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The International Monetary Fund cut its forecasts for growth in 2012 on Tuesday and warned of a possible deepening downturn in Europe.

Revising an earlier forecast, the IMF predicted that the global economy will expand 3.3%, this year, down from 3.8% last year and lower than the 4% growth it had forecast last September. “The world recovery, which was weak in the first place, is in danger of stalling,” IMF chief economist Olivier Blanchard said. “But there is an even greater danger, namely that the European crisis intensifies.

In this case, the world could be plunged into another recession,” he said. Oliver Blanchard is spot on in identifying a serious threat to the world economy. His only error is from where he sees the threat coming and how bad it is. On Monday IMF chief Christine Lagarde warned of a worst case scenario in the form of a possible Depression-era collapse in the global economy. If however Europe follows IMF recommendations, she said, the fund expects the euro zone to face a mild recession this year.

Nonetheless, it should be emphasised that this is still a “best case scenario.” Economists are increasingly concerned that Greece will default within weeks. Even worse, the larger economies of Spain and Italy are now under threat, pushing up the cost for Rome and Madrid to borrow to cover the risk of default. The IMF 2012 forecasts that the economies of both countries will contract, with Italy facing a contraction of 2.2% and Spain a fall of 1.7%.

Neither is expected to recover economically until 2014, at least. Meanwhile bigger economies such as the U.S., Japan, the U.K, France and Germany are expected to expand by only 1.5% on average next year, a growth rate too slow to curb rising unemployment levels. Moreover, the IMF forecast of slowing global economic growth is based on the assumption that the world will not see a dramatic rise in the price of oil. If that were to happen then the IMF’s most optimistic forecast would be null and void, making its worst case scenario seem optimistic. Iran’s recent rhetoric about “closing the Straits of Hormuz” seems intended to play on such concerns; with growing fears that a dramatic rise in the oil price could completely undermine prospects for global economic recovery.

Although Tehran’s ambassador to the U.N. may have only been bluffing when he spoke recently about the “option” of closing the Straits, he seems to have hit a raw nerve. Within days Western powers despatched naval vessels to the Straits of Hormuz – assuming, of course, that they had not planned this some time ago and were merely using his threats as an excuse. Either way, as the European Union voted to impose harsher sanctions on Iran’s oil – and Iran responded by suggesting it could close the waterway through which 35% of the world’s oil is shipped – French, British and American warships were all sailing toward the gulf.

In response Iran declared defiantly that sanctions would provide it with an economic stimulous and repeated threats to close the straits. Between claim and counter-claim and trading threats the West and Iran seem to be on a course for a confrontation. If it erupts into armed conflict then the world may not only face a slowdown in growth and financial meltdown.

For both Russia and China have warned that they view the prospect of conflict with Iran with grave concern. In fact Russia has repeated these warnings recently, as if to emphasise how seriously it views the situation. While China signalled a clear rejection of any new sanctions on Iranian oil. We live in dangerous times. They could be about to become even more perilous.
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About 85% of Liaoning province’s 184 financing companies defaulted on debt service payments in 2010 according to a report from the province’s Audit Office. The report also noted that 120 of these borrowers, de facto government agencies, operated at a loss last year.

Since 1994, provinces and lower-tier governments have not been permitted to issue bonds or borrow from banks. Despite the strict prohibition, their debt has skyrocketed as local officials incurred obligations through LGFVs, local government finance vehicles. The central government’s National Audit Office said these companies, at the end of last year, had taken on 10.7 trillion yuan of debt. No one, however, knows the true amount of LGFV indebtedness, and some have calculated the real amount to be more than double the official figure.

Why the disagreement as to the amount of debt? Local governments have gone out of their way to hide borrowings, perhaps in part because of their doubtful legality. As famed economic journalist Hu Shuli points out, new local officials sometimes do not know the extent of obligations left by their predecessors. There have been a number of stratagems employed, from the issuance of illegal government guarantees to the transfer of funds in roundabout routes.

