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How to survive and thrive in these tough times.

Want some answers? Tired of the talking media heads who have no idea what is going on? Wondering why this is all happening? Wondering when its going to stop?

Get the answers you need to protect yourself, your money, your work, your community. Break through all the noise and confusion with the easy-to-understand principles of money and work and responsibility.

Once you understand why things are the way they are, you can move with confidence and certainty to get out of debt, save and invest and protect your money, find work you love, and be a shield for those you love and care about.

Packed with illustrations, step-by-step action plans, links to key websites, books, and tools to win, all wrapped in an optimistic perspective for what your future can look like.

Here’s an idea to end the recession for our historic new prez, Mr. Obama. If he would implement this idea, it would fix our economy in 24 hours flat. 

You read right. 

This “Silver Bullet Solution” promises to bring back the boom times with unprecedented prosperity.  At the same time, Obama would become known as the greatest president ever.

The biggest challenge he faces is the economy.  

The housing crisis keeps worsening.  Car companies are only keeping their doors open with government loans.  Unemployment is fast approaching double-digits as jobs evaporate daily.

State and local governments are starting to run out of money, heading for the economic dumpster as tax revenues shrink up like a dried prune. 

The Fed and the Treasury are doing everything they can to pump money into the system to keep it “solvent”.   But the money gets “stuck” at the banks and the companies they are bailing out.  The total of this instantly-created bailout or rescue or whatever-you-call-it-money is now north of $8 trillion.  

That means that the people who really need bailout money - people like you and me - can’t get any!

That’s why a silver bullet is called for.  A dramatic shot into the economy that fixes things. That puts money in our pockets, sucks cars off of show room floors, and gets those darn housing prices back up where they belong.  How long can we sit still and let those inventories of big screen TVs back-up, anyway?

Enough is enough.  We need to get money into the average person’s pocket, and we need it there now.  After all, if we had more money in our pockets, we could buy more stuff, and people would have to go back to work to sell us more stuff.  Isn’t that how things work?

And Obama is just the guy to do it.  He’s all about change, right? 

Here’s the Silver Bullet Solution.   Are you ready for this? It is so simple, you’ll wonder why no one thought of it before.  It’s a piece of cake. 

When Obama takes his oath of office, he can issue an Executive Order during his acceptance speech to make it happen. 

You know what Executive Orders are, right?  When you don’t want to follow the constitution to get things done by law, as President you can just order it.  You issue an Executive Order, and that’s it!!  Just like Captain Picard on The Enterprise, “Make it so.” 

Any president can do this.  It just so happens that Obama is the right man in the right place at the right time.  Imagine that.

Who else thinks of these things besides me?  Well, leave it to the common man to come up with the Right Stuff.  Someone has to do it, and if it happens to be me, well, so be it.

Okay, the Silver Bullet Solution.

One simple, little thingy that will right the ship. 

It will do more than just Jump start the economy., it will kick it into high gear.  Americans will be able to go on a spending spree like the world has never seen before.  Tax coffers will fill up and overflow (which could be the only flaw in this idea, come to think of it).  Jobs will be created so fast, there’ll be a labor shortage. Paychecks will increase as companies bid against a shortage of workers.

It’s gonna be great.  Really, really great.

Ready? The Silver Bullet Solution. 

Here it is.

All Obama has to do is issue an Executive Order that forgives (instantly, as in upon signing the darn thing) all mortgage debt, all credit card debt, and all car loan debt.

Forgive all of it. Wipe the slate clean!! 

It’s the trifecta of the century and it’s only 2009.

How’s that for instant action AND instant fame?  Go Obama, go!

Instantly, everyone who is making a mortgage payment is going to have a lot more money in their pocket every month.  So is everyone making credit card payments.  And those car loans - ooooo la la, baby, I got cash in my pocket and it’s Saturday night.  Let’s par-tee!!

So now every one with a mortgage instantly owns their home.  With their new-found cash flow, and no debt (we wiped out the credit card debt, too, remember), and an outstanding credit rating, these same people can now spend like no tomorrow.  (They now have outstanding credit ratings because they don’t have any debt!)

They can run out and buy new cars.   A second home.  Remodel the kitchen. Put in a pool.  Install solar energy (for those environmentally sensitive people, gotta think of everyone here.) Take an amazing vacation.

