All sorts of unforeseen events can affect our financial lives, not just financial catastrophes themselves, but illness, terrorism of one sort or another, even the weather.. Real world prepping encompasses many different types of skills, events and objects, and for me, finances are a part of that, as they are for many, though not all, preppers.
Financial preps are funny old things. I did a couple of posts about financial prepping a while back, but right now I’m spurred to write because as usual last January, I finished my income tax declaration/negotiations with HMRC. And on the day I did that, what should happen but a major UK bank goes down under a DDOS attack! There are thousands of people who don’t pay their income tax on self employment until the last possible day, and if they got caught out by the DDOS attack (on HSBC) then they’d really be scrabbling around to try to finish things off. HMRC has rightly said that people can estimate figures to make a final payment, and then amend them within a year, and that’s true, of course. But there’s be chaos and stress that would be totally avoidable, with a little bit of forethought: preparedness!
As preppers, we talk (or at least, I talk) a lot about how the “just in time” culture of our retailers can lead to severe shortages in very little time if there is even a small problem. Likewise, for us to rely on a just in time approach to our tax affairs could present us with problems that would then be of our own making. For instance:
31 January, when our returns have to be in, is smack bang in the middle of the ‘flu season. If you’re relying on the last week in January to get your return in, and you come down with a bad case of flu on 20 January, HMRC really aren’t going to be too sympathetic.
A DDOS attack, exactly as happened on 29 January, could leave you without access to your money.
Other forms of cyber attack exist – internet servers themselves can be overwhelmed, leaving you stranded for an unknown length of time.
Your own internet connection could go down. Mine went down earlier in January – there was a problem at the nearest telegraph pole, believe it or not, and I lost internet and phone connection for two days. I could have coped with sending a tax payment by using the banking machines at the nearest branch, but if I’d still needed to fill in the online tax form, I’d have been in deep trouble. Going to a public computer, wherever it’s based, to fill in your tax return, must be an unpleasant feeling.
House fire. Imagine it. 27th January, and you’ve easily got four days to sort everything out and send HMRC the money. But a pan boils dry in the kitchen, burns, and then catches fire: you were in the attic, fetching down the tax papers. You make it outside the house, with your go-bag, but all the papers you were about to use are burned, and everything else is soaking wet after the Fire Brigade put the fire out.
Weather-related problems. Anything from your own connection breaking down with water on the line, a local electricity exchange flooded even though your home is dry, a lightning strike on a building or a crucial cable.
Figures might be unavailable – up to date log in details, new passwords, activation codes, all sorts of things, are necessary.
Complicated financial affairs? You may well need to amend figures and resubmit. Mine are a little bit complicated because I have some assets in the European Union, not just in the UK, and believe me, it makes everything trickier.
When you’ve finished inputting, and you’ve really got everything the way you want it, it takes a few days for the HMRC website to churn through your information and tell you what you owe on what you’ve submitted. Leaving your submission to the last possible day is really asking for trouble on this – I left 10 days, and I still made a hash of it, even though I’ve been doing these returns for 5 years. Their software told me I was entitled to a refund, but then I realised I’d filled in some figures incorrectly, and resubmitted. So then the software told me I’d made late payments for the last two years and I owed interest – not much, but still, thats what they said. I should have been working more slowly and submitted the figures earlier, then I wouldn’t have made the mistake that caused this problem, and both I and HMRC would have had less online kerfuffle.
Have enough money to pay and of course this particular tax prep is becoming more and more problematic for a lot of people. Claiming everything that’s tax-deductible, claiming all benefits you’re entitled to, legal methods of tax avoidance – like a private pension! – all of these are important, and if they’re not enough then second and even third income streams are called for.
Communicating with HMRC so that if there’s a problem filling out the form, or paying, you’re able to get through to them, instead of being 118th in the phone queue.
How is this prepping? Prepping isn’t all about making fire in the woods and purifying water – even though those skills are important in some circumstances, and lifesaving in others. Currently, we all live in this society, which uses money and insists we hand over some of it to central government. Ensuring that you meet your legal and financial obligations in the world as it currently is, is also about prepping. If you don’t do that, action can be taken against you, from fines at the very least all the way up to imprisonment. Like me, you probably want to avoid those things.
Nearly all of these events are outside our own control, and the only way, really, that you can ensure their effects on you are minimal, is to take action in good time. With an important event like submission of your tax return, don’t leave yourself only a week or so to get things completely done: personally, even though I often finish the submission in January itself, I start it the preceding April, with income details, regular outgoings, the easy stuff. This year, I aim to get it all done by the start of the preceding winter, but we’ll see.
Money can buy flexibility, but just like anything else, it has to be used correctly. And the more we use it correctly, the more we liberate for our own discretionary spending or saving.