Federal Debt Now Equals Total U.S. Economy

If you’re looking for inspiration to get out of debt, then you would definitely not want to look to the U.S. government. They’re setting a horrendous example… and then trying to pass it off as “no big deal.”

In my opinion, it’s only a matter of time before the U.S. debt load comes crashing down. But hey — I’m just a citizen. What do I know about economics and finance?

Good question. I’ll answer it in just a second. But first, from the article:

Continue reading Federal Debt Now Equals Total U.S. Economy

Selling Gold Jewelry – A Good Idea?

Selling gold jewelry has become quite a big business recently. I’m sure you’ve seen the TV ads encouraging you to call and pawn off your gold jewelry for some cash.

It’s tempting, for sure. After all, gold has been sitting at more than $1,000 an ounce for a long time now.

Most of the sales pitches rest on a couple key points. The first key point is that you might need cash fast. Selling your gold jewelry could quickly raise funds.

The second key point is a suggestion that gold prices might fall. This creates some urgency for the potential seller: “How long will gold prices stay above $1,000 an ounce? I better sell now while I still can.”

Where Is Gold Headed?

The reason gold seems to be increasing in value is because the dollar is declining in value. So gold is a hedge against the dollar. It is a way to preserve your wealth.

By getting out of gold and getting into dollars, you’re moving out of an asset that is appreciating and getting into an “asset” (the dollar) that is depreciating.

My opinion is that gold is headed higher. I would not be surprised if we see it surpass $5,000 an ounce by 2012.

Of course, I have no magic ball, so I have no idea what the future holds. But generally speaking, I expect the price of gold to continue to go up — not go down.

Selling Gold Jewelry – Timing the Market

You can never know for sure when the price of something has peaked. So your decision to sell your gold jewelry has to be based on your own in-depth research and the urgency of your need for cash.

For the time being (early 2010), I would personally wait to pawn off my gold jewelry. I would attempt to sell other things first: furniture, electronics, appliances, cars, etc.

Again, my logic is based on the simple fact that I believe gold will continue to appreciate. Other possessions like cars, gadgets, and so forth will continue to depreciate.

It’s almost always better to sell something that is losing value instead of something that is gaining value. With that in mind, my personal belief is that selling gold jewelry may be a bit premature at this point.

Credit Card Law – What the New Rules Mean

In May of 2009, Congress passed a new credit card law called the “Credit Card Accountability Responsibility and Disclosure Act of 2009.”

It is called the “Credit CARD Act” for short. (Politicians just love acronyms, don’t they?)

While some of the provisions of the law went into affect last summer, most of them go into effect February 22, 2010.

If you want to learn about the new credit card law in some detail, you can read this write-up by the FDIC.

But I found the infographic below to be much more fun and enlightening. It is the most beautifully executed explanation of the Credit CARD Act I’ve seen. It shows:

  • The severity of the credit card and debt problem in America.
  • A few of the good things the new credit card law does.
  • Plus, the sneaky practices the new law does NOT prohibit. (The credit card companies can still get away with a few shenanigans.)

I encourage you to click the infographic below. This will take you to the original blog post where you will want to click the same infographic and scroll through it. Takes about 2 minutes.

Credit Card Law - Debt Is Crushing Americans

Not what you’re looking for? Search Google:

Currency News – Time to Take on Debt?

The currency news mill is working overtime.

There have recently been more predictions of the imminent collapse of the U.S. dollar. And for good reason. According to some sources, a U.S. default is now certain.

Other sources say that the financial oligarchy — the true men in power in the U.S. — are preparing to drive the value of the dollar down by 30-50% in the next 12 months.

I’ve actually already seen the images of the plates for a new North American currency that could be released by the end of the year (2010). There are no dead presidents on these bills, but rather pictures of each of the founding members of the Federal Reserve.

How’s that for creepy?

No matter whether or not the rumors of a new currency are true, the future of the dollar isn’t looking good. And if it continues to decrease in value, it’s going to spell trouble for Americans. Which is why I think you have to ask yourself…

What If the Currency News Is True?

If the currency news is true, then that means our buying power is going to decrease during the coming months. Which means that we will not be able to buy as many products and services with the money we earn.

It could also mean that your income will go up. But this will only be an illusion of progress. While your income may increase, it most certainly will not increase as quickly as the prices of goods and services will increase.

Now let’s see how this relates to getting out of debt.

Your debt is essentially a fixed number, assuming that you are not incurring debt and you are making all your minimum monthly payments.

But in an inflationary situation, your income may be going up, as well as the prices of everything you normally buy.

This means that it will actually be easier to pay off your debt later with dollars that are worth less. I have read of stories where people paid off their homes in a just a few short years once hyperinflation kicked in.

So if I expect that we will see rapid inflation this year, it doesn’t make much sense to pay down my debt a whole lot. It makes more sense to wait and pay back the debt with cheap dollars that are easily obtained.

Protect Yourself from Inflation

In the mean time: I suggest you use the dollars you have right now to hedge against inflation. In other words, buy tangible goods… things that you think you will need this year and next.

Personally, I’ve used some zero-interest loans to acquire physical goods. I’ve done this with the expectation that the goods themselves will be worth more than dollars will be worth in the near future.

Also: I’m buying gold and silver. Owning precious metals will protect you from inflation in the months and years to come. I have already bought silver myself, and I believe this was a wiser way to spend my money than to pay down my debt.

This is just what I did, and it’s not intended to be financial advice, nor should it be considered as such. You will have to do your own research and due diligence before making any financial decisions.

Staying on top of the currency news is always a little bit discouraging… and exciting at the same time. I hope you’ve found this information helpful and interesting.

Zero Percent Loan Same as Cash?

A couple months ago I was talking with my neighbor about some purchases I was thinking of making because of the zero-percent financing that was available.

He said, “That’s great, man. If it’s zero percent, that’s the same as cash.”

In a way, it is.

Getting a zero percent loan and making payments against it is the same overall effect as saving that money up and spending the lump sum down the road.

Yes, you may lose out on interest from your savings… so you might argue that you’re losing money by taking the debt.

But on the other hand, inflation greatly outpaces the interest rates offered by banks. The more money the Fed prints, the faster prices rise. This process discourages saving and encourages borrowing.

With a zero percent loan I can borrow money today and pay back the amount borrowed with less valuable money. Yes, I’m paying back an equal amount of dollars, but each one is worth less (or has less purchasing power) than it did when I borrowed the money.

So in a very real sense, a zero percent loan is not the same as cash… it’s actually better than cash.

This is the kind of world most of us live in, particularly in America where the printing presses never stop running. It’s a topsy-turvy world where what should make sense (saving) doesn’t make sense; and where what shouldn’t make sense (borrowing) does make sense.

Thoughts? Leave a comment below.