I went to see I.O.U.S.A the other night. The documentary was accompanied by a live panel of 5 including Warren Buffet. The show was simulcast live to over 400 theaters nation wide. What an eye opening experience. I left the theater shocked and wondering how we (The United States) are going to fix the many financial problems facing this country over the next several decades. I pride myself at being informed. I thought I had a fairly good understanding of our collective financial situation. Boy was I wrong. Our National Debt is out of control! Every American ought to watch this documentary.

I am not going to attempt to explain the details of what we are facing. However, I would like to point out a few statistics mentioned in the movie. For starters, as of today, we are 9.6 trillion dollars in debt. That’s $31,586.31 for every citizen in the country! However, this is just the tip of the iceberg. The total sum of all of our unfunded obligations, Social Security, Medicare, Medicaid and our National Debt is an astonishing $53,000,000,000,000 (53 Trillion dollars). That equals a mind blowing $175,000 for every American according to the Peter G Peterson Foundation. Crazy. Freak-in crazy!

I was especially impressed with David Walker, former Comptroller General of the United States under Presidents’ Reagan, Bush and Clinton. He did an excellent job of explaining the problem in terms everyone can relate to. He resigned his government position to join the Peter G. Peterson Foundation as the President and Chief Executive Officer to focus on helping the public become aware of this enormous problem.

This was a real wake up call. I am very concerned about the immense debt load we are leaving our children and grandchildren. If the situation is not addressed future generations will undoubtedly be faced with a much lower standard of living than we Americans have come accustomed.

I highly recommend you check this out. It is opening in theaters across the country on August 22, 2008. It is an unbiased, nonpartisan look at one of the biggest problems facing our nation. It will be played at both the Republican and Democratic conventions. It is timely and informative. Find a theater and be prepared to be shocked!

Did you catch the live performance? Have you seen the movie? What did you think?

If you want to learn more, visit http://www.pgpf.org/ and http://www.agorafinancial.com/iousa.html

Manufacturers Display Their Magical Powers

There is something underway you should know about. Even as I speak thousands of consumer products are shrinking, right before our very eyes. That’s right, manufacturers are reducing the sizes of everything from bags of dog food to boxes of cereal and cartons of ice cream. Can you say back door price increase? Inflation?

Less is better right?

While the mainstream media reports less product for the same price, I have noticed something different. Most everything I purchase has gone up in price, if only by a few cents. Sale prices have not been anywhere near what they used to be. So, I would say “Less for More”. If you are already aware of this, good for you! You’re a savvy shopper! If not, take a look next time you’re at the grocery store. Ice Cream for instance has shrunk from 54oz to 46oz. That’s almost 15% less creamy goodness for little Johnny. Some manufacturer’s are trying to pass off the size reduction as a health benefit, as in “New Smart Size”. Face it folks, it not about your waist, it’s about your purse.

Soon you may have to buy ten boxes of Super Duper Flakes to make one bowl of cereal!

Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.

What Can You Do About It?

Here are a few ideas to help ease the pain:

• Shop sale ads
• Buy sale items in bulk
• Use manufacturers coupons
• Buy store brands
• Eat less (I’m kidding, sort of)
• Write your congressman (Again joking, they don’t seem to be able to relate to what’s going on in the real world from behind the tinted windows of their bullet proof, fuel-hog SUV’s.)

For more detailed tips on saving on your grocery bill, check out:
5 Tips To Cut Your Grocery Bill Today!

And now would be a great time to work on your personal finances:
8 Steps To Recession Proof Your Finances

Please check out these posts and feel free to offer other money saving ideas that you may have!

In Conclusion

There are many reasons for this latest round of product shrinkage. Commodities such as eggs are up 46%, corn is up nearly 70% and wheat is up an amazing 96% over the last year. Fuel has almost doubled. These are all major factors contributing to our ever decreasing purchasing power. I get it. I understand the manufacturers have to re-coupe the cost of the higher raw materials and fuel. But where I have a problem is the way in which they are passing on the increase to consumers. Quietly. Inconspicuously. I would almost prefer to see the price increase. Almost. Unfortunately, I think we will see more of both. What do you think?

