SWB: Alan B. Rowley II - Success Coach - ECoaching - Email Coaching

This Is Probably The Hardest Part Of The Money Choice Program

My wife overheard a conversation the other day that she shared with me this morning.  A couple were going to refinance their house and were going to get an "interest only" refi.  I can't remember if I've covered this here but I go into it in some detail in my book.  The short of it is that for most people, these are a bad deal.  For mortgage companies they're great.  That's usually how it works.  If it's wonderful for the mortgage company, you're getting screwed.  If it's good for you, they aren't getting any money.

The conversation came to an end with a shrug and the words, "I've accepted that I'll always be in debt."

The hardest part of my job is breaking the programming that the banks have instilled in the general public.  People don't have to always be in debt.  In fact, people can get out of debt rather quickly if they want.  They don't try.  One of the reasons they don't try is because of this belief.  There are other reasons but this is a big one.

Maxed Out - The Movie

There is a movie out now about credit card debt and the predatory nature of credit card companies called Maxed Out.  http://www.maxedoutmovie.com

You can visit the website to see where the movie is playing.  Nowhere near me, unfortunately.  I guess I'll have to wait for the DVD. 

I did watch some of the clips at the website and one that was interesting was an analogy posed by a journalist.  He said that when slavery was abolished, the system was changed to a share cropping establishment which was basically debt slavery.  People were free but they would have to work for their whole lives and they would never be out of debt.  The journalist said that's essentially what we have going on now.

One thing that I would like to point out is that in many cases, it takes two people to create these situations.  Yes, the credit card companies are using some tricks but it is possible for people to stop using credit cards.  It may not be easy at times but it is possible.

People don't want to stop using the cards.  They want the extra purchasing power.  The problem is that the power is so short lived.  Maybe I'll go into that more tomorrow.

If anyone sees the movie, let me know what you think.

Financial Slavery

It was pointed out yesterday that I have been talking about financial slavery all along and this is true.  What I want to point out to people is that it hasn't happened on accident and that even though people are responsible for their lives, they have been (and still are) being manipulated.  I also wanted to point out a couple of lies that people have accepted as truth.

The banks of this country are trying to get every last penny that you have and they will use any trick that they can to get it.  You need to understand this.  You need to see that they want you to work for them for your whole life and when you can no longer pay them, you will be cut off from them.  There won't be any thanks or "job well done" when you can no longer give them interest.  They are not doing you any favors no matter how they sugar coat it.  They use the media and ads to do everything they can to change your thinking and downplay how much they are stealing from you.  And sometimes, they just lie.  Here are some things that I have noticed.  I'm don't have any formal training in finances but I'll present them as I perceive them.

Buying things boosts the economy.  If you can't afford it, charge it and you'll help people get jobs and all that good stuff.  This is a lie that has been attached to a truth.  Like a tow truck dragging along a rusted Pinto.  Yes, buying things boosts the economy.  And imagine what would happen if everyone paid cash for those things.  Remember that cash paying customers can by 2 to 3 times as much stuff.  Don't you think that buying 2 to 3 times as much stuff would boost the economy 2 to 3 times?  I do.

Don't hurry to pay off your house if you don't have kids, it's your last big tax break.  I've heard people tell me this when I tell them my plan to be completely out of debt in 5 or 6 years.  I tell them to go ahead with their plan.  Keep giving the bank a dollar so that you can save a quarter.  I'll give the government a quarter and save 75 cents.  We'll see who is getting the better deal when they are still paying a house payment (at around 80% interest per payment) while I have all of my money (minus taxes) to do what I want with.

You need to keep using your credit cards so that you can improve your credit rating.  My wife is looking into this one.  So far what she has found is that you need to have a credit card open for two years with no late payments to improve your credit score.  She hasn't been able to find anything that says that you actually have to use the card.  We did find some information earlier that says that if you owe more than half the limit on your card, it lowers your score. 

Talk about money with people and you are going to hear these things over and over.  I know that I do.  I have yet to find someone that has offered up anything substantial enough for me to change my mind on what I'm doing or what I'm planning.  I do see where the banks are trying everything they can to get my money and that's a battle that I'm willing to fight.  My freedom is worth it.

Why does the bank make such a ludicrous offer?

If you came to me and asked me for 10 bucks so that you could buy dinner and I said that I would as long as you gave me a dollar a day for 30 days, would you do it?  It probably depends on how hungry you are. 

If you went into subway and saw that your sandwich, chips, drink, and chocolate chip cookie were going to cost you 30 bucks, would you buy them?  Uhh, noooo...

What's the difference?

The banks are killing forests because there are people out there who are hungry enough that they are willing to pay 3 times what something is worth just to get it.  They failed on us but they are playing the odds.  How many people have to accept this offer before you have paid for the paper and postage to send this junk mail out?

It can be a difficult trap to get out of because once you start going in debt and making monthly payments, you have less cash to use to purchase things.  You can however charge it on a card and pay a low monthly payment.  This again reduces your buying power and not long down the road, you find that you have about zero buying power.  All of your money has been spent.  In fact, it has been spent for years and years down the road.  You have spent all the money that you are going to make for the next 30 to 40 years.  Because you are paying interest.  You are no longer working for yourself or your family or to have a better life.  You are working for the banks.  You are working to make enough money so that you can eat so that you have enough energy to keep working so that you can send most of your paycheck to the banks. 

And quite frankly, that's how they like it.

Tomorrow:  That low, low monthly payment