An event in the news this spring reminds us of a key survival and preparedness tip – the importance of cash.

Preparedness isn’t just a bunch of gear you buy, or a checklist you follow in case of disaster (though those are part of preparedness). Preparedness is a mindset. Considering the preparations you’ve made, what are you prepared for? How many different scenarios does a single prep make you ready for?

That depends. But if you’ve made preps, then the more scenarios they protect you from, the better they are.

For example, if you’ve got six months of food stashed where you can access it, that covers you for any scenario in which food is difficult or impossible to obtain for up to six months. The exact reason why the normal supplies of food are unavailable only matters for estimation as to whether your preps will outlast the crisis.

Grid Down

Near the end of April, the city of San Francisco experienced a massive blackout. The outage extended to over 90,000 businesses and residences, leaving multiple neighborhoods (commercial and residential) without power from about 9AM to 4PM.

The cause was a catastrophic failure of a large circuit breaker at a power substation, causing a fire at that substation.

Here’s the most interesting quote from the article:

Johnny Sadoon, owner of Sutter Fine Foods on Nob Hill, sat against a register eating vanilla ice cream from a Häagen-Dazs carton. He figured he had but a few hours before he should start to worry about the food going bad and the ice cream melting in the freezers.

He had kept the store open despite the blackout and a few customers perused the darkened aisles, but because the credit card machine doesn’t work without power, sales were few and far between.

“No one pays cash anymore,” he said, spoon in hand as a siren wailed outside. “I’m angry. I’m annoyed.”

So this owner was prepared enough that he was set to withstand the likely duration of outage. He was ready to continue doing business, and would not suffer the sorts of product losses various other food businesses suffered.

Blackouts

I was in California during the rolling blackouts right before Enron collapsed. I didn’t have much sympathy for it and felt the Californians brought it on themselves. Enron was saying it was a lack of power production, and no wonder. You can’t build a nuclear plant because it might explode like an atomic bomb. You can’t build coal or fossil fuel plants because they pollute. You can’t build hydro power because it affects the natural streams and waterways. And you can’t build wind power because all those turbines ruin the view (I’m not joking, this was an actual complaint I heard several times back then all over the state). So that leaves solar, and it just doesn’t have the capacity to power everything we need it to.

And then it turned out the real reason for the blackouts was monkey-business from a corrupt energy company: Enron.

So there are many things that commonly cause massive blackouts today. It doesn’t have to be an EMP attack on the US. It could be a bad storm damaging part of the grid. It could be corporate malfeasance. Or it could be a simple equipment failure, either due to poor maintenance practices, or due to Murphy’s Law and completely unexpected.

When the blackouts hit my neighborhood, they lasted longer than a day. I lived in an apartment and as I got hungry, I tried to find something to eat. The microwave was down, as was the electric range, so I wouldn’t be cooking anything at home. I walked a few blocks to the nearest shopping area and found that all fast food places were closed down, as was the local grocery store. None could function or do business without power. And so I had to be hungry until the power came back because everything in my pantry required cooking, but I had no ability to cook.

When night fell, I had no candles and my activities became limited with the lack of light.

Cash

Back to the store owner in San Francisco this year. What if you lived in that neighborhood? What if you were just passing through on that day and hour?

Let’s imagine the scenario in a more rural location. You need gas or something else from the local convenience store and gas station, and it’s the last stop for the next 60 miles. The owner is sitting there, ready to process cash even though the credit machine and ATM are dead. If you were there today, would you be able to buy gas? Or food? Or drink?

My recommendation: go to the ATM today. Pull out your max daily limit (for most folks, this will be either $200 or $300.) It’s probably going to be in $20 bills.

Now stash it somewhere in your car. Put it in there, well hidden from anyone who might be looking, and forget about it until you need it. Maybe do it again next week, and again on the week after, and you’ll have nearly $1000 in cash in your car.

That’s a small enough sum that it won’t hurt too bad if anything did happen to it (theft or fire), and also small enough that asset forfeiture from the DEA wouldn’t come into play. Technically, they could hit you on only $20, but that’s a lot harder to make stick to the accusation than an ice chest with $30k of cash.

But with that cash in the car, you’re ready. If you pass through that neighborhood where the power is out and you really need to buy something that can’t wait until the next stop, you’re not stuck waiting for power to come back to the credit card machine. As long as the owner is taking cash, you’re good to go. (I’m not so sure he’d take silver or gold bullion. How’s he going to check the current exchange rate?)

Or perhaps something goes wrong with your bank accounts. I was once on the road in weak cell phone area and a funds transfer into my bank account had failed, bouncing various credit card payments and such that as I drove, I had no idea that I went from having 5 figures available to negative numbers. Then I was at that truck stop with no way to buy gas or food, and not enough gas in the tank to go any farther. I sat there for hours, making calls to various financial institutes when I could get a phone signal, and waiting for them to sort out what had gone wrong.

If I’d had cash then as I’m recommending today, I could have made the rest of my journey that day and made calls from my hotel. Without cash, I was stranded.

At home you may want to stock away even more, but then again your home is likely more defensible than a vehicle. A large safe, especially if concealed, could be a good place to lay up three or six months’ of expenses.

Be prepared. Don’t rely on the power grid and the credit grid.