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How Much Cash Should You Have If the Grid Goes Down?

CashInSHTF
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It is the final backup plan for a lot of us in the case of a disaster. A generous supply of cold hard cash to buy our way out of trouble, pick up as many last-minute supplies as possible or to acquire resources that are unavailable to anyone with a credit card in a world where the electricity is out and the internet is down. We frequently talk about having cash for emergencies, but how much cash should you have if the grid goes down? What will you be able to purchase with your doomsday supply and how long would it last in the first place?

One of our readers made a recommendation the other day to have between $500 and $1000 in cash for your bug out bag and at the time it prompted me to consider again if this amount makes sense. In my personal preparedness plans I have a supply of cash but I am always trying to figure out if what I have is enough or too much. Will it even matter when TEOTWAWKI comes and how can I best use the cash I have to survive?

Why do you need to have cash on hand?

You want to know the time when you will need cash the most? It will be when you can’t get to it. How many of you right now have no cash at all in your wallets or purses? I used to be the same way. I never had cash and relied on the ready availability of cash machines or most often the ability to pay for virtually everything with a debit card. How convenient is it to never have to make change or worry if you have enough cash when with the swipe of a card your bank account funds are at your disposal. This is a great technological advance, but the problem is that this requires two things to be functioning. First, the card readers and ATM machines require electricity. If the electricity is out, neither of these two machines works. The second thing is a network connection. If the network is down, even with electricity the transaction won’t work and you can’t pay for goods or get cash from your bank.

In a disaster, one of the first casualties is electricity. This doesn’t have to be due to some cosmic solar flare that has rendered the grid useless, it could be as destructive and common as a fire, flood, earthquake, tornado or winter storm. It could also be from simple vandalism or perhaps terrorism. A major fiber optic cable was cut in Arizona back in February leaving businesses without the ability to accept payments. When the electricity is out, you aren’t going to be able to access your cash via the normal means so having a supply on hand is going to be a huge advantage for you in the right circumstances.

Even if there is no natural disaster, you are still at the mercy of your bank. What if your bank closes or there is a bank holiday declared because of some economic crisis. In any of these situations, if you are dependent on access to money that is controlled by either technology or physical limitations like a bank office it is wise to have a backup plan should either of those two conditions prevent you from getting cash.

What is cash good for in a crisis?

I think there are two levels to consider when it comes to keeping cash on hand. There is the bug out scenario mentioned above where you would have some “walking around money” to take care of relatively minor needs like food, a hotel or gas. The second is for a longer or more widespread unavailability of funds. Let’s say the economy tanks and the price of everything skyrockets but stores are still open for business. Your bank is one of the casualties, but you had a few thousand dollars of cash stored away that you could use to purchase food, gas and necessary preparedness items for your family. In this scenario, the government is still backing the fiat currency and vendors are still accepting it as a form of payment. For this scenario having a few thousand dollars makes sense.

But what if we have an extreme event where the currency is devalued and is essentially worthless? Your thousands of dollars might only buy you a loaf of bread. Don’t believe it can happen? It did to the Weimar Republic after WWI so it can happen again. That isn’t to say it will, but you should balance how much money you have squirreled away under your mattress with supplies you can purchase now that will last and keep you alive during that same event. My goal is to make sure I have the basics I need to survive at home for several months to a year without needing to spend any cash. This way, if the money is worthless, I still have what my family needs to survive.

If we have a regional disaster where you can bug out to a safer location, your cash should serve you well. Of course if you are in a safer location, assuming electricity was working your access to bank funds should still be working. If this is truly the end of the world as we know it, how long will that cash you have be worth anything?

It is surprisingly simple to disrupt all credit and debit transactions. Do you have cash instead?

It is surprisingly simple to disrupt all credit and debit transactions. Do you have cash instead?

How much cash do you need?

So the million dollar question is how much cash should you have if the grid goes down? I always try to plan for the worst case scenario. My rationale is that if I am prepared for the end of the world as we know it, I should be just as prepared for any lesser disaster or crisis I may be faced with. The way I see it is if we do have a disaster, you aren’t going to be using that cash most likely to pay your mortgage, student loans, rent, or your credit card bills. Cash will go to life saving supplies and this will need to be used in the earliest hours of any crisis before all of the goods are gone or the cash is worthless. Once people realize for example that the government has been temporarily destroyed, they aren’t going to want to take your $500 for a tank of gas. They are going to want guns, food or bullets.