The case of China Zhongwang Holdings, a giant aluminum producer, illustrates how Liaoning province effectively went into debt in a roundabout manner—and concealed the borrowing. As disclosed in a footnote in its 2009 financial statements, Zhongwang had borrowed 2.3 billion yuan from two Liaoning banks and, as reported by Naomi Rovnick of the South China Morning Post, had “given the money” to a government-owned entity. Zhongwang, based in Liaoning, kept the loan on its books but disclaimed any responsibility for repayment. Apparently, the series of money transfers among Liaoning’s government-owned entities through Zhongwang was intended to facilitate development of the local economy.

The debt problems of northeastern Liaoning may be worse than those of other provinces because it is in the heart of China’s “rust belt,” but LGFVs in other parts of the country are also beginning to experience difficulties. Yunnan Investment Group, the largest financing vehicle of southwestern Yunnan province, has just put restructuring plans on hold after China’s most widely followed rating agency warned of a downgrade in July. Most LGFVs, however, are not rated and so there is virtually no public scrutiny of their activity.

LGFVs can continue to meet existing debt obligations as long as they can borrow new funds. “If the government doesn’t tighten its policy too much, there shouldn’t be any problem,” said Tianjin Vice-Mayor Cui Jindu on Friday. “But if we end up not getting a single new loan, there could be problems.” The problems Cui was referring to, according to the official China Daily, included non-completion of projects. And if projects are not completed, there will be no sources of repayment.

The problem is that Beijing, to control inflation, is in fact putting the brakes on the money supply. The growth of M2 is the slowest it has been in six years—less than half of what it was two years ago—and central government regulators are trying to restrict new loans with periodic increases in bank reserve requirements and direct administrative measures.

As a result, China’s debt-fueled growth is slowing fast, probably faster than official GDP figures indicate. Electricity usage, perhaps the best barometer of economic activity, was essentially flat this summer on a month-to-month basis. Moreover, export and shipbuilding orders are down. The closely watched HSBC purchasing managers’ index, at its record lowest point, is close to negative territory and headed south.

Xu Lin, a senior official at the National Development and Reform Commission, says there is no need to “panic,” but there are plenty of reasons to think that China’s economy is already landing hard. And a hard landing will soon cause LGFV defaults around the country, which will roil banks. Fitch early this month put China’s local-currency debt on downgrade watch due to concerns about bank asset quality and general concerns about financial stability.

Many analysts, thinking Beijing has plenty of cash, don’t worry. Yes, it is sitting on $3.2 trillion in foreign exchange reserves, but for various reasons dollars, euros, and yen are of little use in a local-currency crisis. Of course, the central government can print more renminbi to pay off LGFV creditors, but that, by increasing the money supply, would only aggravate what is China’s most serious economic problem, inflation.

Everyone now wants to know whether Beijing will buy Greek and Italian debt to save Europe. Yet the better question to ask at the moment is this: “Can China save itself?”

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PETALING JAYA: Tenaga Nasional Bhd (TNB) will raise RM5bil from a 20-year ringgit-denominated sukuk issuance at the end of next month to finance the extension of its Janamanjung power plant.

This comes at a time when the national utility company is facing a severe gas supply shortage that may result in it incurring additional fuel cost.

In a Bernama report on Thursday, TNB president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the group would do its book-building exercise in the third week of October. “The timing is good as the domestic market is now flush with liquidity,” he said.

In April, TNB awarded French group Alstom a 650-million-euro (RM2.8bil) contract to build the Janamanjung 1,000-MW supercritical coal-fired power plant.

Alstom will engineer, procure, construct and commission a 1,000-MW steam turbine, a generator, a supercritical boiler and auxiliaries. The plant is expected to come online in 2015.

The plant will be the single largest in South-East Asia and will produce enough electricity to power nearly two million households in the country.

The project follows TNB's 1999 contract with Alstom to build the currently operating 2,100-MW Manjung coal-fired power plant.

