As I read and pay attention to both the predictions about what post-peak like might look like over the coming decades and to what’s happening already, the one message that stands out is that it is time to get used to being poorer.
Under the pressures of extreme weather events and disruptions to normal weather patterns, increasing oil prices, and a no-growth/all-debt global economic system, two things seem guaranteed: everything will cost more, and our wages will not keep pace with that inflation.
The truth is, this has been the case for a long time. I’ve been working in public service for more than a decade, and I don’t remember the last time a normal, cost-of-living raise was negotiated in a collective agreement I’ve been a part of. Purchasing power in our neck of the woods has been declining since the 1970s, despite the availability of more cheap stuff. After all, perhaps the biggest change in purchasing power since the 1970s, the aspect that has kept our western economies afloat for all this time, is really the massive increase in credit available. Remember how in the 1970s you needed 25% down to buy a house? And there was no such thing as credit cards?
So the value of our income is going down. Prices on everything are going up. And we’re likely to continue in a global economy that is debt-ridden and has run out of ways to grow its way out of recession, which means public–government–spending will also continue to be scaled back, along with our support services. It’s time to start embracing poverty.
So I’ve been considering the question as I assess the resilience of our lives: How do I want to be poor? Poverty is usually associated with people who have few choices and live on the desperate edges of survival, and no doubt this will describe more and more of us as the years go by. But as someone who spent MANY years as a university student working part-time, I know that poverty can also mean living simply but joyfully on not very much money. At this moment, our household has options, and my goal is to use this time of relative luxury to set up systems that will allow us to live on a much smaller relative income with dignity and little sense of deprivation or despair.
In 15 years, the Skipper will be ready to retire–at least that’s the goal. At that point, if the economy allows, I could still work at high-ish wages for another decade. But during that transition, I would like to be as little dependent on working incomes as possible. And if one or both of us loses a job or we have our incomes go down (or hyperinflation kicks in), it would be nice to be able to continue a reasonable life without ending up on the street. So we want to start making the wider economy redundant to us, before it makes us redundant to it!
Taking a hard look at our home economics in this light, though, is sobering. We have been on the “simple living” bandwagon for many years. The old rhetorics about getting rich by cutting out lattes and investing in mutual funds definitely don’t apply to us! We don’t “go shopping”, we brown bag it everyday, and we value quality over quantity. No keeping up with the Joneses here!
But our situation is by no means secure. We have some debt, and we have used credit to do some of our home and garden infrastructure improvements. We have a mortgage on a 30 year amortization that I don’t want to take 30 years to pay off; the sooner we OWN land, the better. I have a small student loan that I previously put in the category of “good” debt, but now don’t see that way.
If the essentials of life are food, shelter, and water (not necessarily in that order!), right now shelter is costing us a LOT. The mortgage, property taxes, home maintenance, required insurance, and the electricity that runs our basic water and septic functions add up to the biggest chunk of our budget. Other debt payments are another big chunk, if we include a vehicle, student loans, and credit cards (because we’re paying them aggressively). We live at the halfway point between 2 small cities: Skipper commutes south, I commute north. Commuting is environmentally toxic, but also expensive: gas, maintenance, insurance, and a vehicle payment also take a big bite out of our incomes.
Food is complicated. On the one hand, eating out of the garden is WAY cheaper than buying all those fruits and vegetables (especially organically) at the supermarket. The garden does save us some money, and I will continue to push toward growing all of our vegetables and most of our fruit for the year. I do spend money, though, on seeds, organic bulk fertilizer ingredients, and in the last 2 years, building more raised beds. We provide our own eggs and some chicken and crab/fish, but there are background costs to these as well–feed costs for instance are dramatically on the rise, and that’s before this year’s drought affects them.
There are still all kinds of food items that we will continue to need to buy: grains and dairy seem the most obvious. I’ll definitely be doing some research about how to mitigate these costs. We’re in the middle of the year’s provisioning, and I’ll be tracking the math more carefully than usual, and will share what I find.
Here’s the puzzle for us in a nutshell. We’re getting by, and if all things were going to stay the same for the next 20-30 years, there would be no issue. We’ve been playing by the popular culture’s economic rules, and by the normal account of things, we’re doing fine. But if I look a little deeper, our security is more tenous. We also have projects that we want to undertake to improve our resiliency–a new roof, hardwood flooring, wood storage, etc etc. At the moment I’m not sure where the money for these things will come from.
My goal is to massively decrease our need for incomes over the next 15 years. But given the major expenses that we have right now, we have to think hard about how to do that.
Here are the options I’m considering:
Plan A: We will be spending some time over the next few months paying close attention to our spending, to see just how we might be able to cut back on whatever luxuries we have. There’s not a lot of fat to trim, but I’m sure there is some. The sad part is, though, that some of those luxuries are ways in which we support important local economies. For instance, instead of making our own bread, which would be cheaper, we buy it from our extraordinary local bakery. Although we’ve made our bread often over the years, the bakery we support is investing in local grain production, which benefits our whole region. So part of this exercise will be thinking through the security of our purchases. The usual frugal rule of finding the “cheapest” option is a false frugality, because it *increases* dependence on the tenuous global supply chain.
Plan B: Depending on how much we’re able to refine our current spending habits, we may have to look at more radical changes to our lifestyle to free up the cash to pay off the debts, own land, and have a system set up on our land to support a less cash-dependent lifestyle down the road. Here’s where things get tricky.
We can try to decrease our mortgage. The real estate trade-offs that affect price are the condition of the house, the size of the house, the size of the property, and the location. To decrease our mortgage substantially, I’m willing to decrease the size of the house and property, but those two have to remain practical for reasonable food production, processing and storage. Changing location may be an option, but moving closer to town, where prices are cheaper, also means higher property taxes and more rules–chickens aren’t yet permitted in town, for instance. Skipper is a carpenter, and in theory fixing up a cheaper house is an option. But we’d have to make sure that the costs of renovating and retrofitting don’t outweigh the savings in the mortgage.
I’ve considered even more radical options: selling the house, paying off the debts, saving the rest and moving on to a boat or into a trailer for a few years to build up some cash reserves before re-entering the housing market. But these mean that we lose our capacity for food production, at least in the short term.
Another option is to try to cut down the cost of our commutes. We’re making some choices about this already; we’ve decided not to replace my fuel-efficent beater, which we think will still keep going for another few years with some money put into maintenance. It also looks like down the road I might have an opportunity to work closer to home (or more from home), and I’ll focus on that in my project decisions. If we’re looking at the 15 year mark, and Skipper retiring, then that also takes care of a commute. However, depending on where gas prices go, we could also consider making a more radical decision to move closer to one job and have the other person find a job in that community. We both have very good reasons to hold on to the jobs we have, though!
Moving has the potential to make our lives more financially secure, and may prove to be the best option as time goes on. But it has some big downsides too. We’re in a house now that needs little retro-fitting. We’ve replaced almost all of the appliances and toilets with efficient, low-water ones. We have done a lot of work to the garden to get it producing well, and there’s lots more we could do. And we’re in a community that has a lot to offer, including the kind of barter and exchange that is so necessary to replace the dependence on outsourcing-for-money.
Plan C: Plan C is to continue as we are, doing our best, and using short-term credit as necessary. Then, if things really do get difficult, we consider renting out a room, taking on extra work, etc to make up the difference. This goes against my pro-active nature and my gut response to the stories on the news every day, but it is a totally valid option which many will pursue out of necessity.
Those are some of the tough decisions that post-peak life has us considering. How about you?