This could work so well we could have more homes owned than there are people in the U.S.A.

Heck, knowing how Americans think, we could probably turn this whole thing around in, oh, 48 hours.

For you doubting Thomas’ out there, let’s do the math.  At the end of 2008, here’s where we stood:

Total credit card debt in the U.S. = $2.583 trillion dollars

Mortgages total = $10.54 trillion

Car loans = $864 billion

Total buying/spending power:  $13.984 trillion

So we go from all this debt, to having $13.984 trillion in our pockets to spend. 

Let’s just round it up a bit and make it an even $14 trillion.  I don’t know what planet you are from, but in the U.S.A., that is a LOT of spending power. 

Talk about a Silver Bullet Solution!!!

Now you might ask, what about the banks and investors and credit card companies who are owed that debt?

This is not hard, people.  Just have the Fed or the Treasury cut them a check.  Better still,  just make a deposit in each company’s bank account with a computer entry. 

Isn’t that how they got all that bailout money?  You remember, the $8 trillion+ that is being used to shore up Wall Street and the banks and AIG and the car companies. 

So just do it again. Only this time, just reimburse them for all the debt that was just wiped out by Executive Order.  (At the risk of being presumptuous, bless you, Obama!)

It’s simple to do.  A few clicks on a keyboard, and bam - money into the accounts for any organization holding a mortgage.  A few more clicks and money into the accounts for any organization holding credit card debt.  And of course, hit that keyboard again for any company holding car loan debt.

I told you this was simple.   All that debt gone.   All that cash flow to buy things.  Good credit to finance things.  Clean credit cards to charge with. 

It’s a nirvana solution for what ails America. 

Here’s the really big - and I do mean BIG -  payoff.  Now all those mortgage companies, banks, car finance companies and credit card companies are loaded with cash - to lend to people to buy more things!

All those fat-cat execs will get those big bonuses again, just like they deserve.  The world will be right again, finally.

Now I ask you this: what recession, no matter how big, can withstand an onslaught of cash, spending and borrowing like that.   I’ll tell you - it can’t.  We’ll simply overwhelm all those recession-type thingys. 

That’s why I decided to call it the Silver Bullet Solution.   A one-shot fix from the New Decider.

America back on its feet.  Optimism overflowing. 

All it takes is that Executive Order.  Some marching orders given to the Treasury and the Fed.  A few strokes on some keyboards.

And about 48 hours.

The rest is easy.

Happy days are here again!

Look, I can write how-to stuff all day long…but unless you have the context that will motivate you to action, what does it matter? So take a gander at this little column from Investors Business Daily about the ongoing departure of large, important and significant companies from the shores of the USA - and then think of the snowball effect this is having on our economy…and inevitably on your personal economic well-being. 

http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=313977823484200

Then seriously consider getting off your duff and moving towards work that you love and can control, and taking steps to protect yourself and those important to you. Now is a good time to start. Later is not.

Be prudent out there!

Here’s a post I lifted from an investment forum I frequent. Just a word of warning that I hope will stimulate some kind of coherent thought out there, folks. Be prudent!!

The Nightmare German Inflation

Posted on December 6, 2008 at 9:40 am by sailman - 

“The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value.”

Foreword: The many parallels between 1924 Germany and present-day United States are cause for concern. Though the U.S. has not yet reached the depths to which Germany descended in that era, few can look at the constant depreciation of the dollar since the early 1970’s and fail to be alarmed. It seems contemporary America differs from 1924 Germany only in the duration between cause and effect. While the German experience was compressed over a few short years, the effects of the American inflation have been more drawn out.

In my view, this has occurred for two good reasons:

First, American central bankers have learned enough from the German experience to delay and extend the consequences of printing too much fiat money.

Second, Germany was a small state isolated from the rest of the world, a pariah nation of sorts following World War I. As a result, it had a difficult time finding a market for its government bonds. German deficits had to be financed internally — a difficulty which greatly accelerated the printing of fiat currency.

Up until recently, the United States enjoyed a strong world-wide demand for its government paper. Thus, the negative affects of government deficits have been subdued. Now, with consistently low interest rates, and a growing fear globally that U.S. deficits may have run out of control, foreign support for the U.S. bond market has faltered. In the absence of international buyers, the Fed could be forced to monetize an ever larger portions of the debt — the modern equivalent of printing money.