The supercritical power plant operates at a higher temperature than regular coal-fired power plants. Its high temperature increases the pressure at which it operates, which in turn improves its efficiency, increasing the amount of power output and decreasing emission per unit of fuel burned.

Meanwhile, TNB is still bogged down by cost concerns whereby it may incur additional fuel costs of up to RM3bil.

On Tuesday, Che Khalib said the company's fourth-quarter performance would be weak and his earnings estimate for 2011 had gone haywire and had been cut by more than 50%, marred by a continued gas supply shortage.

Analysts have said the gas shortage might only be permanently resolved by the second half of 2012, when Petronas Gas' regasification terminal in Malacca was operational and Malaysia started importing liquefied natural gas at market prices.

source

Here, in a chart, is why Britain can’t afford to be complacent about the plight of Portugal, Ireland, Italy, Greece and Spain. UK banks are exposed to these countries to the tune of 16 per cent of gross domestic product, according to this chart from Stephen Jen of BlueGold Capital Management (the figures themselves are Bank for International Settlement numbers).

By my reckoning that’s just under £250bn of exposure, so if these economies topple, we can’t afford to smirk and be smug about the fact that we avoided joining the euro. We would be engulfed in a nasty, nasty financial crisis of our own.

Look, too, at Switzerland: it faces a 21pc of GDP exposure to these struggling nations. It is an important point ahead of tomorrow’s crunch European Council meeting tomorrow, at which leaders are expected to agree on some sort of bail-out package. At the moment, it looks as if the eurozone members (mainly France and Germany) will provide cash for a “firewall” bail-out designed to prevent these countries from toppling, but there are some whispers that Britain may have to make a contribution. These figures might help explain why. But in that case, one would also expect Switzerland to get involved, no?

In fact, the more one considers it, the more barmy it is that the eurozone ministers have pretty much vowed not to allow the IMF in for a bail-out. This is what the UK has been advising behind the scenes, but the euro ministers realise that this would be seen as an admission of the project’s failure. I also like Stephanie Flanders’ point that, of course, Nicolas Sarkozy is also determined not to let his future presidential opponent IMF chief Dominique Strauss Kahn swoop in and “save the euro”.

Anyway, there’ll be much more of this in tomorrow’s paper, where Ambrose Evans-Pritchard will explain all, and I have a run-down of the issues in my 0p-ed. So stay tuned.

PS Yes, I know we’re not supposed to call them PIIGS but the acronym is just too irresistible. However, one decent alternative I heard today is Club O’Med. Kudos to whoever dreamt that one up.

source HERE

1. Venezuela

CPD: 56.26%

S&P Credit Ratings:
Foreign Long Term: BB-
Foreign Short Term: B

Credit Watch/Outlook: Negative

2. Ukraine

CPD: 52.91%

S&P Credit Ratings:
Foreign Long Term: CCC+
Foreign Short Term: C

Credit Watch/Outlook: Stable

3. Argentina

CPD: 46.06%

S&P Credit Ratings:
Foreign Long Term: B-
Foreign Short Term: C

Credit Watch/Outlook: Stable

4. Pakistan

CPD: 38.11%

S&P Credit Ratings:
Foreign Long Term: B-
Foreign Short Term: C

Credit Watch/Outlook: Stable

5. Republic of Latvia

CPD: 30.47%

S&P Credit Ratings:
Foreign Long Term: BB
Foreign Short Term: B

Credit Watch/Outlook: Negative

6. Dubai, UAE

CPD: 25.71%

S&P Credit Rating: *
Foreign Long Term: BB+
Local Long Term: BB+

Credit Watch/Outlook: Negative

7. Iceland

CPD: 24.66%

S&P Credit Ratings:
Foreign Long Term: BBB-
Foreign Short Term: A-3

Credit Watch/Outlook: Negative

8. Lithuania

CPD: 19.11%

S&P Credit Ratings:
Foreign Long Term: BBB
Foreign Short Term: A-3

Credit Watch/Outlook: Negative

9. California, USA

CPD: 18.97%

Moody's Credit Ratings:
Senior-most tax backed: Baa1
Senior-most revenue backed: Baa1

Outlook: Stable

10. Greece

CPD: 18.67%

Fitch/Moody's Credit Rating:
BBB+ / BBB+

source HERE

The governments of every developed economy will eventually default on their sovereign debts, including the US, the UK and Western Europe, Marc Faber, editor of the Gloom, Boom & Doom report, told CNBC.

