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	While the average American household has acquired approximately $8,000 in consumer debt, many people have achieved the dream of living debt free. Reducing and eliminating your debt does not happen overnight. However, if you outline a realistic plan for reducing debt, you can become debt free in a few years. Establish a Plan for Reducing Debt Before achieving your goal, you must outline a detail plan for eliminating debt. To begin, gather all your credit accounts and unpaid bills. It is important to have an accurate debt amount. Individuals who earn a huge salary may be able to eliminate their debts by simply cutting expenses. Record your monthly income and make a list of your monthly expenses Determine how much income remains after your have paid your bills for the month. This amount is your disposable income. Instead of frivolously spending this income, use the extra money to payoff your credit card balances. If you do not have the extra income to payoff your debts, there are other options available to you. Apply for a Debt Consolidation Loan to Reduce Debts Applying for a debt consolidation loan to reduce your debts is a great way to eliminate high interest consumer debts. While a debt consolidated loan will not immediately erase your debts, these loans have short terms and low rates, which allow you to payoff your personal debts in less time. There are three ways to acquire funds to consolidate debts. For starters, you can attempt to apply for a personal debt consolidation loan. Depending on the financial institution, you will need collateral or an excellent credit score. Homeowners may apply for a home equity loan or line of credit. The funds received from the loan or line of credit may be used to payoff or reduce other high interest consumer debts. Be careful when accepting these types of consolidation loans. Home equity loans and lines of credit are protected by your home’s equity. With this said, the lender may foreclose your house if you do not repay the loan. Debt Management and Consumer Credit Counseling Services Another method for reducing debt involves establishing a relationship with a debt management or credit counseling service. These services will help you reduce debt and improve your credit rating by contacting your creditors and establishing better terms and rates on your credit cards and loans.

As I mentioned in my last message, if the support line of your mutual fund or your stock is broken, beware! This is a very clear signal you should be hedging your position, and perhaps consider selling a portion (or maybe even the entire) position. Breaking the support line is the ultimate sign that supply is now clearly in command. Your principal is now at risk.

Too much supply, and not enough demand, will bring lower prices. That is not my theory.

That is an economic law.

Summer 2003: Krispy Kreme is on the cover of a major financial magazine as “the hottest brand in America” and the only Krispy Kreme store in New Jersey opened. People had lined up overnight to buy their doughnuts at this store! But sell signals began to appear.

Do you remember the very first time the company missed their quarterly earnings forecast? They explained it away on the “low-carb diet” fad!

By the time the real story broke the next year, about some very real accounting issues, the stock had already been sliced in half.

The support line had been broken back in March 2004, at 34. This week, as they closed the New Jersey shop and carried away all the signs and equipment, the stock is just $6.00.

Maybe this is too dramatic an example.

Take a look at a big blue chip, widely held stock. Merck broke through it’s support line in August 2003 at $52. Since then, it has dropped to the mid 20’s. It now flirts with $30.

Regarding Merck, keep in mind that Vioxx was withdrawn in September 2004. But the stock broke support a year earlier in August, 2003. How did the market know? Maybe it did, maybe it didn’t. But by the time the Vioxx story broke, in late summer 2004, supply was firmly in control. No demand whatsoever to prop it up. The stock dropped even further, from $44 to the mid 30’s on the Vioxx withdrawal.

Hey, Merck is a fine company with GREAT fundamentals. The stock has struggled for lots of reasons. All of which is unimportant.

Remember, Wall Street is a huge voting machine. Crowds are often wiser than individuals and their opinions. So stocks like Merck can have terrific fundamentals...and yet their stock can be sliced in half.

And we can see it, LIVE, when stocks break the support line.

From my perspective, as your advisor, I have a tough job. I’ll call you, seemingly out of the blue, and tell you we need to get defensive with (or maybe even sell) company XYZ’s stock.

It could be a stock you’ve owned for years. It might be the single biggest investment you hold. Maybe you inherited the stock from your parents, or perhaps you even worked there, or know someone who works there.

Regardless, when a stock breaks through the support line, it is a major red flag and should not be ignored.

We often don’t know the reason for the decline, and may not know for some time. There may not even be a news story about it. But we know that supply has taken over and lower prices often follow. And since it is my job to protect what you’ve worked hard to get, we sometimes have to make tough decisions. Without all the answers. If we waited for the news with stocks like Krispy Kreme and Merck, we’d be in serious trouble.