Whether or not the situation will slip out of control is a matter for debate. The trend, however, is alarming. The largest annual contribution to the outstanding public debt during the Nixon years was $30.9 billion; Ford - $87.2 billion; Carter - $81.2 billion; Reagan - $302 billion; Bush(Sr.) - $432 billion; Clinton - $347 billion; GW Bush - $596 billion.

german gold coinAs this report points out, the correlation between deficits and inflation is sacrosanct — deficits lead to inflation and uncontrolled deficits lead to uncontrolled inflation. Whether or not there will be a Nightmare American Inflation remains to be seen. Let it be said though that the trend is not favorable.

The survivors of the German debacle did so by purchasing gold  early in the process. As a citizen and an investor, the best you can do is prepare, and then hope that it doesn’t happen here. This report of Germany’s hyperinflation, originally published in 1970 by Scientific Market Analysis, could play an important part in your  preparation process. There is little doubt it will affect your thinking. - Mel J. Kosares

Big problem, debt. It sucks money out of our cash flow monthly, weekly. Golly, how much less pressure there would be without debt!

So pay it off. The faster the better. Debt is a form of slavery, and the goal is to be financially free. Can’t do that without getting rid of debt.

How to do that?

Read the rest of this entry »

http://www.iht.com/articles/2008/11/19/business/19ports.php

Find the “hunkering down” reference and I’ll autograph your book order with any message you want.

Just click on the “Visit the Shop” button.

3. Hunker down - Sell Stuff

As Americans, we all have too much stuff. We own things we never use. Gifts that we never wanted or needed. We’ve accumulated enough stuff in our homes that the North American continent is sinking by 2” a year. Just kidding!

Point is, we all have stuff we don’t need or want. So sell it. That’s why they invented eBay. Not to mention Craig’s List. 

It’s not difficult. Just get a digital camera, take a few snaps to show off your precious possessions, and slap them up on eBay or Craig’s List with a price. You’ll have to open a Paypal account (a snap, believe me) if you don’t have one already. 

 www.paypal.com  www.craigslist.com  www.ebay.com

Sell crystal glasses. 

Sell computer stuff.

Sell cell phones.

Sell musical instruments.

Sell tools.

Sell bikes.

Sell artwork. 

Sell cameras.

Sell baby stuff - car seats, playpens, etc.

Sell books.

You get the idea. Chances are your place has some stuff that has no or little value to you. Convert it to cash by selling it, then stuff the cash into one of those diversified accounts. 

Or use it to pay down debt - our next subject.

2. Hunker down - Diversify

Got some assets? As in money in the bank? A brokerage account with stocks or mutual funds in your portfolio?

Then get busy and diversify. The biggest challenge in the unraveling of our economy as we know it is RISK. And a good way to minimize risk is to diversify. 

Diversify banks. If you have a lot of money in the bank, then check out the credit rating of that bank you are trusting. Be sure you are confident that their credit rating is solid. Then find two or three more banks with strong ratings and spread out your deposits. (This assumes you have $50,000+ in cash.) Then if any happen to go under and get closed, you’ll still have ready cash at hand. You might lose access to some for a period of time, but not all of it.

Diversify investments. In your investment accounts, take stock of your stocks. Unload any losers you have - holdings that are down 20% or more. Reinvest those funds in solid, high-dividend paying stocks that will not be negatively affected by an ongoing decline in the stock market. MLPs (Master Limited Partnerships) such as pipeline companies are a good bet. 

There is also an MLP index that you can buy to diversify ever further. http://www.alerian.com/insight.html

Think of other companies or funds that are likely to do well when people pinch pennies and trade down. Wal-Mart and McDonald’s are a couple of stocks that have weathered this downturn so far. So has Costco. And Panera’s. BJ’s Discount Club just reported a 24% jump in quarterly profits. Do your homework and put on your thinking cap. In the midst of disaster there is always opportunity.

Diversify housing.  Assess where you live and consider selling. Housing prices are not going to recover for a very long time. Perhaps as long as 10 years. Do your homework and put on your thinking cap. In the midst of disaster there is always opportunity. Diversify housing. Assess where you live and consider selling. Housing prices are not going to recover for a very long time. Perhaps as long as 10 years. If the value of your home was to drop another 50% would you want to continue making the mortgage payment? So think of your house in terms of what it costs you to live there. If you can get out without suffering a loss, you might want to sell and rent instead. And rent a smaller place. Save and/or invest the difference. 

