The Truth About Personal Debt

New Daily Issue Posted 4 Days Ago By Dave Gonigam

  • (Hooray!) Americans paid a little on their credit cards in September
  • Robert Kiyosaki’s take on “debt that makes you richer, not poorer”
  • West Texas Intermediate’s slick slide into bear territory
  • Promises, promises: Crown Prince MBS assures world of oil supply
  • Snap to attention: Jim Rickards’ defense-sector asymmetric trade
  • A tale of two Sessions — pot’s big break?
  • California bungles cannabis (and lotto)… but is it a “Catastrifornia”

The good news: Americans paid off their credit cards a little bit in September. The bad news: The balance is down only slightly from the record levels of August.

The Federal Reserve issued its monthly consumer credit figures late yesterday. The outstanding balance on Americans’ revolving credit — that is, credit cards — totals $1.041 trillion. That’s an unexpected drop of $312 million from a month earlier.

Actually, there’ve been five small drops like that this year — a stark contrast with the years 2014–17, when there wasn’t a single monthly drop at all. Are people wising up, however slowly? Do they sense the proverbial rainy day is coming?

Around here, we’ve said all year we’re in the late boom phase of the boom-bust cycle. That’s one reason we’ve recruited Rich Dad Poor Dad author Robert Kiyosaki to bring his unique insights to the Agora Financial team.

Next Wednesday, you can join him for an exclusive event where he’ll show you how to reel in unprecedented streams of cash flow every week, no matter what the market does. (And if you know anything about Robert, it’s that he’s all about the cash flow.)

“My personal debt today is in the hundreds of millions of dollars, but it’s the kind of debt that makes you richer, not poorer,” Robert tells us. “It’s the kind that puts money in your pocket every month through cash flow.”

What’s the difference, you ask? And what kind of debt makes you richer, anyway?

“If borrowed money is spent on consumption — a vacation, jewelry or shoes that you charge on your credit cards — that’s financial illiteracy,” says Robert. “Your car loans, your home’s mortgage, all make you pay out of your own pocket. These are liabilities. That is NOT the kind of debt I am advocating you collect.”

While we’re on the subject, we’ll quickly elaborate on a point from Robert’s riff about homeownership yesterday.

As it happens, he and his wife Kim own their own abode.

But here’s the key distinction: “I didn’t buy it as an asset or think of it as an investment. I bought it because I wanted to live in it and was willing to pay for the privilege of doing so. Could it appreciate in value? Maybe. But it could also lose me money in the end. I don’t really care.”

But investment real estate? That’s another matter entirely.

“When I use debt to my advantageessentially creating tax-free moneyto invest in real estate, it increases my cash flow,” Robert explains.

“Not only do I not pay taxes on my debt, [but] I also pay little to no taxes on the income from that debt. I earn more but pay less in taxes.

“I use 100% debt as often as possible to acquire assets. In reality, this strategy is difficult, but not impossible. It took me a long time to gain the credentials with bankers as a real estate investor to be able to do this.”

It’s a skill he began to acquire early on from his “rich dad” — the mentor who became one of Hawaii’s richest men. As he explained it, “My banker is my best partner. He loans me 90% of the money and I control 100% of the property, 100% of the profits and 100% of the tax breaks. All I have to do is find great investments he wants to be a partner in.”

“Most financial ‘experts’ would say I’m crazy when I say to ‘fight debt with debt, Robert acknowledges.

“They’ll say my advice is flawed. And I’ll be the first person to agree — if the advice is going to someone who doesn’t understand money.

“But I ask you to step back and take a look at the world of finance. Wall Street is able to take your debt and turn it into their asset. That’s what financially smart people do, and it’s one example of why rich people get richer.

“Unfortunately, most people take a little liability-laden debt and turn it into a lot more. This is especially true of poor people and people that use credit cards for liabilities. But their problem isn’t credit cards — it’s a lack of financial know-how.”

As we said last week, for Robert it all comes back to financial education — or the lack thereof — in schools.

“Clearly, advising people to cut up their credit cards won’t solve the problem of excessive credit card debt,” he says. “A pair of scissors won’t make anyone financially smarter, but some financial education just might.”

[Ed. note: We’re less than a week away from Robert’s Weekly Cash Flow Summit — perhaps our biggest event all year.

Robert will reveal a revolutionary technique to generate cash flow every week — anywhere from $840… to $4,540… to as high as $10,600.

It works in any market environment. So if you’re worried the boom will soon turn to bust, you’re covered. And if you think the good times will keep on rolling, it’ll work for you too.

But the only way you can make it work is if you educate yourself about the process. And that’s what the Weekly Cash Flow Summit is all about.

It’s set for next Wednesday, Nov. 14, at 1:00 p.m. EST. Spots are FREE to claim, but they’re filling quickly — best grab yours right now.]

The U.S. stock market is taking a breather after a solid post-election relief rally.

The Dow, S&P 500 and Nasdaq all posted gains of more than 2% yesterday. Today, they’re pancake-flat — the Dow up slightly, the S&P and Nasdaq down slightly. Gold has backed off a bit to $1,223.

Otherwise, traders are marking time till the release of the Federal Reserve’s latest “policy statement” at the conclusion of its every-six-weeks meeting this afternoon.

No one expects the Fed to bump up the fed funds rate this time, but traders will try to decipher the statement for new clues to the Fed’s intentions going into 2019 — not unlike how a witch doctor studies entrails. If there’s anything truly noteworthy, we’ll follow up tomorrow.

West Texas Intermediate crude has slipped into bear-market territory but for how long, we wonder…


At last check, a barrel of WTI fetches barely $61 — a 20% drop from a peak of $76 only a month ago.

