Note: This is an excerpt from an email that I sent to my clients in September 2008. I post it now as a blog for the simple reason that periodic checks on where you store your money is a prudent thing to do.
This post is NOT intended to scare you or entice a run on the banks. Rather it is some common sense advice based on the adage: An ounce of prevention is worth a pound of cure.
Recently, a market technician that I use suggested that people should check the health of their banks. Since I agree, I am providing you a link to his step-by-step instructions.
And while he uses some strong language, I want to reiterate: Do NOT go into hysterics! I just think that prudence dictates that we seek the best places to store our wealth and if our current location does not measure up, we need to know that and take corrective action.
Of course, things change over time so you might want to set up a reminder to do this once or twice a year. Or, you might also consider putting your wealth in the best place to store money, which I have chronicled here before.
Friday, August 26, 2011
Saturday, May 28, 2011
A False "Debt-chotomy" And What To Do About It
I hear a lot of financial advisors recommending to their clients to get out of debt. In years past, though it has been a while, I heard another set of advisors heartily recommending the strategic use of leverage. Apparently the "debt" word had become so distasteful to the general public that the pundits had to come up with a different word, "leverage", to make it sell.
So which is the better way? Who is right, the no-debt crowd or the leverage lot? Well neither actually, but understanding why is no easy task and many Americans still suffer this conundrum for failing to see the actual state of affairs they live under.
In point of fact, we live under a fiscal and monetary regime that is DEBT based. Whether or not you understand the implications of that statement, you must come to understand this: Under the current economic system, you are NEVER out of debt. For practical, theoretical and actual reasons, this is so.
Practically, your next debt is your NEXT emergency or NEXT major purchase. In other words, if you are "debt-free" now, you won't be the moment you encounter an unexpected or large expense. Even IF your emergency fund handles the first misstep, you then have a DEBT to replenish your emergency fund or else you won't be able to handle the next one.
In the theoretical realm, advisors will tell you that if you spend CASH to avoid debt then you have just created a reverse debt. They call it "lost opportunity" and the idea is that the cash you spent (an appreciating asset) to buy an item and avoid debt (usually on depreciating assets) has just lost the opportunity to grow for the rest of your life. Maybe that's why the car dealers are willing to "give" you ZERO percent interest?!? Once they have your capital, they have what matters, the asset, and you have a hunk of junk in a few years!
But the real and most destructive reason that you are never out of debt is this: If you are saving money, you are losing...unless you do it right. You see, when you save money at one percent interest and then experience four percent inflation, you have just gone in reverse by three percent...and that is just using the stated percent of inflation. Many experts think that real inflation is MUCH higher.
The reason you should not try to "get out of debt" OR use "leverage, leverage, leverage" is that neither course will get you where you want or believe you are going! It is a false debt-chotomy...er...dichotomy, a false choice. If you can imagine yourself immersed in a pool, tiring of treading water and desperate to get OUT, the "get out of debt" group is essentially throwing you a towel, which itself is going to get wet, and the "leverage" lovers are advising you to swim to the bottom! Good luck with that!
Sadly, there is no REAL solution under our current monetary system. But you can take on a strategy and technique that will help you harness the power of the debt economy. This is what the "becoming your own banker" system is all about and it is one part of my 4-part process to make you financially healthy.
I hope you will look into becoming your own banker and then begin working to return our country to sound money!
So which is the better way? Who is right, the no-debt crowd or the leverage lot? Well neither actually, but understanding why is no easy task and many Americans still suffer this conundrum for failing to see the actual state of affairs they live under.
In point of fact, we live under a fiscal and monetary regime that is DEBT based. Whether or not you understand the implications of that statement, you must come to understand this: Under the current economic system, you are NEVER out of debt. For practical, theoretical and actual reasons, this is so.
Practically, your next debt is your NEXT emergency or NEXT major purchase. In other words, if you are "debt-free" now, you won't be the moment you encounter an unexpected or large expense. Even IF your emergency fund handles the first misstep, you then have a DEBT to replenish your emergency fund or else you won't be able to handle the next one.