I went camping this past weekend and noticed a significant jump in gasoline prices. I paid $3.89 per gallon, for the first time ever. It was $3.69 just last week. I see $4.00 per gallon in the very near future. And unfortunately I think we may see $5.00 per gallon this summer. Long term it could go much higher.

This obviously will cause prices of everything from food to laundry detergent to go up (even more). I am wondering what effect higher gas prices will have on you and your family? Will this cause you to change or even cancel your vacation plans? What do you think about the ever increasing gas prices? Vote in the poll and leave a comment! I would really like to hear what you think.

Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.

Food For Thought

• Diesel fuel in England just hit £1.28 ($2.52) a liter or $11.50 per gallon
• Price of a gallon of gas in the Netherlands: $6.48
• Price of a gallon of gas in the Saudi Arabia: .91
• Rockefeller family has challenged ExxonMobil to focus more on renewable energy

Find some ways to save on gas:
8 Steps To Reduce Your Gasoline Bill

Find the best gas prices in the US & Canada:
http://www.gasbuddy.com/

There have been so many mixed signals about the state of the US economy lately. One day a pile of negative reports is released followed by a couple of positive ones the next. I do not like being an alarmist. I am not a negative person by nature. In fact, I try to maintain a positive outlook. That being said, I also don’t believe in slapping lip stick on a pig.

I am not an economist. As I have stated before, I do read a lot and pay close attention to what’s going on around me. For some time now, it sure seems as though the negatives are out weighing the positives as far as the economy is concerned. Here are several key points that have been on my mind lately:

• Oil hit an all time high today of $135.09 a barrel, before falling slightly.
• Gas prices are approaching $4.00 per gallon.
• Annual inflation is running at 6.5 percent, excluding food and energy.
• Eggs, milk and wheat prices are up more than 30% this year.
• There is a world wide rice shortage, yes I said rice shortage.
• The housing market is in turmoil, with prices in some markets down 20%
• The sub prime mortgage fiasco continues
• Personal bankruptcy filings were up 28% in January compared to a year ago.
• Mortgage foreclosures surpassed 200 billion dollars in 2007.

I am not telling you all this to get you depressed or worse, for you tune out and shut down. I think it is important to understand what is happening to our economy. In order for you to make wise financial decisions for your family, you need to be aware of what is going on.

The question of whether or not we are in a recession keeps rearing it’s ugly head. I have read several economist opinions that have stated we are indeed in a recession. However yesterday, the government released a key economic indicator that says we are not in a recession.

Here is my take:

We are in a recession. It is just getting underway. It will get much worse before it gets better.

Why do I think this?

The two previous US recessions 1990-91 and 2001 were very short lived. Many believe this was because consumer spending held up. Put simply, people kept buying and buying and buying. This time around, most consumers are strapped with huge amounts of debt. Because of the housing crisis, most people cannot tap any more home equity. Because of the rising cost of gas and food (and just about everything else) most people have much less disposable income. These three facts combined will make it extremely difficult for the US consumers to bail us out of this economic downturn.

What Next?

So what should I do, you may be asking. I would say, expect the best, prepare for the worst. I am not suggesting locking yourself away and becoming a penny pinching miser. No! Or No! Not unless you want to! As I have stated before, I would recommend the following:

1. Do not enter into any new long term debt, right now.
2. Try to pay down any high interest debt, such as credit cards.
3. Look for ways to trim your expenses.
4. And if at all possible, start putting away some money in savings.

Conclusion

It remains to be seen whether we are really in a recession. And things could change tomorrow. But even if things do continue to get worse, you will be in a much better position to deal with it if you educate yourself about the basics of our economy and take some steps to tighten up your personal finances.

Misc Info:

Goldman Sachs predicted this month that oil could spike to $200 a barrel

About Housing:
“This year and next are going to be tough as home prices find bottom…
The housing market is in its most severe slump since the Depression, a crisis which we’re likely to be about halfway through right now.”

- Fannie Mae’s president and CEO, Daniel Mudd