Michael,

     It is probably wise to invest into some silver coins, either one ounce rounds, Peace dollars or American silver eagles.  The price for these coins is at a relative lull at the moment, but general expectation is that silver will go through $25 an ounce easily within the next year or so.  Silver coins are also more easily transactable than gold, which most people are unfamiliar with and which is also unlikely to have the upward momentum that silver coins offer.

You probably want to keep yourself fairly liquid to take advantage of distressed sales of useful things that are likely to appear in our yard sale future economy.  Also, do you have a personal survival kit that can help you survive a blackout and a stocked pantry?  Those might be among the first investments you should make. -Joe

Thanks for the comments.  One thing I have noticed is that I tend to have two to three weeks of food on hand at any time, but most of it is inedible if I can't cook it.  Right now, if I had to get by without access to the store, electricity, or water, I could probably make it for two or three days.

I thought I'd add a few comments to what Michael said.

First of all, congratulations. I wanted to give you my own advice.

You said you don't want to be the guy in Money As Debt who doesn't work. Keep in mind that guy is the banker. I'm pretty sure you're not on your way to becoming a banker. As an investor, you are always at risk of losing money. On the other hand, bankers, like casinos, never lose money.

I recommend you buy some silver and gold coins, though not all at once. Buy a few coins every time you get paid. Avoid the Ameriacan Eagle (gold). It's overpriced and for no good reason. You pay a premium for that coin just because it's American, which makes no sense whatsoever. Gold is gold, so get whatever genuine coin that contains an once of gold, but don't pay a premium if you can help it.

I know Michael doesn't have a car, so you don't need funds for when your car breaks down. My advice is don't get a car. Electric scooters are virtually maintenance free. Cars can drain all your savings, and sometimes all at once. I have tons of stories about cars and how I allowed them to eat fortunes of money I made before.

My final recommendation (which may go against what some people have said here) is don't focus too much on stocking things, but rather on acquiring skills. Having extra food is great, but in the case of an emergency and rioting, people will take that food from you. So you work hard to buy and put food away only for some gang members to benefit from it. Same thing with precious metals - careful where you put them. The best thing you can invest in is your mind and educating yourself. Acquire skills that can help you and your neighbor in a post-peak oil world. There are numerous workshops on permaculture or whatever thing interests you.

Hope this helps. I have thought a lot about this. And I bought gold when it was $932 - now it's down to $770 - likely will come back up, but if I needed cash I'd lose money by selling it.

Hope the Washington Mutual accounts have already been withdrawn and closed long before this, but if not, do this like immediately.  You need to have your accounts in a more secure bank as it is pretty useful to be able to smoothly do business transactions, something all of us have to do in this society.

The posts on this thread are all good advice.  Some comments however: 

Although the Federal government bail out of all these “indispensable” financial institutions is inflationary in the longer term, it appears that the credit crash/crunch will cause a deflationary condition for some time.  It is wise to be in cash that you have relative close contact with.  You may even want to make a habit of saving your change, coinage may well have greater valuation and purchasing power than paper currency and it is a simple enough pattern to do.   Avoid having a lot of money - beyond what is necessary to cover essential transactions - in bank deposits or ANY paper certificates, bonds or securities.

Take advantage of the low price of silver coins by engaging in a regular purchase of them.   I was told in correspondence that although the spot price is very low (reached as low as $10.40 or so recently, before rising quite a bit),  just try and buy coins at that price.  The marketplace is sold out and the nominal spot price is probably much lower than the actual, practical market rate is.  Still, start those silver coin purchases soon and perhaps team up with me and others in a regular silver buying club.

Recognize that money is not the only thing limited in your life, so are your time and energy.  It would be worthwhile to learn a number of practical skills like permaculture or bicycle repair, any eduation in those directions is useful and empowering.  However Michael, what you are doing in terms of your post graduate research in mathematics is something wonderful, rarefied and fragile.  In terms of your focus, put it on your research and teaching work, pursuing a doctorate may not be nearly as easy and seamless five or ten years from now.  In fact, it may be impossible for all but the lucky few.  There is going to be plenty of time to learn how to plant potatoes and boil turnips, take advantage of your life opportunities when you have them.

The recent onslaught of bad news from hurricane damage to critical USA oil infrastructures to financial institutions collapses, failures and buyouts is too much to take in and absorb.  Am still digesting what I have been reading and actually glad I am going to be offline for a few days.  What thing is certain, along with the evaporation of hundreds of billions or maybe even trillions of dollars of hallunicated valuations, paper promises of all sorts will be seen as empty.  We are going to see some interesting mental and societal disorientations, it might even be scary.  Put your trust, faith and energy into those things that are real, closeby, useful and constructive to yourself.  Connect with people who have skills, resources and ethical values.  This is just the beginning and it is not going to be wise to be ignorant or unprepared in the future.  -Joe