Don't Quit Your Day Job…

Sorry to pick on the Art Majors, but all of this discussion about President Obama’s Executive Order on student loans has pointed the country down an interesting path. Perform this thought experiment with me… The vast majority of student loans in the United States are federally backed. There are also $1,000,000,000,000 in student loans outstanding. This means that, in the event student loans aren’t paid, the debt will be borne by the general fund of the United States (read: taxpayers paying private and public colleges). Should taxpayers demand lower paying majors pay higher student loan rates?

First for some good news: the United States still has a debt rating of AAA, according to Moody’s. However, it’s probably in the country’s best interest to keep an eye on increasing deficits before they get too large. That’s what the site I’m linking you today helps you do – keep an eye on the real time US deficit, and some of the unfunded liabilities on the books. I present: the U.S. Debt Clock.

Can states default on their debt? The state of California has been in the news recently because of a $24.3 billion gap in funding. Is it possible that we may soon hear of a state actually going ‘bankrupt’? What are the economic and political ramifications if California takes such a step?

There are three ways for a government to pay for debt: issue new debt, collect taxes, and cause inflation. Inflation is a ‘hidden tax’ on a populace- it decreases the value of future money, and allows governments to pay off their current debt with devalued money. The United States dollar, as the world’s reserve currency, gives the United States a unique temptation (opportunity?) to pay off their debts in a currency it can print. What exactly is inflation, though? And if you believe inflation is on the way, how do you set yourself up to counteract it?

If you come into money, don’t ignore paying down debt as an option. Oftentimes paying down debt can save you much more money than you can earn with another option. Additionally, paying off a loan in full will increase your future cash flow. Read on for a look at debt as an investment and a closer look at tax-equivalent yield.

However you got it, you’ve got it now. Cash, and a good chunk of it at that. The big question for you now… Where are you going to put it? When you realize the mattress isn’t a good place to stash it, read on for some ideas!