Hiding cash is easy with these fake containers, just don’t forget where you put it.

I also don’t see you using your cash to buy passage to another country, but that’s just me. I know there is a historical precedent for that, but I am not planning on that being something I realistically attempt with my family. I am also not planning on bribing any officials with cash either. My cash is for last-minute necessities and then it is back into the hopefully safe confines of my home to plan the next steps. For that I have only a couple of thousand dollars in cash stored away. I figure if I need more than that I didn’t plan well. Also, I would rather spend my money on supplies like long-term storable food and equipment than having a large horde of cash. With that amount, I figure I can make one last run if needed or be able to weather any short-term emergency when I can’t access cash.

What is the best place to hide cash in your home?

I wrote a post awhile back titled, How to hide your money where the bankers won’t find it that had lots of good ideas for reasonably safe places you could store cash. As I said in that article, you do have risks involved with keeping cash in your house, but I think you have just the same, if not worse risks relying on banks to keep your money safe and give it back when you want it. There are a million places to hide cash, but you can get tricky and buy a fake shaving cream safe to store several hundred dollars in there. Just be careful you don’t throw that away. There are other options like wall clocks with a hidden compartment inside that might be less prone to getting tossed in the trash. Your imagination is really all that is needed for a good hiding place, but I would caution you that you don’t store cash in too many places or you could forget where you hid it. This happened to me when I had hidden some cash behind an item that I ended up giving to my daughter because I thought I didn’t need it anymore. Imagine my surprise when she came into the living room and said, “Dad, I found an envelope with a lot of money in it”. I gave her a twenty for a reward…

What about you? How much cash do you think you need to have on hand and what do you plan on spending it on if the grid goes down?

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  • EgbertThrockmorton1

    I think that this “concept” is so personal, that we need to be extremely discrete when discussing it on a public forum. My wife and I, decided a long time ago, that we needed to have a “year’s supply” of cash on hand(in our home) for emergency use only. We’ve been diligent in doing that. The amount itself has fluctuated for a variety of entirely good reasons. However, given the extreme volatility in the financial markets, and the political and civil instability, we’ve gone to a more long term strategic solution of having precious metals on hand as a means of real wealth protection. It has been extremely difficult to convert “cash” over to long term survivable precious metals. We do think this is our best solution. While we still have a supply of cash, it’s worth in the short term(tactical) use is far more practical than for long term.(strategic)
    We do not “hide” the cash, it is in the safe which itself is hidden in a “safe room” deep within our home, and no, you won’t find it at all.We cannot protect ourselves from every eventuality, but we can(and should we believe) prepare as best we can for strategic and tactical financial needs as best as we can.
    This needs to be, (my personal belief here), a priority that is every bit as important as self-defense, water and food. For without wealth protection that you yourself actually can hold and control, you are at the mercy of others’ precarious vicissitudes. I for one have seen enough of those vicissitudes of life, and I don’t care to be at the mercy of anyone else ever again. Really not “comfortable” with “hiding” anything, because half the time, I can’t find my own car keys, so, “hiding something” or hiding the map” is not something I’m willing to do at this point in my life. A good home made strong box with excellent locks, is better (to me) than “hiding” anything. At least make them “work” for it. Hope this helps somebody out there.(just my subjective opinion, YMMV)

    • Thanks for sharing your honest opinion and thoughts as always Egbert!

  • Bolofia

    Pat,
    I think you hit the bull’s eye on this. If there was a collapse of confidence in the dollar and merchants refused to accept it in any form (cash or electronic), it doesn’t really matter how much cash you have on hand or the balance in your checking/savings accounts. And, as you have noted, there would be a severe, time-based constraint on the value and acceptability of cash. Initially, prices for basic commodities would skyrocket due to gouging, but once the public (and merchants) realize that the dollar has no value at all, other mediums of exchange would replace it. Enter the bartering system.

    Without electrical power and a network link between point of sale devices and computers, many businesses would be entirely unable to operate – including national grocery chains and big box stores. Data centers would be able to remain on line for a day or two because they have back up generators, but if the national power grid goes down, it makes no difference. You are still screwed.

