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.

Banks Give Homeowners a Break

About 10 months ago I wrote a post about how some people who couldn’t sell their homes just stopped making payments. I also shared that my relatives who live in Phoenix were planning to do this. I wrote:

They plan to live in their current home for 3-6 months without making any mortgage payments. They will save up some money so they can move. When the bank finally approves them for a short sale — or gives them the boot — they’ll go get a rental somewhere else.

Here’s an update:

My relatives did indeed stop making payments on their mortgage in November 2008. They started getting nasty letters in the mail, phone calls, etc shortly after that. Fortunately, their realtor had prepared them, so they were expecting this and have seemed to handle it well.

Guess what?

It’s 11 months later… and they’re still living in the same house!!

In fact, we drove down to Phoenix this past April and visited them for a week. It was kind of strange at first because I wondered, “Could somebody show up at the front door and just decide to kick us out?”

Of course, that never happened. We had a great visit (with the exception of my youngest getting sick and vomiting).

It’s interesting to talk to my relative about their house. She’s very detached… and really doesn’t care about the house one way or the other. It’s almost like she’s adopted the mindset of a renter… but to a greater extreme.

She views the house as a place to live — but she definitely does NOT feel like it’s her home. And she and her husband are always waiting to find out when they’ll be forced to move.

Not an ideal way to live, but at least they’ve not had to make a mortgage payment or rent payment in 11 months.

You might wonder, as I did, why in the world a bank would let someone “squat” on its property for that long without making payments. Well, here is what I’ve discovered…

Many banks have bad mortgages on their books. But they don’t have to officially record those bad mortgages — they don’t officially get put on the books — until the bank forecloses on the property.

So here you have a lot of banks that are actually delaying or avoiding the foreclosure process so they can make their financial statements look better than they really are.

Crazy, huh?

The banks want to deceive the public, particularly their account holders and share holders, so they can continue to profit from deposits, transactions, and increase in share value.

And so banks are literally giving homeowners a break to maintain as long as possible the deception that everything is okay and the banks are doing well.

If the banks were dealing with only 10 or 20 foreclosures, this would never happen. But they’re dealing with thousands of foreclosures. The problem is so big they can’t deal with it — at least not all at once.

Anyway, that’s the update on my relatives. Still in the same house in Phoenix… still haven’t made a mortgage payment since November 2008. What crazy times we live in!