"In the developed world we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due," Faber said in a live interview via telephone. "These unfunded liabilities are so huge that eventually these governments will all have to print money before they default."

Faber said that emerging economies are much more financially sound on this basis than the developed world, with the exception of Singapore, which has a limited amount of debt and huge reserves.

His comments come amid talks of a bailout for struggling Euro zone member Greece, which needs to borrow 53 billion euros, or $73 billion, to cover its deficit and refinance debt that is coming due.

Faber added that the global stock markets — which have mostly fallen about 10 to 20 percent from their peaks — have begun a correction phase that he expects to continue.

He said he thinks the new resistance level for the S&P 500 will be 1,100, though an oversold market could cause a relief rally over the next ten days.

Still, he said he is "relatively optimistic" about stocks going up, referring to them and precious metals as two of the best safe havens.

source HERE

The year 2010 is likely to be the pivotal year where pundits stop referring to the recession and begin openly talking about a depression.

Our economic problem is rather simple to describe: There is too much debt relative to income and/or wealth. Below is a single graph that depicts the condition of our economy. It shows total debt of the U.S. as a percentage of GDP from 1870 forward. The debt figure includes all private and public debt. It does not include liabilities associated with unfunded government mandates like Social Security and Medicare. (Note: according to the U.S. trustees of these funds, the present value of the liabilities is about $106 trillion. Including them would boost the ratio below to nearly 1,000%.)



The amount of debt relative to GDP is staggering from a historical perspective. Several points are worth making about the graph:

* The long-term "norm" for the ratio appears to be around 150%. The red lines band the "norm" at 130% and 170%, respectively.
* Other than the two boom periods that commenced in the 1920s and the 1980s, the ratio never exceeded the upper band.
* Each cross resulted in enormous credit-driven booms. The first ended in the Great Depression. The second will produce a similar if not bigger bust (we are merely at the beginning of this event).
* The credit expansion that led to the Great Depression was not nearly as overextended as the current expansion.
* Peak credit occurred after the Depression began. Government spending and the shrinkage in GDP continued to drive the ratio up early in the Depression.
* Since this graph was published, today's ratio has grown to near 380%, about double the level when the U.S. entered the Depression.
* While it appears as though current private borrowing may have peaked, funding enormous government deficits continues to drive the ratio up, as does GDP shrinkage.

No economic theory rationalizes a proper "norm," yet intuitively, we know that such a number exists. Debt must not exceed some percentage of income, or else it cannot be serviced. Equivalent conceptual ratios for individuals and businesses have been used by the banking industry as lending criteria for more than a century. For various reasons, banks neglected these guidelines over the past couple of decades, contributing greatly to the credit bubble.

The government has decided that the cure for too much debt is more debt. This solution cannot work, especially when credit is already so overextended. Income and wealth cannot support present debt levels. Credit will adjust back to the mean, regardless of what the government attempts. Whether this is via orderly payment or via default, the reduction in debt is inevitable.

Ludwig von Mises addressed the limits of credit in The Theory of Money and Credit, originally published in 1912. As he expressed in later work:

There is no means of avoiding the final collapse of a boom brought about by credit [debt] expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit [debt] expansion, or later as a final and total catastrophe of the currency system involved.


