First Financial Alert for 2012 (1-5-12)
Well, it’s another new year, and with it comes a new debt record for the U.S.
According to the Treasury, the U.S. ended 2011 with total debt at an all-time record of $15,222,940,045,451.09. That’s just the online debt. Most experts agree that we owe between $70 trillion and $120 trillion in unfunded liabilities that are already law. Our yearly budget shortfalls are only going to get worse in the years ahead. We're now only $14 billion from our next debt ceiling. Congress has already demonstrated that they are unable to deal with the financial issues facing our nation and are unable to do anything to slow down the massive financial spiral that faces us. The only option they have is to print more money!
I predict that QE3 will happen in 2012 as Europe faces greater and greater financial problems and the U.S. has to offer loans to help strengthen the Euro. The long-term diagnosis is sure: utter bankruptcy for the U.S. eventually. Although we’re already there, as they say, when you own the printing press you always have money—it just may not be worth much.
The time frame can be hard to predict. The dollar has just recently bounced up in value as people ran to the perceived safety of the U.S. Dollar when Europe’s issues increased over the last few months and the Euro’s value fell. Because of this bounce up in the dollar’s value, gold and silver declined in December, but this is only a temporary drop. Our long-term outlook on precious metals is still bullish. There are still some great buys in some stocks if you know what you are doing, but most people don’t. My advice is still to stay out of the markets! Certainly, safe money like IRA’s and your retirement money should not be put in stocks. The S&P was completely flat in 2011, producing a return of 0.003%. The S&P 500 started 2011 at 1,257.62 and finished at 1,257.60. The Dow gained 6%, but that only happened in the last 30 days of the year. Interest rates are hitting historic lows with Treasury’s in most cases earning a negative rate of return after you figure in inflation, which is running a published rate of about 2.5% a year but is much higher in commodities.
Basically the world is nuts! The evidence of what’s ahead for the U.S. as well as most of the world, is flashing warning signs at us non-stop. However, the U.S. is getting comfortable with the word “trillion.” Unfortunately, many people in Congress, are concerned for only their own welfare and want the U.S. to go ahead and print all the money it needs to continue with all of it’s entitlement and social programs with no regard to the future.
Pray for our country and the government. Pray that those who serve will serve the nation with wisdom. I see 2012 as a year similar to 2011 in the economy assuming that Europe’s debt doesn’t explode, that our debt isn’t downgraded again, and that our politicians can agree on a plan to deal with our debt. The Lord did give me a dream a few months ago stating, “Something is going to happen to cause a sell-off in the markets”. He didn’t tell me when this would happen or what it was. However, I have been advising people to stay out of the markets all along anyway so I knew his warning was for you. So, as we’re now in 2012, there are several things I advise you to consider:
1. Continue to get out of debt! My company, Forward Financial Group can provide you with a written, customized plan for your family to be debt free just for the asking. Call 1-800-815-0818.
2. Don’t sell your gold and silver.
3. Consider safer IRA and retirement options.
4. If you need a home, there are some extremely low-priced homes on the market. With interest rates so low, now may be the cheapest time in decades to buy a home. Debt is acceptable for a mortgage (although it would be better to pay cash) if you are planning to stay put for a long time or you get such a great buy that you have 25-50% equity immediately. Remember, renting is just paying someone else’s mortgage payment. Be sure to buy way under what your cash flow can afford. Your goal is to spend the smallest amount of money that will provide your needs. My personal limit on mortgage debt at this time would be to spend no more than 20% of your monthly income on the payment.
5. NO CONSUMER DEBT! Buy used cars with cash. Don’t use credit cards.
6. Build a strong cash reserve. After paying off consumer debt, dump all cash into savings, not the mortgage unless the rate is extremely high. Your first goal is to build a large sum of cash to help if you lose your job or other such changes take place. Once you have a large cash reserve, (at least six months income, 12 months would be perfect) then attack the mortgage.
7. Believe God for ideas and new concepts. Diversify your abilities with businesses, etc. Multiple income streams are what you want to develop.
8. Study the kingdom of God!
