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Overcoming
Debt:
The Way to Solvency
Personal
Debt is Skyrocketing
 With
the exception of a small rise in middle-class wages in
the late 1990s, real wages have simply not kept pace with
inflation. In fact, the median income of average households
has fallen steadily for five years in a row. Despite these
facts, consumption continues to increase. How can this
be? The answer, unfortunately, is that people are incurring
an increasing amount of personal debt. We’re talking
here about the 95% of us who are not wealthy, who are
not saving enough for retirement, and who are bombarded
constantly to buy, buy, buy.
It’s
true that the nation’s economy is growing—how
many times have you heard politicians point that out,
while you wonder why you’re still so far in debt?
What they fail to mention is that the economic expansion
is largely the result of people overextending themselves,
using credit to buy such necessities as food and clothing,
and even taking cash advances on credit cards to pay mortgage
payments. A Federal Reserve study showed that 43% of US
families spend more than they earn. The only way to do
that is to use credit. And it's pretty obvious that if
you use credit to spend more than you earn, you are going
to be in debt.
The
credit card industry collected 43 billion dollars
in late-payment, over-limit, and balance-transfer fees
in 2004. The major advertising ploy used by all the credit
card companies sounds like a scene out of Brave New
World—“You like it. You deserve it. Buy
it.” It’s easy to fall into their supposedly
people-friendly trap. But the truth is, they exist for
one reason only, and that is to make money from you.
“Uh-oh,
the mail is here.”
With
the typical American family now owing $19,000 on non-mortgage
debts, it’s no wonder that mail deliveries have become
something to dread. Which bill is due or overdue? How
much are the finance charges on credit card A, B, C, D...and
on and on. (The average family has 13 credit, debit and
store cards.) Sandwiched between the bills are offers
from other credit card companies—or even the same
ones you’ve already got. “Transfer your balances!
No interest for six months!” Many people go this
route as a way out. It can buy you some time, but it doesn’t
work forever. The proverbial piper must eventually be
paid—and when that time comes, it will be worse than
ever.
 “But
I always make the minimum payment!”
Making
just the minimum payments on your credit cards will keep
your credit picture in focus as far as the credit reporting
agencies are concerned. “Pays required amount. Pays
on time.” Sounds good, doesn’t it?
Actually,
you’d be playing right into the hands of your creditors.
The less you pay on your balance, the more interest
they make. Let’s say you have a balance of $6000
on a credit card and you STOP using it today. If your
interest rate is 17.5%, a pretty average percentage, and
you pay the minimum payment of $90 every month, it will
take you almost 20 years to pay off the balance.
You will have paid $21,240 on that $6000 balance. They
made $15,240 in interest—and maybe additional amounts
in annual fees.
Think
about what you could do with $15,240! Wouldn’t
you rather be tucking that money into an IRA or a college
fund?
Medical
Expenses Are Enough to Make You Sick
A 2006 study conducted by the Center for American
Progress showed that most older Americans who find themselves
in debt do so because of the high cost of healthcare and
prescription medications. In fact, anyone of any age with
a serious illness or debilitating injuries suffered by
any family member can soon find themselves in deep financial
trouble. Even if you have health insurance, there are
deductibles, co-pays, supplies and drugs that aren't covered.
With today’s astronomical healthcare costs, a policy’s
maximum lifetime payout can be reached with alarming speed.
When they stop paying, and care is still needed, where
do you turn? A medical emergency can be devastating to
any but the wealthy.
When
Keeping Up With the Joneses Is a Bad Idea
In recent years, low mortgage rates and steadily rising
real estate costs made home ownership seem like an excellent
investment. While that is still true, some people find
themselves in trouble now if they financed their home
with an A.R.M. (adjustable rate mortgage) or an interest-only
loan. When the federal reserve began raising interest
rates, ARMs started resetting, increasing mortgage payments
by as much as 25%. If you took an interest-only loan to
buy a dream house just before the housing bubble burst,
prepare yourself for disaster. With prices declining,
there’s a high possibility that if you can’t
make your payments, you will have to sell the home for
less than you owe—maybe a lot less.
“Wait!
There must be a way out.”
You
could take an equity loans on your house—assuming
you have enough equity to make it worthwhile, and that
you can handle the equity loan payoff. Although you could
try a credit counseling agency, and IRS inquiry in May,
2006, revealed that the 41 so-called credit counselors
they examined were of virtually no benefit to consumers.
Investigations into other agencies are on-going.
“I can always go bankrupt.”
Recent
changes in federal bankruptcy law have made the procedure
so expensive that people in dire financial straits cannot
even afford the filing fees. While people often think
that declaring bankruptcy means you can toss out your
bills and just pay cash until your credit rating improves,
the new laws demand a payback percentage to creditors.
Credit counseling is now mandatory, although the chances
are you will find yourself paying a bogus “credit
counselor” for nothing more than a checkmark on your
bankruptcy record that you’ve completed the counseling.
 ”Is
There a Reasonable Solution?”
Yes.
Think about it. If you need more money to pay your debts,
then you simply need to make more money. This doesn’t
mean you need to go out and search for a new job in a
crazy job market. It simply means that you need another
income source to add to those you already have.
Ideally,
you need to find a way to bring in extra income without
undue stress on yourself and your family. You should still
have some down time for relaxation. If this sounds impossible,
there is good news: It can be done. Thousands of
other people have already proven it.
If
you're determined to get out of debt, a home-based
business is a viable method for generating a genuine
second income. It’s a far cry from working for peanuts
at a night job in a retail store, warehouse, or fast-food
joint. You’ll save money on commute time and gas,
and the only equipment you’ll need is a computer
and a telephone.
Your
first goal will probably be to heave a huge sigh of relief
as you realize your balances are declining and you’re
getting ahead. Like many others, you may discover that
you were always cut out for running your own business
and increasing your personal wealth more every day. Your
second job could become so rewarding that you will decide
to make it your only job. Imagine working from the comfort
of your home, interacting with people who started out
just like you and are now making fortunes.
The
way to financial solvency—even wealth— is open
now.
If
you're ready to pop that steadily swelling debt balloon—ready
to shape your future the way you’ve dreamed it could
be—you can begin right now.
Simply fill out the form and we’ll send you free,
no-obligation information.
Sincerely,
Walter
Hamilton
walter@pencilthemin.com
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Overcome Debt
Your Own Business
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a Franchise|||| |
The Secret
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