In 2009, it was not possible to finance U.S. capital requirements through conventional markets. Only via the Fed's explicit (and surreptitious) Quantitative Easing was the government able to fund its 2009 deficits. Discussing 2009, Zerohedge stated:

There was a huge credit and liquidity crunch, and then there was Quantitative Easing. The last is the Fed's equivalent of band-aiding a zombied and ponzied corpse, better known as the US economy. It worked for a while, but now the zombie is about to go back into critical, followed by comatose, and lastly, undead (and 401(k)-depleting) condition.


Zerohedge estimated that demand (financing) for U.S. fixed-income securities must increase elevenfold in order to fund capital needs in 2010. Continued shrinkage in foreign participation in U.S. fixed-income markets makes that increase impossible.

There are only three possibilities with respect to meeting 2010 funding needs:

* The Fed continues its QE beyond their planned cessation in March 2010.
* The Fed raises interest rates to levels that would attract the capital necessary to fund government operations via conventional credit markets.
* No Fed action is taken. That would cause the government to default on some of its obligations.

None of these alternatives is attractive. The unpalatable choices arise from prior Fed and governmental policies. To avoid recessions over the past fifty years, the government abused and then finally exhausted all reasonable options. After years of mismanagement, the government is in a quandary of its own making from which there is no escape.

All alternatives will be very painful, and none offer the possibility of a traditional recovery. No matter what alternative is chosen, the country cannot avoid a depression. At this point, "do no further harm" should guide policy.

Of the three alternatives, what is best economically is worst politically. This natural conflict between good economics and good politics is not unusual. Economically, the country would be harmed least by implementing alternative 2. From a political standpoint, alternatives 2 and 3 are probably unacceptable. Thus, it is likely that alternative 1 will be tried (again!). It is precisely the continual overuse of this alternative that has led to the current sad state.

Alternative 1 cannot work. It will not avoid a depression. Worse, it will likely result in hyperinflation. Thus, we likely end up with the worst of all worlds. With hyperinflation, money will cease to be a medium of exchange. Markets will cease to work, except on a barter basis. The middle class will be wiped out. Their savings will become worthless along with the dollar. The end will be as Mises warned so many years ago.

The possibility of losing our form of government is a real risk under any of the alternatives. So is civil unrest and strife. All are probably more likely under alternative 1 because of the corrosive effects of high inflation combined with a depression.

Beware the turn of the calendar. Things are going to get interesting, and probably very quickly.

source HERE

The European Commission (EC) itself has warned that the finances of half of the Eurozone's sixteen economies are at risk of becoming 'unsustainable', essentially bankrupt. As shown in the Wall Street Journal graphic below, Spain, Ireland, Netherlands, Slovenia, Slovakia, and Greece are all teetering on the brink.



While relatively better off European nations would prefer not to bail out their flailing neighbors, the problem with the euro currency union is that their fates are ultimately all tied together via the euro, even if politically they believe themselves to be separate countries. Thus an old criticism of the euro system is appearing more relevant than ever.

WSJ: They said a monetary union unsupplemented by a political union risked a fiscal free-for-all among governments, especially in a full-blown recession. The next year will be a good time to prove them wrong.

The focus in early 2010 will remain on Greece and its budget deficit at 12.7% of GDP, four times the EU limit. The Greek government is trying to hammer together a political consensus in parliament for a plan to bring down public spending without triggering more social unrest seen in the country's streets at the close of 2009.

more HERE

When banks give out loans, they do not give out money that they already have. They simply give the loan which is a promise to pay the actual money which they never really have to do. In the economy, 95% of the money is in the form of bank credit. There is no real currency backing it.

Whenever we borrow money, the bank creates new money. This process constantly (almost) expands the money supply. This dilutes the value of the existing money. This is because total debt has to keep expanding in order for people to be able to pay back what they owe, otherwise there simply won’t be enough money to earn to pay back what we owe. When that happens, we declare bankruptcy, there are foreclosures, unemployment and so on which causes the vicious cycle of deflation.