    Just my opinion, but in a complete SHTF collapse, cash would have a steeply declining value that could reach zero within 24-48 hours.

    • Bolofia

      Footnote: The price of a 4’X8′ sheet of 3/4 inch plywood runs about $28 retail at Home Depot (plus tax) as we speak. If cash was useless, would you be willing to trade 10 rounds of 9mm ammo for a sheet of plywood at your local lumber store?

      • LWJ

        Yes I would to be honest. Ballistic wampum and precious metals are things I also keep on hand. While I would be very hesitant to part with my Crticial Duty stockpile, I would trade some 9mm FMJ in a heartbeat for a critical need item.

      • Actually, I would too because I think I can spare some ball. Now, the .30-06 ammo would be a different story….

    • LWJ

      Look at Baltimore, with the curfew going on and parts of town being a bit unrealstic to travel through cash on hand could a life saver for some folks. If you can’t get to a bank or an ATM, and you have an event that might last for a week or two a spare grand could make it much less miserable.

      • Bolofia

        True enough, but Baltimore has a functioning (but corrupt) city and state government and the dollar is still backed by the “good faith and credit” of the US, for what that’s worth. Your life and mine haven’t changed one bit because of the rioters – the country still exists. Strip ALL of that away and the cash in your wallet would have just about as much value as a pile of cow manure. On second thought, the manure would probably worth more.

        • LWJ

          Nonsense it would be a good fire starter in the apoc!!!

        • Maybe a nice fan on a hot day? I did see stories of people in the Wiemar Republic burning cash because it was cheaper than wood.

    • That’s what I am thinking. My cash in a collapse scenario is mainly for last minute additions. I plan on having everything I need before hand, but it might come in handy. I am not keeping stacks of bills out but trying to spend judiciously on supplies (tangibles) now. I also have some precious metals but I can’t see those being valuable for a long time post-collapse.

    • Buddy Bob

      Weimar Republic after WWI NOT II

      • Thank you for catching that! I need an editor….

        • Buddy Bob

          Welcome

          Bob Kellogg

  • Bobcat-Prepper

    With the interest rate at my bank current 0.1% annually, why would I keep a savings account? It just doesn’t make sense anymore, given the chance that I might not be able to get it out someday soon.

    Better to keep it at home, and build up the stockpile of the bullion, beans and bullets.

    • My thoughts precisely Bobcat. Soon, they will start making you pay to keep your money in the bank. They are already talking about it http://www.usatoday.com/story/money/business/2013/11/26/banks-fees-deposits/3711987/

    • Bolofia

      Bobcat – Bingo!
      In a nationwide catastrophic situation, the first thing the government would do is close the banks to prevent a run on them. Step 2 would be to limit the amount of cash you could withdraw after they allowed the banks to reopen. Of course, that begs the question of whether the currency still has any value after the event that forced a nationwide bank closure.

  • I know what you mean NRP and i used to think the same way. I would have 6 months worth of cash saved up in case I lost my job. Do you keep that in the bank? What if something does happen and you have 6 months worth of worthless cash. Wouldn’t you wish you had bought maybe 5 months worth of food?

    Impossible to tell the future, but I am betting on bad times, worse than me losing a job. Hope I am wrong.

    • NRP

      Actually NO, I do not keep “extra” cash in the banks or savings accounts. I do use the banks to pay “some” out of town bills, and to keep the accounts active. Even with the planning for SHTF, life does go on, so keeping some accounts active does help the old “credit score”.
      To be honest having several months of worthless cash will be the least of the worries of the dung does hit the fan. That is why I build all of the “preps” at the same time, food/water/cash/ammo/ and so on. I feel it’s just as important to be ready for short term SHTF as long term. So if I hit a bump in the road, I can do quite well for about 18 months without worry.
      NRP

  • Elizabeth

    So it occurs to me that his group of commentators has the security and means to maintain a stash of cash. Thankfully I’m doing fine now but when I was a young single mom, I had to use what I earned because the math simply didn’t work.

    BUT I thought it might be useful to communicate to people who are in that same spot now as I was then that it’s possible to do what you guys are talking about, albeit with a very different technique.

    learned a few pretty useful things:

    1. Cash your paycheck, don’t use a traditional bank. Pay bills with money orders or if there is no way around it, with a prepaid card. Keep your cash until the last minute because if you absolutely have to redirect funds due to an emergency, you still can. Try to time making payments for whatever to have the shortest amount of time possible until your next check.

