DebtReductionBlog.com

I just read this story on MSNBC The new economics of hunger which told of massive food shortages in several counties. As I was reading it, I had to check the date…nope, not April 1st anymore so it’s not an April fools joke. Ok, here’s a hint: I don’t watch TV. I occasionally stream news and entertainment online, (thanks Hulu); but never do I plop down on the sofa and turn on the news, (or anything). My TV is good for watching DVD’s and collecting the random dust that I see floating about in the sunlight. I guess my point…or my excuse, really, is that I haven’t really been keeping up on world events.

I knew things were going sideways a while ago. I predicted oil to climb steadily and then drive up food prices but I thought all that would be in sort of a “false inflation”, if you will. I called it false inflation but it seems like oil prices never really stabilized and continue to surge. And, now that we’re coming into the summer months expect prices to go even higher! So much for false inflation. I’m not sure what the Federal Reserve calls it but apparently they tried to throw together a pie chart that show inflation hasn’t been a concern because if you take away food and energy, prices are pretty much the same. Hmmm…ok; I guess I was kind of thinking that same thing with my “false inflation” theory…but it only exists falsely if prices stabilize and eventually drop again, (oh, how I long for the days of $2 gas).

Wake up call, prices are going higher. Seriously, this is not going to get easier; it’s going to get harder. And, with an “economic slowdown”, (according to the prez), we are a far sight worse off and the future looks bleak. So, what’s my point? I’m not sure because I’m just kind of rambling so I lost my point…wait…there it is again.

Commit yourself to getting out of debt as soon as possible. With all the uncertainty…scratch that. With all the CERTAINTY that the economy is going to get worse for reasons we discussed here and some we haven’t yet, (housing meltdown, credit crisis, and more…), the certainty is that we are not riding high like we were in the late 90’s and early part of this century. Life is not going to get easier, people; it’s getting harder. The stress on the economy is palpable, (that means you can feel it as though it were tangible). Sorry, I had to look up that word a couple years ago and I thought I would share, :). My point there is that I feel the stress on the economy like I haven’t ever felt it before.

Remember the movie The Perfect Storm? In the movie, (it was probably a book first and a true story before that), two major category 123, (or whatever), storms came together and created one big superstorm…the perfect storm.  Well, that’s kind of what we have here now with the economy.  First, you have a housing crisis caused by years of stupidity in the mortgage industry, (remember buying a house with no money down and no way to pay back the loan), coupled with dwindling oil supplies, (supposedly), and a falling dollar all creating a domino effect.  I guess it’s not really a domino effect so much as the cat finally kicking over the first domino that we’ve been setting up for years.  So, that’s it.  You’ve got a few choices at your disposal if you have enough gold to keep you alive the next couple of years and only a couple if you don’t.

Either way, I recommend you reduce your debt somehow.  Start off by paying off the high interest credit cards first.  Then tackle your car loans.  Auto loans typically aren’t high interest but they usually have a heavy footprint on your monthly cashflow.  After the cars are paid off try paying off your student loans and then your mortgage.  Some people tell me that you have a lot of tax benefits by keeping a mortgage.  Fine, pay it off then remortgage and do something investy with the money.  Scratch that advise if you’re paying less than 6% interest now.

If you are considering bankruptcy, (it happens every day), then try settling your debt first.  Many companies would rather you pay as much as you can and then drop the debt from the books than get nothing at all.  It’s simple.  Save up enough money to pay off half of a credit card.  Call the credit card company and offer them half of what you owe to settle the debt.  If they go for it, great; if not, I suppose they’ll have a counter-offer.  If they refuse to work with you then  you can just go into hiding with your lump sum, (or settle the next debt in line).  Credit card companies typically come around eventually and there are many factors that will contribute to their level of desperation…but we’ll cover that another time because I am about ready for bed.

Sorry to blog your eyes off but the story I ready just hit me in the face with an anvil sized dose of reality and I didn’t like it much at all.

Talk with you soon,

Dave B