Personal Finance Series Part 2: Why Should You Avoid Debt?

Why should you avoid debt?  Watch part 2 of our personal finance series below.

Avoiding debt, more specifically, credit card debt, will be critical to your success in becoming financially free.

Budgeting Basics – The First Step in Securing Your Financial Future

Thank you for visiting JoesMoney.com!  If you were linked here from my YouTube video on how to use the budgeting spreadsheet, the link to the file is below the text of this post below.

Budgeting is the first step in securing your financial future.  Without knowing how much and where you’re spending your hard earned money, it is impossible to start goal setting.  Please take a few minutes to view the video below to help you get started on your journey to financial freedom.  This entire series is aimed at regular, everyday folks!

Please post comments or questions by registering below, or on the YouTube page.  I encourage any and all questions and I’ll do my best to help you along the way.

Don’t forget to bookmark our page or subscribe to our YouTube channel.  This series will cover many personal finance topics along the way.

 

Download the completely free excel budgeting worksheet here

Democrat, Republican, Independent, Alien Life Form – What I Think You Should Know

Regardless of who took office, I believe the following information everyone should have.  Some of this is my opinion but is backed by my years with a Fortune 500 Financial Firm and more hours of study on economics than I’d care to share.

Again, impartial to whom took office and when, the money machine printing press has not stopped in the US in a long time.  In my opinion, it is critical that we all understand the implications of unsound monetary and fiscal policy.

When we print money at the rate we have over the last several decades and wages do not rise either at par or better than the inflation that comes with the money printing, we all suffer, most of the time completely unknown to many of us.  By printing even a single extra dollar, the value of all other dollars goes down in value.  I’ll do my best to explain this on a smaller scale.  Keep in mind for the full effect you’ll have to multiply the following example by trillions to understand what I believe is happening.

In a world with finite resources (food, land, gold, oil, etc) prices fluctuate based on outside factors.  Let’s just say for the sake of this example there is only $100 in currency in the entire city, country, planet, whatever.  And within this physical space we have only 10 houses for sale.  Simple math tells you that all houses created equal there are enough dollars to buy each one at $10.  But what if we double the supply of money?  Now we have $200 across our land but we’ve only been able to build an additional 2 houses (because we can only grow the economy so fast, apparently if at all).  Also assume that the 2 new houses are exactly the same as the first 10.  We now have 12 houses that we could spend $200 on.  The price is now almost $17 per house but we’re getting the same asset.  You can apply this to anything.  Apples, cars, yachts, etc.  The asset isn’t worth more, but you have to use more of your dollars to buy them.  Before we increased the money supply in this example, we could buy a house for $10.  After doubling the money supply, the same exact house costs almost $17!  The more money that gets printed, the worse off we are.

With that said, who does this effect?  In my opinion, we print money for a multitude of reasons, each have their merits.  However, when the economy doesn’t grow as fast as the money supply, we end up with the effect above.  This affects the middle class most as this, in essence, lowers their standard of living because more of their dollars are eaten away on housing, food, energy, etc.  When they have less dollars left over, they can buy fewer things.  The government is taking your wealth without you even knowing, it’s a hidden tax.  You say well I’m making $20 an hour.  Well that doesn’t matter because your $20 buys less than $10 would buy 15 years ago.  We take this wealth that’s been stolen via inflation and we spend it on programs to try to bring the “poor” up by providing assistance and other programs.  Sometimes they work, sometimes they don’t.  I think we can all agree there are at least some abuses within these programs.  They do not enable or encourage people to better themselves but it creates an environment of low self-worth that keeps people down with no ambition to ever get out.  In the meantime, the middle class has less money to spend on discretionary items so their standard of living has been lowered, again, many times without them even knowing, it’s a blind tax and it will not stop until we stop printing money.  The poor are no better off than they ever have been and the poor class is growing because inflation is taking away wealth form the middle class, and in turn making them poor.  This has been happening for decades.  Since the inception of the Federal Reserve Note in 1913, the dollar has lost 95%+ of its purchasing power.  IE – In 1913, if you spent $1 on something, that same item adjusted for inflation would cost over $22 today.  This is because they can’t turn off the printing press!

