Say you have a large chunk of credit card debt, but you believe economic crisis is just
around the corner. Would you then:
1) Pay off the debt? Or…
2) Start buying gold and silver hand over fist?
We are confident that the “old ways” of investing no longer apply in 2012 and beyond.
We are confident the US government will be forced to choose from either inflation or deflation to get out of this mess – causing a global economic disaster either way.
And yet we’re also confident our new “Infinite Banking Concept” investment strategies of the ultra-rich will help us survive and thrive during the economic calamity.
But when we get a question like this, it pushes us to the limit…
Elizabeth S, asks:
Because of life-happenings, as well as stupid financial mistakes, we have around $20,000 in credit card debt.
Given the present financial disaster hanging over our heads, does ANYONE know if it would be better to save money like crazy or get these credit cards paid off?
Elizabeth S.
Thanks for the question, Elizabeth. I know many are in the same spot, and it’s a tough one.
Unfortunately, there is no single answer. All we can do is give you some facts and help you best understand your situation… a situation made worse by the threat of an economy that could fall apart at any time.
And of course there are no certified financial advisors on our team, so we can only tell you what we would do. After that you need to discuss it with a financial advisor.
Taking all that into account, here’s what you need to know to make your decision.
Right now…
The Greatest Battle Affecting You Is
…deflation vs. inflation.
The housing bubble and 2008 financial crisis were major deflationary events. And since governments hate deflation, they’ve been stuffing hundreds of billions of new currency into the system – hoping it’ll re-inflate things.
The trouble is, it’s not working. The deflationary event is too large this time.
So either the government admits defeat and massive deflation takes over…
OR, the Fed will print so much money trying to stop it, we’ll see massive inflation instead – or even hyperinflation.
It’s the government’s choice which disaster ravages our economy, and all we can do in the meantime is prepare for either scenario.
So what do these two scenarios mean for someone holding credit card debt?
I Hate To Say This
…but massive inflation can be good for people with significant credit card debt, at least in the short term. As more money enters the system, it drives prices up – including wages and salaries.
The only thing that doesn’t go up with inflation is your debt. So while you’re bringing home more money, your debt stays the same making it easier to pay.
Deflation is just the opposite, of course. With deflation, prices generally fall and cash is harder to get.
This can make debt an extremely heavy burden to hold.
So to be equally prepared for both inflation and deflation, we’d still buy gold and silver, but paying off credit card debt should be a high priority as well, with one exception:
The Economic Crisis is only 3 Months Away
Because if the economic crisis were just 3 months away from rearing its ugly head,
then you’d want to forget about credit card debt and load up on gold and silver.
At this point, there would be little time left to pay down much of the debt. And there’d be a greater urgency to stock up on assets to help get through the crisis.
For that, gold and silver are your best bets in a hurry. They are a great hedge against both inflation and deflation because people rush to them during economic crisis.
Even in the deflationary period of the Great Depression, gold stocks soared in value (the actual price of gold was set by the government, so we can’t use it as a measure).
And monetary metals are better than just saving cash. Because if the government tries to avoid the economic crash by printing money – an extremely plausible scenario – then inflation will hit and your cash will be devalued.
Gold and silver, on the other hand, rise in value during inflation.
BUT… we don’t know yet that the economic crisis is going to hit in 3 months. It wouldn’t surprise us if it took 3 years. But we are going to keep our eye on current events.
If it does take 3 years for the economic crisis to show up, here are…
2 Ways To Fast Track Paying Down Credit Card Debt
The first way to pay down your debt faster is to make more money!
We don’t accept excuses about “not having enough money” to both pay down credit card debt and buy gold and silver. That’s a scarcity mentality, and the truth is you can always come up with more.
The second way to pay down debt faster is to actively seek a lower interest rate. This makes a huge difference.
Let’s compare a high 25% APR to a low 11% APR.
After 3 years of paying the average minimum payment on $20k of credit card debt, your balance would be the same at both interest rates: $13,928.35.
The difference is, at a 25% APR you will have paid $12232.79 in interest compared to $6,540 at 11%. That’s $5,692 you could have used to get better prepared for the crisis.
Get Started Now
At this point, we don’t know when the crisis will hit. We also don’t know whether the government will choose to plague us with inflation or deflation – but we could find out shortly.
The best thing you can do now is find out more about the economic crisis heading our way, and the “infinite banking concept” investment strategies of the ultra-rich we’re using to survive and thrive during the storm.