Rising Debt

But there are some signs looming out there that indicate that all the trouble may not be over.  One of the biggest signs of trouble is the amount of debt that the United States is accumulating at a rapid rate.  In the next year, the total debt held by the US government will rise to $12 trillion.  All the economic stimulus and the war in Afghanistan continues to fuel this burden.  As the trend continues, our dollar is worth less and less (because we keep printing more and more of them).  The largest holders of all this US debt (which is in the form of treasury bonds) are Asian and European countries.  Once these investors get tired of our fiscal irresponsibility and the low rates that our bonds are paying them, they will start heading for the exits.  As they start selling bonds, the values of the bonds will drop, and interest rates will rise.

How Soon Could This Happen?

The United States has a very large credit limit, so this is not likely to be something that happens very quickly.  But in the next three to five years, this scenario is very possible.  When it does happen, stock and bond markets will take a tumble, and interest rates, inflation and unemployment will rise to levels we haven’t seen in a few decades.

What Can I Do?

Fortunately there are some steps you can start taking to protect yourself from another financial meltdown, and it doesn’t involve putting your money in the mattress.  Stay tuned in the days to come for some personal financial planning ideas that could help you stay afloat if the economy starts to sink again.

These days it seems that everyone in the financial services industry has some letters displayed after their name, indicating that they hold some sort of professional designation. There’s CPA, CFP, CLU, ChFC, PFS, CMFC just to name a few. Like alphabet soup, there are lots of letters and they don’t really seem to spell anything. Many people don’t understand what these designations mean – such as “Senior Specialist” or “Retirement Advisor” – or what is required to obtain and keep the various designations.

Today there are over 90 designations, degrees, titles, certifications, and accreditations available in the financial services industry.  For this reason, investors need to be very careful not to assume that just because a person has some letters after their name, that they are an expert in handling your financial needs. Some designations represent legitimate expertise, while others are merely marketing tools. For more information on the meaning of various designations, visit ’s FINRA’s website and click on the “Investor Information” tab, and do a search for “understanding professional designations”. You will be able to type in the letters of the designation you would like to find out more about the issuing organization, prerequisites and education requirements, continuing education requirements, and exams that must be passed.

Here are a few good designations to look for:

CFP or Certified Financial Planner. The CFP is the most comprehensive financial planning designation that a professional can earn. It requires that a candidate complete a series of courses approved by the Certified Financial Planner Board of Standards. Each course requires the passing of a final exam, and then a comprehensive final exam must be passed at the end. A CFP has studied all areas of financial planning including: retirement planning, estate planning, investments, insurance, & taxes. Candidates must also have 3 years of personal financial planning experience and a Bachelors degree, or have 5 years of personal financial planning experience. Another big benefit of working with a CFP is that they are required to act as a fiduciary for their clients. This means that they must do what is in the best interest of their client no matter what. This reduces the risk of an advisor selling something to a client that may not be in the clients’ best interest, all because the advisor was thinking about how they would be compensated. CFP are required to complete 30 hours of continuing education training every two years.  This helps keeps them on the cutting edge of changes in the industry.

ChFC or Chartered Financial Consultant. The ChFC designation is issued by The American College, an accredited university specializing in financial education. A candidate must have at least 3 years of full-time financial services business experience in the 5 years preceding the awarding of the designation. They must complete 6 core and 2 elective courses that cover most of the same information that a CFP will study. Each course has a final exam, but there is no comprehensive final exam required. 30 hours of continuing education training every 2 years are required, which also helps to keep an advisor in the forefront of the financial services industry.

Be Wary

Watch out for designations that take a few days of classroom study, or a few hours of self-study, plus a fee to earn.  These types of titles are generally just marketing tools to trick people into thinking they are working with an expert (and a way for the issuing organization to make some money).  Do a little homework and don’t be afraid to ask a few questions, you’ll be very glad you did.

According to my understanding of Mr. Obama’s healthcare plan (which may not be accurate), he wants to add millions of new people to the Medicare plan (essentially) which is already over-burdened and headed for financial disaster.  The current numbers already don’t add up with the people who are already on Medicare, and the baby-boomers yet to come.  I don’t see how you can add on additional tens of millions of new patients to an already almost-broke system.

For those of you who are looking forward to having access to the Medicare-like insurance plan, let me just mention what another country with a similar “you-get-to-choose” system is experiencing.  As Mr. Obama has said, people would have the option of either staying on their own private insurance plan, or opting for the government subsidized plan.  Germany has a similar system with two sets of people, those on the government plan, and those on private health insurance plans.  They also have two sets of hospitals, those for people with private plans, and those for people on the socialized system.  The hospitals for privately insured citizens is clean, up-to-date, efficient, friendly, and easy to get into.  The hospials for people on the government healthcare plan is crowded, out-of-date, and can take months to get into.  On top of this, the doctors who work at the government hospital are the ones who can’t get a job at the private hospital, so they don’t have anyother choice of where to go work.  Now just think for a minute…if you had something seriously wrong with you that you really needed help with, like an artery blockage…which hospital would you want to go to?  And which kind of doctors would you want working on you? 

It doesn’t take a brain surgeon to figure this one out.  Our healthcare and health insurance system has some serious problems.  But to pay for a plan like this one and make it work, you can be guaranteed that your taxes are going to go way up, and the quality of our healthcare is going to go way down.

For more free education, information and advice on all topics related to personal financial planning, visit www.Great-Financial-Planning.com.