    2. Priorities are food and transportation first. Housing second. Utilities third. Everything else last.

    Why transportation? (this can be public transport in a normally functioning world) Because work and income are the vehicle by which everything else is obtained. If you can’t get to work, you’re up the creek.

    3. Although it’s highly preferable to pay bills on time, if you can’t, call up whoever is expecting you to pay them something and talk to them well before you’re overdue. I’ve never had anyone not work with me if I took proactive steps.

    4. If you know everything really is going to fall out from under you, take care of food, transportation and housing above everything else and work your butt off to figure something out.

    5. Plan your life as if help is not coming.

    6. Getting mad that even though it would be really awesome if help fell from the sky is about as helpful to you as getting mad at the weather. Resentment and anger won’t help you in the least, leaning on your own resourcefulness is your best bet.

    I’m sure many people have many different methods, this is just what worked for me.

    • Elizabeth

      And I totally forgot daycare – I’m so used to it I consider it the price of admission so that goes in priority 1!

    • LWJ

      The best way to start a cash stash is with your spare five and one dollar bills. Throw in a 20 or a 50 on occasion and over time you will have a nice little nest egg. I have also for the most part given up the Xbox and drinking. You would not believe the money I have now because of that…… The perks of not being 22 anymore!

      • Good points LWJ. I agree with the Xbox – never had one, but drinking? Come on man, where is your humanity?!?!?! 🙂

        • LWJ

          Gone, I have two kids one is almost eight and the daughter turns two this weekend. So time is a factor, I don’t have as much as I used to. I don’t want my kids to see my wasted at a young age. Lastly acholism is an issue for both sides of the family, so when I do drink these days I cap it at two. Very rarely do I tie one on. Quite the far cry from a decade ago…..I am just getting old.

          • Oh, I completely agree that you shouldn’t get trashed ever, but I do like to have a nice glass of Scotch every now and then. I’m getting old too brother… Moderation is the key for a wise man or woman in everything.

            • Sideliner1950

              “Moderation in all things, especially moderation.”


              Ralph Waldo Emerson

              That said, if you’re a Scotch afficionado, you’ll surely appreciate the holy elegance that is Highland Park Scotch Whisky, from the Orkney Islands in the north. 12-year old, 15, 18, 25, etc. all available, but the 12-year old is exceptional in its own right. Enjoy moderately, and raise a glass to me while you do.

    • Excellent points and tips Elizabeth. I know that some can set aside more than others, but we should all be able to set aside something. Even if your amounts are lower, having a small rainy day fund is better than nothing. I had to start somewhere too and in the beginning I was happy to have $50 set aside for emergencies.

      • Elizabeth

        I agree, no one should be in a spot where they’ve got nothing on hand; I was just trying to illustrate that even when things are tight, that if one is employed, often one has more financial choice than one would otherwise think 🙂

  • Mike Lashewitz

    Good post, but you are missing one thing. We has a power outage here because of a hurricane. Walmart closed and they would not allow cash purchases because their employeed on average were too uneducated to make change.
    We are proud in South Carolina to be 49th in the nation’s schools! At least we are not fiftieth! Get my point?
    Do what you can to prep every payday. Stop buying the flashy stupid bulshit. Nobody needs a collection of wind up chickens that shit candy.

    • NRP

      HEY!!!!
      Don’t go picking on my “wind up chickens” HAHAHAHAHA
      Great Point, stop buying stuff that’s worthless in a week.
      I have seen people buying $1000s of kids toys at Wally World. and 5 days later tossing them out.
      Heck when I was a kid, it was a stick and a rock for a baseball.
      Our society has gone to a use and toss.
      NRP

      • Mike Lashewitz

        OMG kids toys! Make a to and then make a cartoon so idiots will buy it. 5 cents of plastic for $5 (or more) Bakugan!! Rock Knights, Sky Landers, YUGIO, Pokemon, gummie bracelets, Sky Dancers, things that are Toy-etic . . .