A lot of people like to think it couldn’t happen here but it already is.  In my opinion, the only way out of the debt this country is in, is to inflate (print) our way out.  Whether we do it today, or in another 100 years, we’re merely delaying the inevitable.  When they do come to that point, its bad news for us.  Our savings will be worthless, we’ll be starting over regardless of how hard we’ve worked.  History repeats itself often…

To see some of the history of consequences of high inflation, see this link http://en.wikipedia.org/wiki/Hyperinflation

In somewhat recent history, severe devaluation of currency has resulted due to loose monetary policy in several countries you may not have expected.  In Germany around 1924, the value of their currency was devalued to a point where it was literally worthless. (See this link)  The savings of the citizens was erased due to poor monetary policy.  The same thing happened in Hungary in 1946, the largest bill they created was 100 quintillion because lower denominations had zero value.  Another striking example right here at home was around 1933 when Roosevelt devalued the dollar by approx. 40% overnight, with nothing more than the stroke of a pen, when he took us off the gold standard.  Don’t even get me started on fractional reserve banking.

I fear that if we continue down this path, the ultimate breaking point will be much more severe.  Please share these thoughts with friends or anyone who will listen.  I encourage any challenging comments or questions you may have.  I’m by no means an expert, but to me, the writing is on the wall and it doesn’t look good for any of us.

Where to Get the Best Prices on Silver and Gold Bullion

With the recent run up in price for gold, silver, and many other commodities, you may be wondering where to score the deals for those precious metals.  I haven’t personally been buying too long, only a couple of years.  However, here are my experiences.

Apmex (Online Merchant)

A few years ago, I made my first silver bullion purchase from Apmex.com.  Little did I know, they cater more to large volume buyers as the only time you can get a decent price is if you are ordering 100+ ounces of silver at a time.  To some, that may not be that much, but I certainly couldn’t afford it.  On otp of the high premiums for low volume buyers, there are shipping fees, credit card fees, etc.  If you pay by check or money order, the credit card fees are obviously removed.

Final Say: Better for large volume buyers, no so much for the low volume.  Service is impecable.

ebaysilver

eBay Auctions

Boy ohh boy, where do we start here?  In the past, deals were difficult to find, but were there.  With prices where they are now, this is not the case.  Lots of buyers have been bidding well past the normal premium prices as of late.  I did a little research and have found that most of these buyers fall into the category of simply being unfamiliar with their purchases.  Another group is folks that only buy an ounce or two at a time and are willing to pay a high premium.  The last and likely smallest group of folks paying these insane premiums are folks using reward programs like eBay bucks or eBay gift cards.  The discounts bring the actual paid price to a level consistent with other venues.

I have however heard that there are still respectable deals to be found in “junk” silver.

Final Say:  For well versed buyers, this is probably the last place you should try to strike a deal.  Individuals just looking for a piece or two of silver, this could be an ok route.

coinshow

Local Coin Shows

Keep in mind my findings around local coin shows may not be what you experience, all markets can vary greatly depending on the amount of buyers and sellers.

Local coin shows around my area (Twin Cities Metro Area) tend to have some of the best prices around.  Silver eagles usually go for a much smaller premium than online sellers or eBay.  Eagles have almost always been available.  These are likely the most sought after silver bullion items available.  Generic silver bars or rounds can be difficult to find, especially in quantities.  However, premiums when you can find them, are very low, barely over spot price.

Other common selections from my local shows are the Australian Kookaburra round, the Chinese Panda round, and the Canadian Maple Leaf.  All of these coins have detailed, beautiful designs.

Final Say:  Likely the best prices around, no tax, get to work with folks from your own community, etc.  Possibly a limited selection.  Clearly the best choice as far as pricing goes.