Current credit based monetary system is a game of musical chairs. As long as the music keeps playing (as long as total debt keeps increasing), system keeps running. The moment debt expansion stops (credit expansion stops), then money creation stops and it becomes impossible to pay existing debt (principal + interest) with the existing credit expanded (~existing money), thus some of us are guaranteed to go bankrupt (standing when the music stops). This is because there simply is not enough money in existence to pay the existing debt principal + interest. An interest free monetary system may be the fix.

Charging interest is bad for the society

As explained above, mathematically, we understand that the existing credit based system, with it’s ever expanding interest demand, can cause deflation and guaranties bankruptcies. The practice of constantly expanding the money supply steals from the savings of honest earners who want to use money as a store of value. Ordinary people should not need a Ph.D. in finance to figure out where to put their savings. Money, however it is defined, should be able to do that job in an uncomplicated way.

Most of us are conditioned to “make money work for us”. It is common wisdom to expect some interest for your money. Adam Smith claimed when individuals maximize their gains, that would ultimately serve the society and move it forward. This is not always the case. Here we have displayed why credit based monetary system that uses interest as a vital component falls short of satisfying the society’s needs. It creates conditions in which the human productivity is curtailed and focused on financial gain instead of supplying the necessities of life. Real economy is being burdened by a large financial economy that has to live off of the effort of the real economy.

Bad for One, Good for All

Religions (notably Islam today, Christianity earlier) forbid the practice of usury. There seems to be valid reasons for this and some think that we need to devise a new system to correct our wrongs. However, until then you need to know the dangers of the current system and operate accordingly (Threat of inflation, deflation, unemployment, risk of default, currency devaluation, business cycles to name a few).

Here are observations from the society where maximizing one individual’s gain hurts the society.

Sex Selection

In some cultures (India, China), parents prefer a male child. This is because a female child eventually requires the parents to pay a dowry, and the male carries the family name. Thus, to maximize their own good, parents decide to end pregnancies for a female baby, and keep male babies. This eventually brings an imbalance in male / female population ratio such that some males are not able to “carry on the family name” because they cannot find a bride to marry.

Wal-Mart

Wal-Mart is the store that has the lowest prices. To optimize our own gain, we go and shop there. But it comes with a price. It brings lower wages to the community. Workers have less benefits. Wal-Mart may cause other competitors close down their doors causing unemployment in your community. It will have ripple effects. Therefore, in this example, even though we maximize our personal gain in the immediate future, it effects the community in a negative way.

The Tragedy of the Commons

Here is a story by Garrett Hardin, in his essay "The Tragedy of the Commons, 1968".

There is a pasture owned in common by the residents of a village. The pasture is at full capacity with regard to the number of the sheep the villagers have. It is such that if villagers add one more sheep, it will start degrading the pasture.

With their natural greed and an urge to maximize individual gain, each villager thinks if he adds one more sheep he will make more money. Thus they keep doing this. As they see the pasture land loose it’s productivity, their mentality will be “it is dead anyway, we should get what ever we can” and keep adding sheep as much as possible. This brings them to a state where the pasture will be damaged threatening their entire flock with devastating losses. It would be prudent for them to agree on a balanced production capacity and limit themselves and police the community to make sure everybody obeys. If not policed, volunteers will be hurt by others who grab their share. Thus, volunteering does not work in these cases.

This story is similar to the loan interest situation. Some volunteers may deny doing business with interest. But this is not enough to save the society. Law must forbid interest or it won’t work.

Paying Off Debt

Here is a poll, from September 4, 2009 CNN Money:



In the light of the above videos, this chart sums up the mood. People are trying to pay off debt. Since our entire money supply is borrowed money, when we pay it off, the money supply shrinks. This is why FED is trying to print money to counter the deflationary forces. That will probably have bad inflationary effects later down the road. But for now, we are heading into deflation. The credit bubble is shrinking.

more HERE

1. Cut Your Credit Cards and Set A Budget

Every family that finds themselves in debt should cut up all their credit cards and live on a cash budget, keeping a log of each and every expenditure made. Use the following formula to set a budget. Keep in mind that the "life" category includes is everything from groceries, to gadgets to entertainment. Housing: 35%, Debt: 15%, Life: 25%, Transportation, 15%, Savings 10%.