      • EgbertThrockmorton1

        My brothers and I played pirates for YEARS, using the galvanized steel garbage can lids as shields and old broom sticks for swords. Then we started playing “jousting” on our bikes, BAD, BAD, “idea”…..”lances” often fell into the opponents bike spokes with the predictable launching of the seated knight….

  • BobW

    The idea of preparing for a rainy day (my philosophy) is different from ‘prepping’ in that it is more broad than looking at a TEOTWAWKI event. As NRP mentioned, I’m concerned about the injury that puts me or my wife out of work for an extended period, child illness that forces us to exhaust vacation/sick leave, as well as civil unrest, and the other, worse events that could strike our community/state/country.

    The idea of having enough cash available to sustain operations until the situation changes is important. 18 years ago, Household 6 and I discussed having $10k available for a rainy day. That was before an expensive mortgage, kids, and the like. At the time, $10k was enough to carry us through 6 months without income with room to spare.

    Now that we have a house, kids, car payments, and the like, we’ve been forced to adjust our thinking from a dollar value to six months of sustainment ops without income. We are no where near that goal monetarily, but have compensated for this by increasing our stores to support 6-months of survivability and a lesser amount in cash. 3-months worth of cash to support mortgage and utilities fits the bill. We’ve paid off her car, and I recently purchased an older pickup, so the repo man can come collect the dream truck when they like.

    I would encourage everyone to not think of the cash-on-hand as a TEOWAWKI fund, but a rainy day fund for use when your hours are reduced at work, sick leave is expended, and then for rapid procurement of the last food/ammo/materiel from the store. It’ll only be worth anything for so long at the end. Prices will rise rapidly as stores are depleted, then no one will take cash for anything.

    IMO, the problem with gold and silver, is that it’ll be some time before they replace/bolster barter as the medium of exchange. After cash, and before some form of working economy is reestablished, barter will be king.

    • I think you are right about precious metals Bob. I think in a total collapse you won’t be able to trade gold for food unless that person you are trading can do something with the gold. Not that it doesn’t have value, but we as a society will need to learn what the value is and device means for trading it and verifying it’s purity to some extent first. Absent pawn brokers or bankers, the people who can do that will be few and far between I think.

  • George Washington

    Hmm none, because it will be worthless at that point. When the grid goes down in your entire city for example, you know that it is not ever coming back. Then all bets are off.

  • Adam

    A total economic collapse could potentially bring either the outlawing of precious metals as a currency or even a confiscation of gold and silver to prop up the country. Something similar has already happened in the last hundred years here with citizens mandated to surrender their gold and given something like $20 per oz. Then jacking up the price to 30 something dollars per ounce once it was all at Knox. In an extreme case any currency could be assumed to be worthless as anything that can’t feed or clothe you is only worth what you believe it is worth. It may be possible that lead and steel are the only metals worth having for an emergency, keep the gold and silver for your retirement.
    On a less pessimistic note, as long as we are not on Weimar status I would say trying to sneak away a couple hundred dollars somewhere would be the best idea someone starting to prepare for major emergencies.

    • My thoughts exactly Adam. Thanks for the comments!

    • BobW

      I completely agree that a lock box full of gold/silver would be a pretty stupid play. Sure its going to give marauders a work out getting it open, but when the feds come for mandatory confiscation of guns and precious metals, it will pose no issues for them.

      I’m pretty sure this is why Pat posed the idea of hiding loot in/around the house. Spreading your resources around, some in plain sight, some more imaginative (they do have wall scanners by the way) is a means of protecting some if not all of your resources once the Shiz has hit the fan.

      With the decay of the US mentality, black markets will pop up almost as soon as the hammer is dropped in a full federal-military takeover.

      • EgbertThrockmorton1

        I have NO confidence in a “full-federal-military-takeover” ever being successful, outside of any major metropolitan area. The people who are smart enough to live OUTSIDE the metro area’s “sphere of influence”, will most often have the resources to prevent themselves from becoming dependent upon crumbs and handouts from FEMA.

        • I don’t either Egbert which is what makes me wonder what the plan is to take that event off the table. How do you subdue a nation without firing a shot?

          • EgbertThrockmorton1

            I truly don’t believe “they” have a plan at all. “They” will wing it, I believe, just like they are winging everything else….so far.
            Then again, I’m a cynical pessimist!

