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?

Immediate debt reduction. Take a percentage of those cash and stock/mutual fund holdings - say 10% to 20% - and pay down or pay off your debt now.

Event debt reduction. If you get a bonus from your job, use it to pay off debt. Immediately if not sooner.

Sell your house, and use the proceeds to eliminate as much debt as possible. Do NOT go out and buy another house while still in debt.

You inherit some money - use it ALL to pay off debt.

Get the idea?

“Selling” debt reduction. All that stuff you’re going to sell? Take the proceeds and pay down a credit card. Or a car loan. Or a vacation loan. Just pay it all towards debt.

And we’ll repeat for effect - if you sell your house and you have some profit, use it to pay down debt.

Planned debt destructionThis is where the rubber really hits the road. Best way to get out of debt is with a plan. So how do you develop your plan, and then implement it?

In the book, “The Handbook for Prosperity”, the debt payoff methodology discussed is based on speed. The concept is that the faster you pay off your debt, the sooner you will wipe out the interest you are paying and the sooner you will be free.

So here is a summary of that approach. 

1. List every one of your debts. Car loan(s), mortgage, credit cards, personal loans, student loans. List them all.

2. Now take each of those debts, and divide them by the monthly payments you are making. (Put these on a spreadsheet if you have a computer program for it. Otherwise, it is just as effective write it out in spreadsheet format on paper yourself.)

3. Each debt will have a number - the number of months it would take to pay off that debt if you could fix the amount owed today with no future interest.

4. Then re-arrange the debt list from the smallest number of payments to the largest. This is your priority list of planned debt elimination.

5. Take the top debt on your list, and whenever you find savings by cutting spending, income from selling stuff, event income, etc - apply it to this debt FIRST until it is paid off. Continue to make the minimum payments on the other debts.

6. As soon as the first debt is paid off, add what you were paying to that debt to the amount you are paying on the number 2 debt, and apply that amount monthly to debt 2. Then tackle debt #2 the same way, until you work your way down the entire list.

7. That’s the process. Keep at it until the debt is gone.

Again, the idea here is speed to debt free. It’s a process that works very well, and accelerates rapidly. Do it for a year and see what happens.

CAVEAT: while doing this, you must not incur new debt. Period!

5. Hunker down - Develop Another Source of Income

This section pre-supposes that you are already taking steps to make yourself indispensable at your main job. That has to come first, or you will jeopardize your main income by tackling the development of a second income.

So do all that you can to increase your value to your current employer FIRST.

We all have some talent or skill or capability that we could leverage into income outside of our “regular job”. Either through starting our own business, or by taking on a second job (part-time).

What’s important is to develop some back-up income over which you have some control. 

A part time job may not offer that - but part time jobs are in many ways more secure than full-time positions in this economic mess. At least with a part-time back-up job, should your primary job go away you will have some cash flow with which to work.

The internet makes developing a business of your own a very doable thing. The web is jammed with promos and come-ons to do just that. Much like multilevel marketing, many of these rely on you selling the program to others to sell to others. There is a lot of burnout and many disappointed people who sign up for many of these scams. 

If you spend any time searching the web for “business opportunities”, the scams quickly become easily identifiable. And you can always check out a possible business by searching it on the web for “scams”. So don’t fall for the kind of business that relies on people selling other people the same program or information over and over again.

Having said that, here’s the key thing, the ONE thing: get started. Find some resources that make sense. That help you develop a skill, or that help you find a product - something tangible and concrete - that you can promote and sell on the web. 

A good place to start is with the book “Making a Living Without a Job”, by Barbara Winters.

This is one book you might want to purchase as it is an excellent long-term reference. But the library should have copies for borrowing.

Another source that might prove helpful is the newsletter “early to rise”, or ETR.

It’s a free daily newsletter that both promotes programs and provides daily ideas, insights and encouragement.

Last reference: check out AWAI. “If you can write a simple letter”, as they say, they can teach you to create a writing business with good income through one of their programs. Worth considering, and their track record is pretty good.

The important thing to remember in aiming to develop a second source of income over which you have control is that it takes WORK and it takes TIME. There is no easy way to do this. Methodical ways, step-by-step ways - yes. But no easy ways or short-cuts. That’s a good sign of a come-on.

6. Hunker down - Help Others  

There is a principle of life that most of us missed learning as we grow up. And most of us miss it after we grow up, too.

That principle is generosity and helping others. Whether with your time (very valuable), listening (quite valuable), your encouragement (pretty valuable), your counsel (sometimes valuable), or your money (not so much), being a generous, helpful person to others works magic. 

Not just on the person you are helping. It works magic on you, too. 

Here’s the thing: you can’t accomplish much in this world without the help of others. And the way to gain the cooperation of others is through generosity. A willingness to go the extra mile - giving others what they want and need in abundance. In all walks of life. 

Developing a generous attitude and heart takes time and it takes work. But the personal growth that comes from doing so, and the friends and supporters you’ll make along the way, will prove to be priceless. 

I once spent over 2 years assisting a handicapped person attend a weekly early morning bible study. During that time, I don’t believe he once thanked me - and his handicap caused extra wear and tear on my car! 

At one point, I had about had it. What was going on here? I was doing all these “good things” and I was getting nothing back - not even thanked!!

A good friend of mine chastised me, and rather bluntly. “Look,” he said. “You should be grateful that God place you in a position to help this fellow. You should be thanking God that you are able to help this man, and you should be thanking this man for the opportunity to help him.”

Well, I changed my attitude. Reminded myself of how fortunate I was with my life, and how fortunate it was for me to be able to provide reliable help to my friend.

About 6 months later, this gentleman, who worked for hourly pay in a menial job,recommended me to a friend of his for a job opening that I sorely needed. And it paid 6 figures.

Now, was I generous and helpful because I expected that to happen? Never in a million years, my friend.

Look, the world is full of hurting folks, most of whom will never share their hurts with us. The least we can do is be generous and helpful at all times - you never know the positive affect your kind word of encouragement will have, the listening ear that lifts a burden for someone, or lending a hand improves someone’s self-worth.

And spreading those kinds of seeds and deeds is what we as a nation will need in abundance as we go through this unfolding financial calamity.                                                                                                                                                                 

Stay prudent out there.

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


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.

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.

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: 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?


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?


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