Before I even dive into the point of this post I’m going to address something, to those of you readers who saw the title and chuckled because you claim to live a “debt free” life. I’m going to put the squash on that right now because unless you live in a totally off grid home, grow all of your own food and source all of your own water, drive solar powered cars which require no gasoline (read: you are utterly and completely self reliant) you are in debt. That’s right, the average person might not have a house or car payment but they still are in debt. Don’t believe me? Let’s examine what debt is.
- something that is owed or that one is bound to pay to or perform for another
- a liability or obligation to pay or render something
- the condition of being under such an obligation
Some people might not have any revolving debt (credit card) or installment loans (home, car) but they are still under obligation to pay or render money to certain entities. Utilities are a good example of this. Every month people pay for access to electricity, water, natural gas. Nice to have things also require obligations: cell phone bills, internet bills, television bills. Even need to have items such as food purchased at your local supermarket means people are under the obligation to “render unto Cesar”, unless feeding the family isn’t a top priority.
Here’s the point, most of us have obligations in some form or another, so what happens to those obligations when SHTF occurs? I have a mortgage and a car payment, I even have some student loans an a couple credit card bills I pay each month. If the lights go out tomorrow, should I just stop paying my bills? Well…that depends.
The first thing we must examine is how extreme the type of SHTF event is and how this impacts our ability to pay bills, and to do this there is one simple question to ask: Will people continue to go to work? Let’s take a look at a few scenarios and answer that question.
- Solar Fare, total loss of the grid: No.
- Economic Collapse / Stock market crash / Hyperinflation: Yes.
- EMP Strike, total loss of the grid: No.
- World War 3: Yes.
- Massive pandemic, worldwide outbreak: Maybe (Initially).
- Nuclear War on a global scale: No.
- 1984-ish Society, marshal law etc. Yes.
- Zombie Apocalypse: No.
Here’s the short answer. If people aren’t going to be at work, it’s useless to believe that somehow your bills will get paid, or that anyone will even care about bills at that point. If people ARE continuing to work then you’ll probably have to find a way to make those payments on time like usual. Let’s dig into a few examples of this shall we?
A massive solar flare or EMP strike wipes out the grid in North America. I don’t know about you but I pay most of my bills online, that will stop because the internet will be toast. Mailing in the bill via check will be useless, the postal worker won’t be coming around and the planes or trucks which would have transported your check will be scrap metal, never mind the fact that the worker at the bank on the other end won’t be in his/her cubicle to accept and process your payment. Nobody will be at work, all systems down, whether or not a mortgage payment will be missed will be the furthest thing from anyone’s mind in a life or death survival scenario.
What about a hyperinflation scenario, or if the markets crash in a massive 2nd Great Depression? Times will certainly be tough but bills will still have to be paid, if that’s even possible with all of the job losses which will no doubt ensue. However banks will still be open for business, credit card companies will still want their monthly 2% of your revolving balance and the gubmint will surely continue to desire payment on those student loans. At that point prioritization will be key for many, forced to allow some debts to fall by the wayside (due to job loss) in order to survive. Food and water will be high on the list, followed by keeping current on the mortgage and the utilities that accompany it.
To sum it all up, the answer to SHTF: What happens to the bills is simply this: it depends. In the meantime try to recall some of the information I posted related to debt the next time you hear someone exclaim they are “debt free.” A hot debate could easily ensue once you attempt to disprove their theory!
Person 1: I’m debt free!
Person 2: So you have no obligations?
Person 1: None, I’m completely debt free.
Person 2: You don’t pay utilities, put gas in your car, buy food, pay for cell phone or internet access?
Person 1: Those are living expenses, not debt.
Person 2: Ok, so stop paying for them then.
Person 1: Well I can’t do that.
Person 2: So you need to pay for these items in order to live your lifestyle, one could even say you are obliged to pay for these items? Obligation = debt.
Person 1: I don’t have any debt, I’m debt free. I read a book about it.