  • Good suggestion! Maybe some rust and a dirty old band-aid stuck to the cap and an all over stickiness…

  • Sandy

    Have as much as you wish to retain!

  • RDPaul

    In a real emergency I can’t imagine a prepper spending more than $1k. First of all as a matter of justice, because hopefully we are prepared already buy huge stocks last minute is probably immoral, and prehaps illegal-hording laws. Secondly…its also dangerous, because other people who are not preppared will likely be frantic. Do you really want to be that guy who has $3k in cash to pay for your groceries when most people around you have less than $100?

    I do believe that if you are perceptive, there is a possible window before people panic, to shop for a few final items. Particularly fuel. The main reason for $1k is because once a full tank of Gas costs more than this it will likely be too dangerous to try to buy fuel. Depending on how far ahead of the curb you are you may fill up you tanks, and still have cash left over. First I suggest that if you are 90% certain that things are clasping that you should max out your card first…even if it devalues paper money burns, plastic does not. Second you might top off a few food stores particularly non-staples. I think you should probably leave storage foods for others, unless you find yourself separated from your preps. However, you might also buy some stocks simply with the intention of sharing them with others (strategic allies) who might help keep you safe. Finally, you mighr look at buying equipment that others might completely overlook in the early days of a collapse, including Guns and ammo.

    • Getting out ahead of everyone else is key I think RDPaul, but how can anyone be sure of when “IT” is actually hitting the fan?

      • RDPaul

        There is no such thing as a sure thing Pat but I think a big part of it is reading the tea leaves right. Once folks begin to realize that the situation might last more than a day they are going to make a run on the grocery stores. Hurricanes and Bluzzards prove that. So the trick is to get to the grocery store before the media is reporting on any potential disruption–e.g. realizing a power outage is not just a power outage–and go for fuel and tools while most people are still thinking a few days at home off from work.

      • BobW

        Not exactly sure what constitutes an immoral purchase at the end of the world. The last palate of MREs? Two 55 gal drums of gas/diesel for the genny? The last loaf of bread at 7-11? The last of the 12 gauge at Wallyworld? Not sure I can envision an immoral purchase at the end of the world. If someone will take the currency, and it helps me and mine its a moral purchase.

        The idea that when things start looking sketchy that I can run to the store or gas station and boost my stocks a little before its all gone is something I want to be able to do. If it doesn’t work, it doesn’t work. I’ll prepare with the mindset that the fiat can help me in a pinch now, and as it crumbles. After it happens, who knows. I’ll take my chances that I am left with green wallpaper vs the alternative of watching the last whatever I could have used leave the store with someone else.

  • theone

    Has anyone taken a look at the society that is out there now. Riots and stealing for lno reason. I don’t think cash is going to help one bit. Guns and lots of Ammo is what you will need. Buying anything with cash, won’t work, haven’t you noticed the cashiers can’t count and they need a machine to tell them how much change to give. We are doomed.

  • sootheater .

    The most efficient means of survival would be too find looters and kill them, take the entire supply store. There is a reason why the Vikings were so successful. Don’t even need to use bullets if you are the ‘gruff’ type. That may sound distasteful but keep in mind that a large percentage of the population does not live in the countryside. There isn’t much space for long term sustainability in the vicinity of urban areas. All things considered those looters deserved to die by the simple fact that they voted for the ones who helped bring about the collapse.

  • Observations99

    Getting your SHTF cash in singles will ensure it will at least have value for the pit toilet you dig in the backyard….

  • RedClay

    I have my cash in several places – some hidden in an envelope, some in a fire safe box, a lesser amount in my office, & some in a bank deposit box. Yes, I’m aware of the risk that the govt could take it, like in the 1930s, but there are also risks w/ keeping it all in my home & office. & we can handle losing 1-2 parts of it. Similar idea to the reduce the investment risk thru diversity principle.

    For a while, our son kept some cash in an envelope in a book in a box – one of several boxes w/ 100s of books, & some silver in a furnace vent where it could not be seen unless one unscrewed & removed the vent cover. He’s moved since, & don’t know where he hides it in the new place. When our daughter had a job where she rec’d tips, she sometimes kept extra cash in a picture frame behind the picture.

    As for how much, I too started w/ a small amount & have gradually increased it. Once one has some water, food, & self-defense/security stuff stocked, it may also be wise to buy some silver coins.