In the theoretical realm, advisors will tell you that if you spend CASH to avoid debt then you have just created a reverse debt. They call it "lost opportunity" and the idea is that the cash you spent (an appreciating asset) to buy an item and avoid debt (usually on depreciating assets) has just lost the opportunity to grow for the rest of your life. Maybe that's why the car dealers are willing to "give" you ZERO percent interest?!? Once they have your capital, they have what matters, the asset, and you have a hunk of junk in a few years!
But the real and most destructive reason that you are never out of debt is this: If you are saving money, you are losing...unless you do it right. You see, when you save money at one percent interest and then experience four percent inflation, you have just gone in reverse by three percent...and that is just using the stated percent of inflation. Many experts think that real inflation is MUCH higher.
The reason you should not try to "get out of debt" OR use "leverage, leverage, leverage" is that neither course will get you where you want or believe you are going! It is a false debt-chotomy...er...dichotomy, a false choice. If you can imagine yourself immersed in a pool, tiring of treading water and desperate to get OUT, the "get out of debt" group is essentially throwing you a towel, which itself is going to get wet, and the "leverage" lovers are advising you to swim to the bottom! Good luck with that!
Sadly, there is no REAL solution under our current monetary system. But you can take on a strategy and technique that will help you harness the power of the debt economy. This is what the "becoming your own banker" system is all about and it is one part of my 4-part process to make you financially healthy.
I hope you will look into becoming your own banker and then begin working to return our country to sound money!
Thursday, April 21, 2011
Into Our Own Way...Of Destruction
For all the venom that the modern-day press and "pundits" pour forth upon religion, it sure seems to have well diagnosed the root cause of so many of the ills of society. For example, I read this week in Isaiah 53:6, "All we like sheep have gone astray, every one hath turned aside into his own way."
This turning into our "own way" of which the prophet speaks is nothing more than the simple notion of selfishness. So flash forward from the 8th century B.C. to today and what do we find? A world virtually devoid of sacrifice and selflessness, but rather consumed with envy, hatred, selfishness and destruction. It seems to keep getting worse and worse and worse. Not to be outdone, even American football players, those poor, underprivileged multi-millionaires, are claiming unfair treatment!
Truly it is the "logic" of selfishness. If "what I want" is the guiding principle of existence and if "what I want" is as many of the material goods of the world as I can commandeer, then it only stands to reason that anyone who gets in the way of my acquisitions is an enemy. The theory that this modern, secular world is progressing to an ever more mature and humane society is false. Far from advancing towards graduation, we have regressed to a kindergarten existence with "MINE" the omnipresent battle cry.
We are all infected with it. But the road to recovery can start with as simple a step as giving something up. Better yet, give something away...with love. And for the greatest such gift in history, I suggest that you read the balance of Isaiah chapter 53 for "Surely He hath borne our infirmities and carried our sorrows."
Have a Happy Easter!
This turning into our "own way" of which the prophet speaks is nothing more than the simple notion of selfishness. So flash forward from the 8th century B.C. to today and what do we find? A world virtually devoid of sacrifice and selflessness, but rather consumed with envy, hatred, selfishness and destruction. It seems to keep getting worse and worse and worse. Not to be outdone, even American football players, those poor, underprivileged multi-millionaires, are claiming unfair treatment!
Truly it is the "logic" of selfishness. If "what I want" is the guiding principle of existence and if "what I want" is as many of the material goods of the world as I can commandeer, then it only stands to reason that anyone who gets in the way of my acquisitions is an enemy. The theory that this modern, secular world is progressing to an ever more mature and humane society is false. Far from advancing towards graduation, we have regressed to a kindergarten existence with "MINE" the omnipresent battle cry.
We are all infected with it. But the road to recovery can start with as simple a step as giving something up. Better yet, give something away...with love. And for the greatest such gift in history, I suggest that you read the balance of Isaiah chapter 53 for "Surely He hath borne our infirmities and carried our sorrows."
Have a Happy Easter!
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