(A word about suffering a loss if you sell your house. We are NOT talking about the difference between what you could have sold your house for at the peak compared to what you can sell it for now. We are talking about if you sell your house, would you have to sell it for a) less than you paid for it, or b) you would have to bring cash to closing to make up the difference between what you owe and what you can sell it for. In either case, you might opt to view your home as a rental property and stay there. Because you will be paying “rent” to the mortgage holder for a very long time as the underlying asset continues to go down in value.)

Diversify into other currencies. The race now is among nations trying to out-devalue each other. As governments move to “stimulate” their economies and bail out companies and industries, the relative value of their currency will decline - some more than others. And they will fluctuate wildly over time.

So take some cash and put it into other currencies. A basket of 3 would make sense, including currencies of nations with lots of natural resources, lots of agricultural production. 

Diversify into gold (and out of the country). Put 10% of your investment funds into gold. And do it overseas. Here’s the link: www.goldmoney.com This gives you a hedge against inflation (coming soon in 2009) while holding assets in another country. As simple as a few keyboard clicks.

Diversify countries. If possible, move some money overseas. In the event you decide to leave the country, you’ll avoid any currency exchange controls - which are surely coming. If it turns out you  stay here, then you can benefit from the diversification or you can use those funds to pay for travel outside of the U.S. (Some good resources and “how to” are in The Handbook for Prosperity.)

Can anyone with a brain doubt that we as a nation and as a globe are in serious financial trouble? Can anyone with a brain doubt that it is going to get worse - much, much worse?

Well, if you have a brain and are looking for some help in how to cope and survive - and maybe even thrive - this blog post is for you. Here are 6 concrete steps you can take to make it through while protecting yourself, your loved ones, and your assets. (I’ll post these one at a time over the next few days.)

Step One: Hunker down - Stop Buying

Sounds simple, but boy is it effective. We’re talking about cutting living expenses to the essentials. Don’t spend money on non-essentials of any kind. 

Nice how that rolls off of the tongue, eh? Well, get serious and do it! Here’s some examples that will save you hundreds of dollars a year, if not thousands, in after-tax spending.

Stop buying coffees. Drink coffee that you make at home or get cheap at the office.

Stop “buying movies”.  As in theater tickets. Sign up for Netflix and watch them at home. Who cares if you have to wait 3 months for the video to come out? It’s $10 a pop at the theater vs $10 for several movies a month from Netflix. The theater costs even more when you add in the junk munchies.

Better still, check out movies from the library. Free. They are loaded with great oldies, and the occasional “current” hit. And they have many obscure films that make for enjoying and challenging movie watching.

Stop buying junk food. Eliminate the chips, corn chips, cheetos, et al. Switch to fruit, nuts, and good-quality trail mix if you need to munch. You’ll spend less and feel better. (Likely lose some weight, too.)

Stop buying high-end meat. Cut out those steaks, center cut meats, lamb chops, ground sirloin, etc. Replace with more chicken, chuck roasts/pot roasts. And learn how to cook them to be tender and tasty. Crockpots are a must!

Stop buying lunch at work. Pack a lunch, eat in a park or at your desk. Then take a brisk walk. You’ll spend less and, yup, feel better. Your portions will be more appropriate and your digestion will improve from the walks. A triple whammy - save big chunks of dough, eat better and less, and get in some exercise.

Stop running lots of individual errands. Plan your trip so you accomplish many things with a single run. Cuts down on gas, reduces mileage and wear on the car while saving you time.

Stop buying books. Use the library. It’s free and you’ll never have to move the books. Ditto magazines!

Stop buying low deductible insurance on your car(s). Insurance is not for convenience of getting something small fixed for “free”. It’s about protecting yourself from a major catastrophe and costs. So up that deductible to $500 and watch your premiums drop.

Stop buying different insurance from different carriers. Consolidate your car, home and other insurance with one company, and you’ll be amazed at how your premiums drop.

Stop buying whole life insurance. Like auto insurance, the purpose of life insurance is for catastrophe - in this case, your death. Whole life is about the most expensive way on earth to “save” and “invest” money. Switch to term insurance (minimum 10 year flat rate) and save the difference for investing. Or put it into a rainy day fund.