In recent days, the following notion has become conventional wisdom: Even though Washington has reimposed sanctions on Iran as of Monday, eight nations, including China and India, have gotten waivers so they can continue purchasing Iranian oil. And if any Iranian oil is kept from coming to market, Washington’s head-chopping friends in Saudi Arabia will just open the spigots wider.

But what if the House of Saud can’t open the spigots wider?

“Saudi Crown Prince Mohammed bin Salman is always willing to assure the world that Saudi Arabia is ready to act to balance the global oil market when needed,” our Zach Scheidt reminds us. “And we know what a stand-up guy he is, right?

“Surely he wouldn’t exaggerate what Saudi oil production is capable of?

“The fact is the country might be overstating how much oil it’s producing right now!

“Consider that Saudi Arabian oil inventories have been plunging while official export and production levels are reported flat. In other words, it wants us to believe that it is producing and shipping out the same amount of oil it always has… while the oil it has in stock has continued to fall.”

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“Also raising eyebrows,” Zach tells us, “is the Saudi drilling rig count, which has been increasing steadily. It is now 33% higher than where it normally stands. Again, this is despite the fact that its production is flat.

“So why are they pulling the same amount of oil out of the ground now as before all those new rigs came online?”

This isn’t the first time we’ve said Saudi Arabia’s vaunted role as the world’s “swing producer” is overblown. But it’s worth revisiting at a time like now… because this recent drop in oil prices probably won’t have much staying power.

Defense stocks are among the beneficiaries of the post-election bounce.

ITA, the big military-sector ETF, has rallied from about $198 at the close Monday to $200 as we write. And specific names in the sector, like the one Jim Rickards suggested to his premium subscribers, are doing even better.

If you were with us on Monday, you know Jim was willing to stick his neck out and forecast the GOP would hold onto the House.

Events didn’t break that way, but his “asymmetric” trade recommendation — with upside no matter the outcome — is performing just as intended. After all, Democrats love having pork-barrel defense projects in their districts just as much as Republicans.

Thus, Jim’s recommended call options on one of the “Big 5” defense stocks are solidly in the green this morning and have the potential to double in value by next spring.

It’s not just the victorious ballot measures in three states that have moved the needle on cannabis since Tuesday night…

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You’ve probably heard about how Attorney General Jeff Sessions “got quit,” as the saying goes.

But in addition, voters gave the boot to House Rules Committee Chairman Pete Sessions (R-Texas) after 11 terms. Pete Sessions — no relation, by the way — single-handedly blocked the House from voting on a host of cannabis reform measures, including ones proposed by the author of the above tweet, Rep. Earl Blumenauer (D-Oregon).

As for Jeff Sessions, we’ve chronicled for two years how he’s one of the last unreconstructed weed warriors. But we’ve also chronicled how he’s been ineffectual in stopping the wave of legalization on the state level — something he himself would acknowledge in candid moments.

Now that he’s gone, the worst-case scenario is more of the same under whoever Trump names as a replacement. Is that so bad?

A best-case scenario would be Donald Trump formally announcing a policy that enforcement would be left up to the states — something that’s been rumored around D.C. for months now — and a willingness to sign bipartisan reforms sponsored by the likes of Blumenauer and Trump ally Rep. Dana Rohrabacher (R-California).

For Trump, it would be smart politics — blunting (so to speak) the impact of an issue that engenders hostility toward him among younger voters.

In any event, just the news of Jeff Sessions’ departure has put many cannabis stocks on the rally tracks both yesterday and today…

To the mailbag, where cannabis is top of mind…

“Couldn’t you have wasted five seconds somewhere early in Tuesday’s 5 so that your California pot correspondent’s comment would have appeared at 4:20 instead of 4:15?

[Doggone it — missed opportunity! But go on, sir…]

“Anyway, it sounds like California is running its legal pot business the same way they run their daily lottery — badly. They started their daily lottery decades ago, ostensibly to put a dent in the numbers business. But the private numbers runners pay off at 30–50% higher than the state, pick up your slips at your house and deliver your winnings to you.

“As a result, the numbers runners flourish and the state game is a bust.”

“Political weedfeed greed,” is the subject line of an email after we solicited feedback from North Dakota, the only state where a cannabis measure failed on Tuesday.

“Although I do not live in the ‘Peace Garden’ state, I have monitored several states’ legislative attempts to garner excessive taxes, fees, permit costs, fines, etc., for legalization of both medical and recreational marijuana.

“Catastrifornia is a perfect example. After legalizing both medical and recreational marijuana, the bureaucracy authored so many different levies on producers and retailers that many of the key-component participants backed out of doing business there. Arizona is another state where politicians and bureaucrats have their heads where the sun doesn’t shine.

“No budding industry can flourish in a place where the collective IQ of the government is in the ’70s.”

The 5: It’ll take time, but the politicos will figure it out.

Repeal of Prohibition wasn’t a seamless process either, but for decades there’s been a thriving booze industry across these United States — albeit with access strictly limited to the politically connected. (Never forget — it was money from the beer distributorship of Cindy McCain’s family that launched the late John McCain’s political career.)

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. You’re invited to the Weekly Cash Flow Summit — a special event hosted by No. 1 best-selling personal finance author Robert Kiyosaki.

This event is Robert’s debut as a member of the Agora Financial family. And more important, it’s your chance to learn about an entirely new way to pull in weekly payouts. We’re talking anywhere from $840 to as much as $10,600. Every week.

We’re all set for next Wednesday, Nov. 14, at 1:00 p.m. EST. It won’t cost you a thing to watch this event, but we do have a cap on the number of viewers and we expect the slots to fill quickly. Click here now to reserve your spot.


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