In the last few weeks the pundits are questioning the viability of investing in equities.  As a result of the financial crisis, equities and real estate are down 30-50%, while US government bonds (Treasuries) have had strong positive returns.    Furthermore, the pundits say that over the last 10 years the performance for equities is now below that of bonds.  (Keep in mind that when they speak about equities, they are speaking about the S&P 500, which is only one investment category.)

They ask:  Why take  on the additional risks of equities when you don’t even get rewarded over a longer timeframe of, say, 10 years?  Why not buy Treasuries and decrease your risk, uncertainty, and stress and still make as much money as you would in equities?

While Treasuries might appear to be the safe haven, buyer beware!

At this point in time, the expectation for Treasuries is that they will do much worse than equities in the coming years. Treasuries are also vulnerable to inflation (which is becoming a more likely possibility).  Therefore, a bond-only portfolio is far riskier than we might think.

There are two important rules in investing:

1)  Buy low, sell high. (Bonds are at an all-time high, stocks are at an all-time low.  Your choice is simple.)

Q :
I am a 52 year old woman and in 1980 I broke my back and was paralyzed from the waist down.  Wayne Dyer came to see me and encouraged me to walk again and I do but am in constant pain.  It is difficult to work alot. I collect worker’s comp and make a small amount on my own.  I am now 4000.00 in debt  plus my car loan of 8.000 dollars.  I am barely making it and have trouble not flying into fear.  What  suggestion can you give me to stay calm and not so scared.

~C.V.

A :

1. Find a friend who has no agenda with each others  financial ally or money mentor and meet 4 times a year w/this person to review your finances.
2. Start collaborating with your friends; you might surprise yourself with a new source of income.
3. Do the Intentional Spending statement that’s on my website, under tools and resources on the home page.
4. Read my book – it is all about getting out of fear and into your creativity and wisdom around money
5. Do the money breath everyday that’s explained in book.

Good luck and remember that there are billionaires in poor health who would envy your situation.

Last Sunday, I went to hear the Dalai Lama speak.  He talked about how, when we are afflicted by powerful emotions like fear and anger, our perceptions become clouded and distorted.  And when perceptions are distorted, we cannot see clearly, we may not discern the truth, and we have difficulty acting wisely.

These are important words for our time.  When we are in a state of contraction and paralysis, we can’t see the truth about our options, our opportunities, our actual financial situation. Look at your numbers.  Review all your expenses and see what is really true.  What can you actually afford?  What should you give up?  Many of us are engaged in catastrophic thinking  which is fueled by listening to the media.  But until you actually look at your numbers, you won’t know with any certainty how bad (or not) it is.  Looking at the truth will ease your mind (have you noticed that your fear creates situations that are usually far worse than reality?).  Look at the truth of your cash flow and your assets and liabilities.  Acknowlege your untapped skills and creativity.  Then you will have the confidence to shift your perspective and discern opportunities.

Q : What can I do about a federal student loan that should have been paid a long time ago.  I owe 10,000 initially, but the loan has advanced to well over that amount in interest rates.  The Feds turned the loan over to a collection agency who will not negotiate.  I would prefer to pay the actually amont without the interest.  Also, the statue of limiitations in Maryland is 3 years, but I am told this does not apply to federal school loans although its be handed to a collection agency.

What advice can you give me to get this money paid?  Since the collection agency is not the federal governtment can the statue of limitations apply here?

A : Contact www.CCCSstl.org for answers to your questions.  Then read my book and do the exercises so you stay out of debt.

How do you feel about maintaining mortgage debt, assuming we can afford
that monthly payment.

Advisors seem to fall on both sides, those that say yes pay off your house
and those that say not to make that you’re first priority.

Thanks,

S

A: