On Friday, more news about our economy uncovered only:
1. Consumers account for 70% of the U.S. economy, and consumers are “under water.” Their homes are not worth what they once were. They can’t get credit, and they are seriously in debt. So, you are literally seeing the end of consumer ability to overspend and support the American economy.
2. No top line growth as companies are reporting earnings on Wall Street. This means the companies are achieving growth thru cuts and reductions.
3. Housing default rates are still “blowing up.” While you can see positive signals if you like, this isn’t one of them.
4. China and emerging markets will see boosts in productivity, investment and growth. The U.S. will have to eat it’s debt and remove the entitlement society to be able to get back in a productive groove.
What does this mean for you? It means things are going to slow down. No amount of positive thinking or hope will fix that. Taxes are going up and incomes are going down.
That means you should control what you can. If you have a job, you should:
1. Work to save 20% of your income in high-interest savings vehicles (that are FDIC-insured). If you can’t start saving 20%, start by saving only 1% of your next after-tax paycheck. Then, increase it each time you get paid by 1% until you reach 20%. This slows any shock to your lifestyle while giving you opportunity to save.
2. Reduce and eliminate debt. Forget about the “patriots” asking you to support the economy. You better focus on your family economy and the future (which is unlikely to be as bright as it is today unless you get with the savings and investing goals of your life).
3. Focus on building assets. Be brutal. Focus on assets that can reproduce themselves. If you need help with this one, check it out in “How To Survive Any Financial Crisis” at http://www.middleclassmoney.com. It’s only $4.95 and it is the only thing we sell of any kind.
4. Educate yourself on saving, investing and passive or additional income for the purpose of the above 1, 2, and 3.
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