Got Your 'Bug Out' Bag?

5 tips for getting ready. Just in case...

YOU MAY not be an investor or have a large portfolio, in which case, most investment advice is useless, writes Dan Denning, co-author of The Bill Bonner Letter, in Diary of a Rogue Economist.

But there are practical steps you can take that go beyond purely financial advice. Part of what I'm hoping we can help you do is have the right frame of mind to deal with a fragile financial system.

That's one of the things Bill and I have been telling readers of The Bill Bonner Letter. As I showed recently with the example of the "short volatility trade", the bull market is much more fragile than you might think.

When a system is so complex it could break at any moment – from its own complexity or from an external attack – you need to prepare. Here are five personal tips I practice in my own life. They don't make me any wealthier. But I think they may give you a bit more peace of mind when you're dealing with a turbulent system.

#1. Defer consumption no matter what
Save more than you think you need to. It's a good moral habit, too. When you defer consumption, you accumulate capital. You resist the urge to gratify every desire. As the Stoic philosophers would say, you free yourself from enslavement to your passions.

#2. A little walking-around money
Carry enough cash on you each day to eat a meal or get a cab ride or Uber over a long distance if you need to. You never know when the cash machines will break down or you might not be able to get back to your home.

#3. Cash insurance
Have enough accessible savings (in cash) to survive for six months if you lose your job or are ill. If this seems insurmountable now, see rule number one above. Americans have fallen into the dangerous habit of mistaking full grocery store shelves for wealth. We ARE a wealthy culture. But don't live with "just-in-time" cash management.

#4. Establish a family disaster recovery plan
Each of your family members should know how to contact one another in the event of an emergency which affects any or all of them. They should know important phone numbers, addresses, and, if necessary, the name of a family friend or lawyer to contact in a legal or medical emergency.

#5. A "bug-out bag"
You may not have heard of a bug-out bag. And if you haven't, it may sound a little crazy. But I can assure you it's not as crazy as you think. Events that disrupt the routine of normal life across all of society rarely happen, even at the most extreme times in American history. But they DO happen.

The "bug-out bag" is just a reminder that in a real crisis, the value of your portfolio may be the least of your problems. Like the first-aid kit in your bathroom or the spare tire and road flare in your car, it's the sort of thing you hope you don't have to use...but shouldn't be without...

A few things to get you started for the bug-out bag are...

• A bag (obviously)
• Identification
• Cash
• A first-aid Kit
• Contact names and addresses of friends and family
• Food and water
• Maps
• A multi-tool
• A change of clothes
• Hygiene items (toothpaste, hand wipes, etc...)

Anything I missed?