2. Reduce Your Interest Rates

Reducing your interest cost is one way to fast track your way out of debt. Some people have interest rates as high as 30%, when they pay their monthly minimum, all they're doing is paying off interest rather than chipping away at the principal. By calling to negotiate with creditors, high interest rates can be brought down. If you call and a representative says they can't help you, ask to be connected to a supervisor until you get to someone with the authority to reduce your rates.

3. Bring In Extra Money

Do anything you can to bring in extra money to throw at your debt, even if you work a full time job. Consider overtime at work, dog walking, baby sitting, tutoring, or using any skill that's unique to you to bring home the bacon…some creative ideas we've seen on the show: web designing, party planning, teaching music lessons and much, much more!

4. Get Your Priorities Straight

When deciding how to tackle debt and putting a plan in place to save for the future, you have to consider all of your options. Ask yourself the tough questions and prioritize…if going to grad school is important, then maybe you can be a student but take on a part-time job. If having a child is important, do you need to take a full maternity leave? Should you consider buying a home - maybe renting is a smarter option? Make a list of things you want to do and discuss them thoroughly with your partner to help make the best decisions for you and your relationship.

5. Chip Away At The Debt

To reduce debt, make a list of every single debt that you have and rank them in order of the highest interest rate, not the highest balance. Pay off the highest interest rate card first. Every time you have extra money, throw it at the debt you've targeted until it's gone and then stop using that card! Reward yourself by making a checklist and crossing out the debt, you'll feel better as you start to see it disappear. When your debt is paid off, take the money you were allocating for debt repayment and put it towards savings.

6. Keep Things In Perspective

Getting out of debt isn't easy, but you have to remember that you cannot let debt consume you and hurt your relationship. You and your partner need to work through the debt together, making sacrifices but focusing on what's important as well - your family and your relationship. Get a babysitter and make time to do something special with your spouse so you can remember why you fell in love, set time aside to do group activities as a family to involve the kids as well. Don't let your debt get the best of you.

7. Getting Out of Debt Doesn't Mean You Can't Ever Spend Again

When working your way out of debt you can still spend on things that are important to you, you just need to plan and save for them. So for example, if you're planning to get married, don't rush out and cancel your wedding - re-think your wedding plans and see if there are cheaper alternative ways to spend on what you want. If you really love to travel, don't cancel your trip for the year, figure out a way to do it on a tighter budget and save a little each month for it so you don't have to put it on credit cards.

8. Stop Eating Out

Eating out costs way more than buying food and cooking at home, not to mention that the latter option is much healthier as well. Make cooking dinner a family activity, something that can be done to together to make the experience more enjoyable -- and when you're done cooking, sit down and have dinner together, discuss the day's events and catch up. Having dinner parties at home is also a way to cut down on entertainment with friends. If you're planning a romantic dinner consider taking the kids to their grandparents' and having dinner at home rather than in a restaurant. If you're going to get together with friends, consider the same thing. Remember, it's not about the food, it's about the company.

9. Get Organized

When it comes to working your way out of debt it's all about organization -- believe it or not getting your documents in order will help you pay down your debt because it puts you in control. Organize your paperwork so you know where every important document is and so that all documents are easily accessible. Use a collapsible file folder, label the tabs clearly and most importantly, do this with your spouse so you both understand the system.

10. Be Willing To Part With Toys

Sometimes to get out of debt you'll have to sell something that's really important to you or that you love. The reality is dealing with the heartbreak of losing material things will be far less than dealing with the damage that these things can do to your finances. If you have to sell a car, house, piece of jewelry, artwork or anything else, take a deep breath and realize that what you're doing will help your future and your finances -- and just let it go.

source HERE