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Financial Advice for the Rest of Us

If Congress Fails to Meet the Debt Deadline …

by Brian F. Foley

If Congress doesn’t reach a deal to extend our debt ceiling, the economy might collapse, and We the People will become We the Paupers. As the author of a new “financial advice” book, I investigate below whether some time-tested money tips might still apply to us after the U.S. stiffs its creditors.

Freeze your credit card? Some financial experts regularly advise people to put their credit cards in water and then freeze the water. The Deep Freeze Method makes it hard to buy stuff: you have to wait for the ice to melt! Thaw time cuts down on impulse buying, unless you have a microwave.

Unfortunately, this method has drawbacks. I once “Deep Froze” a credit card, but it didn’t work, because I could still see the numbers, expiration date, and even the security code through the ice. More, I’d already used my credit card so much that I’d memorized those numbers. I even wrote these numbers down before freezing the card, just in case I might need to buy something before my neighbor’s microwave could melt the ice. (Money Tip: use your neighbor’s electricity whenever possible.) So although my card was frozen, it wasn’t frozen metaphorically – I kept buying stuff on the Internet.

That’s why I never recommend the Deep Freeze Method, except as a metaphor. But if the U.S. defaults, I think all our cards will be frozen metaphorically.

Get Points/Air Miles on Your Credit Card? If you buy enough stuff on your card, you get points that get you free stuff. Getting anything for free is always sound financial advice. If the dollar tanks as the result of no debt deal, I believe that you’ll be able to use “points” and “air miles” as a basic currency. If you followed the Deep Freeze Method in rosier times, then you’re behind. Go charge stuff now!

Avoid High-Spending Friends? Some advisers say to avoid friends who spend lavishly. Why? Because we’ll try to keep up with these profligates, to avoid feeling like losers. But trying to keep up so we don’t feel like losers guarantees, paradoxically, that we’ll become losers.

But if the economy collapses, this advice will no longer apply, because none of your friends will be “high-spending.” Unless they have air miles. But as to your pals who lacked the wisdom to rack up air miles when they were high-spenders, the good news is that now you’ll be able to stop avoiding them. You’ll be reunited. You won’t be able to go anywhere or do anything, but you’ll be together, and the time will be precious, as it is time with friends, and time with friends, even formerly profligate friends, is precious.

On the other hand, if you follow my advice about getting air miles, you might end up the “high-spending friend” of your friends. If your friends still follow the financial advice to avoid high-spending friends, then you’ll spend lots of time alone. But at least you’ll have air miles and free stuff.

Get a Part-Time Job? This advice will no longer apply, as there will be no jobs. But this new development will come as a relief to everyone who’s long felt guilty for not following advice to land that Second Job to Make Ends Meet by slinging burgers or mopping floors at night. No more guilt!

Don’t Buy Books – Use the Library? This advice will become obsolete. Public libraries, as an “inessential” part of government, will shut down. (Or, libraries might raise their overdue book fines enough to cover their operating expenses – but then you definitely shouldn’t borrow and risk a fine.) So you’ll have to use the bookstore. You can try to read there for free, but that generally requires buying coffee. Your best move: stop reading altogether. Then you’ll identify more closely with our political leaders, who don’t seem like people who read.

Pay Off High-Interest Rate Credit Cards First? Advisers say to pay down these cards first, as they cost us the most. But these are the hardest to pay off, and you feel like Sisyphus when your payment barely bumps down the principal. You end up losing self-esteem — and then you spend money to feel better, which raises your debt again. The good news: this feel-bad advice about paying off credit cards will no longer apply if our government refuses to pay its debts. Why? I quote famous Supreme Court Justice Brandeis: “Our government is the potent, the omnipotent teacher. For good or for ill, it teaches the whole people by its example.”

So if the government defaults, we can all default and become debt-free! A default by the government, then, is a sound financial move!

Brian J. Foley is the author of A New Financial You in 28 Days! A 37-Day Plan (Gegensatz Press). Visit his blog at http://brianjfoley.net/ Email him at brian_j_foley@yahoo.com