The name of the game in “stop buying” is to find those areas of your spending where you can stop spending or substitute spend for less. Analyze every penny you spend for a month and you’ll find many areas to either stop or substitute. Just ask the key question: do I need to spend this money? And if so, could I spend less and still meet the need?

Next Post: Step 2: Hunker down - Diversify Your Life

A good bud of mine called yesterday to discuss a book idea - actually, a book series idea. 

“Good idea”, I told him. “That would work if you can market it effectively.”

Seems Tom is finally feeling the heat of this ongoing financial calamity. And is moving into areas where he can earn an income regardless of whether the stock market goes up or down. Or whether companies have training and consulting budgets left.

Good on Tom. Necessity does that. It either brings out the best or the worst in people. The stronger you are, the more likely you’ll step up to the plate during duress. So I’ll wish Tom the best on his idea, and help him in any way I can (short of throwing money at him.)

Then Tom asked the key question. “What’s up with gold and silver? This should be the time when they are flying to the moon. These mining stocks have been and continue to be absolutely hammered. So what’s going on?”

Ha! If I could answer that I’d already be in my cabin in the mountains, hiking with my dogs, sipping steaming coffee on a rocking chair watching the sun go down, and juggling my stellar investments daily. I told Tom I didn’t know what was going on and had read very little analysis that indicated any one else knows what is going on.

There are some rays of light. Like Rick Ackerman’s latest series of daily missives.

But in the main, what we are seeing is absolute chaos. The financial markets, along with the massive and growing government intervention, have become a liar’s poker game. Liar’s Poker, a book about the investment world in the 1980s by Michael Lewis, is summarized on Wikipedia this way.

The book’s main contribution to literature and history is its unflattering, but accurate, portrayal of Wall Street traders and salesmen, their personalities, their beliefs, and their work practices.

He also noted that, although most arrivals on Wall Street studied economics, this knowledge was never used—in fact, any academic knowledge was frowned on by traders.

During the training sessions, Lewis was struck by the infantilism of most of his fellow trainees. Examples include, but were not limited to: yelling and insulting financial experts who talked to them, calling phone sex lines and then broadcasting them over the company’s intercom, gambling on every perceivable thing (including how long it took certain trainees to fall asleep during lectures), and their incredible lust for money and contempt for any position or job that didn’t make that much.

Lewis attributed their behavior to the fact that the trading pit required neither finesse nor advanced financial knowledge, but rather, the ability and desire to exploit others’ weaknesses, intimidate other people into listening to you, and generally the ability to spend hours a day screaming orders under high pressure situations. He referred to their worldview as “The Law of the Jungle.”

Does that sound familiar? Seen any such hubris and gun-slinging in the last, oh, 5 to 7 years? 

It’s the same game, played for much higher stakes by much more financially sophisticated people. And it is coming down around us.

That’s why it is chaotic. What used to be controlled is no longer controllable. The levers don’t work like they used to. This is what happens in a con game when the “jig is up”. Everyone scrambles, and this is what scrambling looks and feels like.

Fun, eh? Not when you’ve been hammered for 40%, 50%, 60% losses, it isn’t. 

So when will all this chaos settle down? Will we ever get back to less turbulent times?

I suggest you get your hands on a book or two or three that describes life during the Great Depression. Not from an academic perspective, but real life stories from people who had to deal with those circumstances. Assume that things will get at least as worse, if not more so. 

Books like these:

The Great Depression: 1929-1939 (Paperback) by Pierre Berton

Hard Times: An Oral History of the Great Depression by Studs Terkel

Stories & Recipes of the Great Depression by Janet Van Amber Paske and Rita Van Amber

You can get them on Amazon, of course.

And look for the opportunities within that. There are always ways to build wealth. But we have to be flexible enough to adapt to the changing times. Details about what happened during a similar period of history holds the clues to prospering on this rinse-and-repeat cycle. Or how to survive, if that’s what it comes to.

As Ralph Waldo Emerson put it: Bad times have a scientific value. These are occasions a good learner would not miss.

More details next time. Meanwhile, see if you can pick up a few gold and/or silver bullion coins on eBay or at your local coin dealer. While you can still get them.

And be prudent out there, will ya?