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I received a phone call recently from someone in the media, who introduced himself by way of exclaiming “Is it true that you have a family of four and live on less than $45,000 per year? And if so, how is that POSSIBLE?”

I answered his question, then hung up and ran my latest financial numbers. Turns out I’d lied. This year’s figure was less. MUCH less. Bob doesn’t lovingly refer to me as his “Cheap Mick Wife” for nothing.

Soon after, I received an email from a reader who had just come into an inheritance from her mother. She wanted my advice on how to invest it responsibly.

My first reaction, of course, was that I’m the wrong person to ask. I’m definitely not an expert on how to spend money. I’m an expert in how not to spend money.

I looked over at my financial calculations scratched on the back-side of a post-it note (yes, even they get re-used). It’s definitely been a tough year for cash flow, but it certainly hasn’t felt like our family has been living on so little money. We have a lovely home, we eat well, we have lots of fun, we’re warm, and we don’t worry about how we’ll keep the lights on.

For me, that should be the objective when investing money. Our culture typically instructs us to think of investing in terms of generating interest, so that we’ll have more money, so that we can invest more money, and eventually have a higher income as a result. It assumes a continual growth of the economy. Bob and I don’t believe our economy can (or should) be in a state of continual growth.

Our family financial goals are different. When we have extra money to invest, we want to use it in a way that will enable us to enjoy a good quality of life in perpetuity, no matter what happens in the mainstream economy, with the weather, and no matter what our annual income happens to be in any given year. Knowing this about our financial philosophy, here is how I would advise anyone to think about investing the occasional cash windfall:

1. Lower your cost of living

First and foremost, this means paying off any interest-bearing debts. Monthly payments of any kind rack up the monthly income demands, and you get nothing in exchange for paying interest. Paying off interest-bearing debt is a guaranteed return on your investment. Get rid of credit card payments, pay off the student loans and car loan, get rid of the mortgage, or pay it down as much as possible. Once you’ve eliminated all debt, turn your attention to lowering your household expenses. When Bob and I have had the extra cash, we’ve used it for a woodstove, solar hot water and electricity, blown-in insulation, and replacement windows. We’ve also used it to do upkeep on our house, so that we’re not panicking about a leaking roof at a time when cash flow may be in the negative. For some folks, this might even mean buying a home in a place where the cost of living is cheaper, or moving closer to a job to cut down transportation costs.

2. Invest in your ability to produce

Those of you who follow my work know that one of my mantras is “Produce, don’t consume.” By producing for our basic needs and pleasures, we lower our cost of living, reduce our ecological impact and occupy ourselves with activities that are a lot more enjoyable and satisfying than simply buying things in the marketplace. And when you are busy making what you need and/or love, you don’t have much time to think about spending money. Producing can also generate income. Bob and I produce our own honey, candles, soaps, and ointments to cut our household expenses, but the surplus sales of these items pay our property taxes. Investing in production may be something small, like garden seeds, a stockpot to make broth, or blueberry bushes, laying hens or asparagus crowns, all which will lower food bills. It might mean investing money to start a micro-enterprise (last year we took a few thousand dollars and began a value-added wool business with our sheep’s fleeces), or buying tools you need to build, fix or mend things.

In our family, one of our most important financial investments was in an expansive working kitchen that includes two cooktops, several large sinks and several yards of counter space. We created a space where a stockpot can be simmering, a meal can be prepared and a bushel of beats can be pickled, all at the same time that clean-up is going on (those of you who’ve bristled at the irony of having to order take-out on the nights you are canning can appreciate such an investment). That same kitchen lets us do our production crafts while running recipe tests, and still allows for the kids to run through and make themselves a snack or grab a glass of water.

An investment in production might be something pleasurable, as well. In fact, during the winter months, when our cash flow nearly stops, it is probably one of our most important investments. Bob owns a couple musical instruments, which he loves to play. He spends hours in the winter strumming his guitar or plucking his mandolin, making lovely music. I once spent a few hundred dollars on a set of high quality interchangeable knitting needles, with which I’ve knitted several miles of our farm’s wool (and saved a lot of money on some great Christmas gifts). When we sit by the fire and he plays music and I knit, neither one of us craves a fancy dinner out, more fashionable clothing, vacations, or the newest iPhone. Heck, with the exception of Saturday nights (when we do like to indulge in a single martini), we don’t even feel the urge to drink. Cheap fun is priceless.

3. Invest in your security

Even though they seem like lousy investments, I’m a big fan of certificates of deposit through local banks and credit unions. I’m the extreme epitome of a “conservative investor.” More than once I’ve had it explained to me how I can have far superior rates of return by using more sophisticated investment options. My answer is always the same: My ability to save can outpace any rate of return you can find in the financial markets. Therefore, I’d prefer to see my savings as secure as possible. Certificates of deposit are insured, they allow for emergency cash if the wolf is truly at the door, and they are conveniently locked away and inaccessible enough to make it difficult to simply withdraw them on a whim.

If, like me, you are living in a place that seems to be falling victim to extreme climate events, investing in your security might also mean putting some funds into your self-reliance on that front, too, with things like generators, hand pumps, gas cooktops, woodstoves, and the like. It’s good to stay warm, dry, fed and hydrated when all the roads in your county are shut down and the power’s gone.

4. Invest in the economy that surrounds you

My parents have long taught me the value of this practice, and as they’ve come into the years when they have extra capital, they have consistently directed it into the local community. They’ve used their extra capital to provide mortgages, underwrite entrepreneurial ventures, finance home improvements, or just help someone to buy a car to get to work. They do earn interest on their loans, although they always collect less than a bank, and there are times when they have to make a few pestering phone calls in order to get paid. Our local food co-op recently ran a campaign to encourage the members to finance an expansion, and our entire family invested in that, as well. Local investment opportunities can be more lucrative than CDs or formal socially responsible investment forums (our personal “local” loans have generated anywhere from 1-6% interest, as opposed to the current 0.40% of a 3 year bank CD, or 1-3% for a socially responsible loan fund), but they are only as safe as your judge of character. They are also contingent upon being deeply embedded within a community, where the social networks help to guarantee payments, and also help to ensure more forgiveness than a national bank chain. In an effort to facilitate more local connections, the Slow Money movement has worked with community chapters to set up local entrepreneurial showcases where private investors can meet up with sustainable food entrepreneurs. Their website contains links to these chapters, as well as links to other like-minded social investment opportunities. You can learn more at .

So there are my thoughts and suggestions when it comes to investing money responsibly. The returns are pretty small. When I do have money to invest, I try to strike an average return of 3%, and even that might be higher than what I can expect in the future. But if I can keep my family’s costs of living down, and we can continue to produce the things we need to survive and enjoy life, I think we’ll be okay. For those of you who have more experience on these matters, I hope you’ll take the time to write and share your thoughts. I would dearly love any insights you can offer. I’ll probably even take notes on the back side of one of these used Post-its that have been collecting beside my computer.