Today on MoneyLife with Chuck Bentley

Each month I write the lead article for our Money Matters newsletter. I write about things I think will be helpful to you. In January, I like to write about the top 5 trends I see for the new year.

Last year, the five trends were:

1. Increased job losses. I said unemployment could go into the low double-digits and that’s where we are now.
2. We would head into a recession and possiblly something worse. That was true too.
3. There would come a time when there was economic calm, the stock market stabilized, everything seemed to be going back to normal. That seems to be where we are right now.
4. We'd see a growing and expanding federal government. I was right on that.
5. And finally, that we'd see a rising intolerance for the Christian worldview. There's data to support that this is happeng.

Today I'm going to share the trends I see for this year. I'm sharing them so you can prepare for them, and make adjustments in your personal finances. We need to have a sense if urgency, not panic.

The current time of economic calm will lull some people to sleep. They won’t be prepared for the difficulty ahead. I don’t want you to be on of them.

You need to make getting your finances in order a priority this year.

Trend #1 – The federal government will continue to expand and increase its size and its budget. The government is almost insolvent already because it borrows more money than it takes in. The government is trying to spend its way out of economic trouble.

Washington is not spending cash reserves, its spending borrowed money. We're borrowing money to solve a problem caused by borrowing too much money. We're borrowing from foreign sources. Spending is out of control. The only way to fund it is to raise taxes, borrow, or print money. None of those strategies will lead to economic health.

Trend #2 – Our banks will continue to have less loan activity. Loan activity is falling and will continue to do so this year. We're in a period of deleveraging. It's a correction of the over borrowing that too place. There's too much borrowed money in the system right now. Economic activity is down while the excess capacity is absorbed. Economic growth won’t happen until the banks begin to loan more money to small businesses. Expect the economic recovery to be slow. You need to stop taking on new debt. Pay back the debt you have.

Trend #3 – We’re in for a commercial real estate crisis. Delinquencies on commercial mortgages and vacancy rates are up, especially on highly leveraged properties. Many will be in jeopardy of foreclosure. Commercial mortgage-backed securities were popular when the credit system was loose a few years ago. A growing number of properties aren’t generating enough income to make their mortgage payments. We've already had this happen with home mortgages made by about 10 large companies. Commercial mortgages were made by many small companies. The fallout could be more widespread than housing. If large properties start to default, it will affect more lending institutions and small businesses.

Trend #4 – Many state budgets will be in crisis. Expect budget shortfalls in 48 states this year. For 36 of them, I believe the shortfalls will extend to 2011. California owes billions it can’t pay. States have to borrow from the federal government or tax to meet their budgets; they can’t print money. There's no easy way out. States will have to reduce services. That means there will be pain at the local level.

Trend #5 – The mid-term elections will be a pivotal moment for the economic direction of our country. I don’t want to get into politics, but the problem is the U.S. is increasing its debt while people are trying to get out of debt. There are big differences in what people see as the solution. The population is trying to get its house in order while the government tries to spend its way out of trouble. The U.S. dollar has lost value because of government’s fiscal irresponsibility. The government can only get money by taxing, borrowing, and printing money. More programs mean more money is needed to fund them. That means government will print more money and further devalue the dollar. You can’t become prosperous through government spending. Elected officials from both parties treat the dollar as if it were Monopoly money. When taxing and borrowing isn’t bringing in enough money, government will print it. That will lower the value of the dollar, and devalue your savings. Our elected leaders are living foolishly. We should vote for those seeking office who pledge to be good stewards of the money the people supply the government through taxes. They should act as trustees that are committed to protect the people by making sure the government lives within its means. Work with all your power to get the government to live within its means. The mid-term elections will indicate the direction of the country. If we’re not successful in electing good stewards, a very painful correction is coming.

It's wise to make a commitment to pay off all your debt. Don’t add any new debt this year. Increase your income through a second job, a part-time business. Improve your financial margin, save more. Trends are pointing toward a painful correction. See the danger, heed the warning. Do your part.

The Bible tells us no one knows the future. I don't know the future. I shared from my heart about the trends we need to be aware of this year. I can’t predict the future, but when you see trends, take action and be prepared. Don’t wait, do something today. Even if the economy recovers and all our current problems are eliminated, the actions being recommended will only bless you.

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I'll be appearing at two events next month as part of the God Provides™ film tour. I'll be in Atlanta, February 11, at Hebron Baptist Church and Chattanooga, February 18, at Ridgedale Baptist Church.

These events are family friendly and free, bring your children. We'll be showing Abraham and Isaac and the Widow and Oil films. You can register here.

I encourage you to see God as your provider during these difficult economic times. I hope you’ll make plans to be there if you live in those areas. If you do, please say hello and let me know you're a MoneyLife listener.

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