels and punches Metal punch set Tin snips / aviation snips Extreme: metal lathe and milling machine, assorted lathe tooling including bits, steady rest and follow rests), Beyond extreme: basic casting equipment: green sand for mold making, copes and drags, melting furnace, charging and pouring tongs, parting compound, borax or other flux agents Joining (*including Unjoining) Large (huge is better) assortment of screws Large assortment of screwdrivers, square drives, and specialty drivers. Power screwdriver bits for variable speed hand drill Bolts (big assortment) Open end and sockets, adjustable wrenches (Crescent wrenches) and Channel Locks) Assortment of glues: Gorilla Glue, Elmer's glue, Krazy Glue, 5-minute epoxy, duct tape Nails of all kinds Hammers of all kinds Pry bars when you screw up with the hammer Band-Aids for when you screw up with anything Small bending brake (sheet metal bender) plus sheet metal screws, pop rivets and so on. Air compressor with nail guns: One each: framing nailer, roofing nailer, finishing nailer Staplers: electric and manual plus gobs of staples to choose from. Glass points (a funny little triangle thing to hold glass in wood windows) Splining tool (used for putting screens into screen doors and windows) plus lots spline. Metal duct tape (2 and 4 - 4 is hard to find but darn useful stuff. Pipe wrenches Pipe cements Shop towels (you'll make a mess with the glue, it's not an if question, but a when.) Special solvents (Acrylic sheet, for example can be joined with colorful specialized glue. frame clamps Bar clamps C-clamps Wire welder for up to 1/4 steel plate (Extreme for home, mandatory on a farm) Unjoining: Penetrating oil Spray coolant Hair dryer or heat gun Breaker bars Finishing Variety of sand paper Variety of steel wool Page 67 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Tape joint compound, with perf tape. Or mesh tape if you want to try it... 3.4.6.8.10 tape joint knives and mud tray with metal edge Bondo Primers (such as Kilz) Selection of interior paints (I keep a couple of gallons of white around) Ditto exterior paints (pick one simple color like parchment beige or whatever you like. Air brush kit for compressor Big paint spray kit for compressor Drop clothes Newspapers, paper towels Manila folders and cardboard cut up for use as 'cut in' tools while painting Masking tapes (3-M blue in assorted widths) Electric sanders (belt and orbiting/finishing) with sand paper Paint Brushes Paint pads Paint Rollers and trays Casting resin Durham's Rock hard Water Putting Solvents including Paint thinner, mineral spirits, acetone, Everclear, diesel or stove oil Other Shop Items Assorted ladders Scaffolding (if more than a single story house) Shop-Vac Bernzomatic propane torch with various nozzles A cutting bench (chop saw and drill press go here) Assembly bench (kept clear at all times for actual work in progress - you'll never do it, but it's the theory that one bench should always be ready for new work) Catch all bench (they all turn into these overnight) Roll around tool cabinets (Sears makes good ones for about $100 each) Task and general lighting House and Farm Reconstruction It's a good idea if you live in a particularly wind prone area to have a small home generator. You can get these for under $500 if you shop around. While they may last only 1,000 to 2,000 hours (if you're lucky!) they will likely be able to provide enough power so that if you get creative with the leftovers from a storm you will at least be able to put something comfortable together for you and your family. $40 dollars owrth of uniquitous blue tarps belong in everyone's emergency kit. It's surprising how little time tools are actually run on a job. What eats up the time is the measuring, planning, moving material around and so forth. I doubt a person who planned well would use more than 20 gallons of gasoline building a small house. In fact, I bet one of those small 18X 20 cabin kits that you see at Lowe's could built with 5-gallons of gas with some planning. Page 68 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • --- We're getting to the point where Elaine and I can see the 'end' of our home remodeling projects. We will run out of something worth reinventing in another year or two. By then, we will have completely built or rebuilt the inside of the house. Bathrooms, plumbing, heating and cooling...you name it. Even when you figure in the cost of tools and machinery, the work we have done on our home has been about 30-cents on the dollar compared to what having someone else do it for us would cost. The new HVAC system we just put in set us back about $8,700. I could have done the whole job myself for under $4,000 including shipping and so forth. But, with client demands, some things are just better off being subbed out. I have spent plenty of time under the house doing plumbing and such, and it's close enough to summer that the brown recluses and the scorpions are about. Mid-winter is one thing. Summer into spring? Like I said, subs are there for a reason. Remodeling the kitchen for the third time? 25-cents on the dollar. Super custom cabinets for the garden room (oak) - about 15-cents on the dollar. Cabinetry may look daunting, but it's really pretty darned simple when you figure out how it's done. A book on basic cabinets is richly rewarding. --- Delving into the working of the home shop may not seem like an especially 'Peoplenomics' kind of topic, but it really is, when you think about it. Money comes into your hands and it goes out of your hands. Having a few tools and having done a few projects with them makes one either BS resistant or BS Proof when dealing with service providers, too. You may not be ready to put new laminate on your kitchen counters (same plan, cut, fit/form/join/finish rules here, too). But at least you will be able to intelligently supervising people you might have do the work for you. Page 69 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com
    • Afterthoughts A few pointers that have occurred to me as I put this eBook together: 1. America is great because there is still a path from poor to Middle Class and this book offers some real specifics on how to go about that process. The process is: Get some kind of work, live below your means, save money, invest in land or a business that can produce something and then work it. There’s a lack of books that offer this kind of “Point A to Point B” kind of advice. 2. Get a library card 3. Learn to talk to other humans as humans. 4. Constantly learn new skills. In the world that is coming, being able to “Do” will have more value than just the “knowing” of something. 5. The plan outlined in this book works just as well for retirees as it does for the impoverished young. 6. Every chance you get, vote for change. The thinking that got the world into its forthcoming predicament will not be the thinking that will lead us out. 7. Avoid debts of any kind like the plague. 8. And above all, remember that Life is a dance with the Universe and if you don’t go with the flow of this dance partner, you definitely won’t like what it can do to your feet and plans. Now go forth and kick some butt! Page 70 of 70 © 2005, 2008 George A. Ure, www.urbansurvival.com