The Wrong Way to Reduce Debt
Picking up from a previous entry – let’s provide an explanation of the commonly marketed methods for a person to get out of debt.
One method offered by companies that earn their income through the sale of mortgages is consolidation. The premise here is to roll all your unsecured debt (such as student loans and credit cards/things that have no collateral covering them) into your home mortgage. It has also been suggested to roll secured debt, such as a car loan into this consolidation.
This assumes your home has equity to borrow from. The theory here is that these funds, the money you previously paid to the credit card companies you will now pay to the mortgage companies, which is okay because then you can write it off on your taxes. The problem with this method is that while it may drop your monthly payments a little, and save you a small amount in annual taxes, you are no closer to being out of debt.
In addition, your student loans, credit cards and car loans are now part of a payment schedule that may actually have you paying them off longer than before, or longer than the car lasts. You have also given up the equity in your home, which is not a bad thing if it is part of an overall strategy to reduce the time in which you are in debt, but not a good thing if it is used as a quick fix to have more money to spend each month.
Another method highly marketed is settlement or negotiation. In this case you enlist the services of a company that contacts your creditors for you and negotiates lower interest, a smaller monthly payment, freezing fees or any other method to help you to not have to pay. This method has fault on many levels.
There is no doubt that debt settlement with any company does hurt your credit it is the downside to the process of reducing your total debt using this strategy. an email response from a debt settlement company
Of immediate concern is how this affects a persons credit score. Any company that agrees to a negotiated payment will enter this information into a persons credit history. This information is now there for all other potential creditors to see. Landlords, retail stores, auto loan companies etc now know that you failed to pay back your debts as agreed. This can haunt you for many years to come.
In addition – negotiation may not work. Companies may not agree to new terms, they may agree to terms that are less than desirable, and this will still become part of your permanent credit history. The settlement company is also not in business to lose money and your fees to them must still be paid. I have heard horror stories of unscrupulous companies who were supposed to pay a client’s bills for them and just kept the money or held it for a time before paying it to collect the interest for themselves.
Lastly – where is the morality of not paying your debts? While there are instances of ridiculously high interest rates, and yes – today’s world seems to suck us into buying more than we need or can afford – how can we as adults accept an agreement to purchase something under certain terms and then squirrel our way out of paying for it? I came across a company which claims to have found a loop hole in banking laws and is using that as a way to help their clients end all payments to bank provided credit cards.
When I asked what lesson he was teaching his children by sitting on a couch watching a television, both of which were purchased on a credit card which he now feels he does not have to pay back – he had very little to say.
In summary – consolidation, settlement and negotiation, which should the last resort for some, fails to effectively eliminate debt for ethically minded families.
Conversation on WHAT EVERY MAN NEEDS TO KNOW
Your thoughts and opinions are welcomed and encouraged here. No judgments no right or wrong. How do you feel about your ability to response honestly to the questions about Where you come from, Where are you at Right Now, Where are you going, Your Friends and Your Gifts?
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Nine Things Every Guy Oughta Know – What’s the Tenth?
This is a space to get your opinion on what is the 10th or 11th or 12th that every guy oughta know.
Some friends have suggested changing the oil in a car, fixing a bike, gutting an animal, and planning a night out.
What do you think? Any comments on what you read? Corrections, feedback.
Get the conversation going!!
Not Everything is an EVENT!!
I love a party. A holiday gathering, a celebration. A time set aside to honor or remember a loved one, a friend or event. Good food, libations, conversations, laughter, dancing. A time set apart from the everyday activities and routines to mark a special occasion. We as humans have much to gain from celebrations. Some cultures do this better than others, some do it more often. Whether religious in nature or secular, patriotic or the simple recognition of another passing year celebration is good for the soul.
But not everything is a celebration. Not everything should be made into an event. Before you think that I am getting all scrooge about this let me explain.
With the New Years celebration so recently behind us, decorations from the holidays and Christmas lights still adorning most homes, many of us are preparing to launch upon our New Year’s Resolutions. We’re eyeing that pair of slacks that we’ll fit into once our new diet kicks in, or mentally spending the money that will certainly be there once our new work commitment or family budget is in place. We’ve got the goal and set the beginning date of when our new plans take effect. Next week we begin. As soon as the holidays are over. Right after the relatives leave and the house is in order. The problem is that we’ve done this before, and it didn’t work then, or even the time before that.
All of life is a celebration. A series of events, some happy some joyous some sad some just everyday normal humdrum. We string these together and they become our life story. We seek happiness and opportunities to break out of the normal day to day routines, although routine does provide a foundation and stability. Within routine are the habits that provide mental, emotional and physical security. It is within routine that we perform all the functions that we know and do well. On a routine day we can often slide through our required activities with adroitness and grace. It is within the routines of a regular day that our habits exist.
Our habits, those things we do without even thinking about them. We wake up at a certain hour, do our grooming, get dressed, go off to our work place or other responsibilities and can often flow through these activities without much mental exertion since we’ve done it hundreds of times before. We have eating habits, exercise habits, study habits, good habits and bad habits.
Here is a quick exercise. Grab a sheet of paper and right down all your good habits. Next write down all the things you know you should be doing, dividing both lists into categories. For example under financial you might have that you are price conscience when shopping for groceries as something you already do. Then you add to the list that a good habit (you know this because you have heard it, read it, or been taught) would be to spend from a predetermined budget. Under the category of health you list all the truths you know about good eating. Less sugar, more vegetables, drink water, daily physical activities.
These are the habits of a good life. The truth is we already know them. We’ve heard the messages, read the reports, and probably even practiced them at one time or another. If you feel your list is difficult to complete in a certain area, or are truthfully uncertain about the activities that would produce a desired result in your life then you now have a goal – an obligation – to search out the knowledge. And knowledge is everywhere!
Let me divert to what might seem to be an unrelated topic and then we’ll tie it back in. When a pilot prepares for a flight there are many factors to consider. Wind, weather, distance, altitude, etc. In a larger commercial plane much of this is precalculated with the use of computers and the automatic pilot is engaged (think habit). It is the automatic pilot’s job to make constant small adjustments bringing the plane back on course. I have heard it said that a plane is off course most of the time and it is the job of the pilot to regularly and consistently bring it back on course. Obviously if the plane is allowed to veer off course for too long the adjustments will need to be greater. But the course is programmed and the destination is always in sight.
The list you made of good habits is the journey, the route, the preprogramed course plan. The wind and changing weather are the events of our life, some under our control, some not. These events can take us off course, if we allow them. A family members birthday celebration. To cake or not to cake? An unscheduled meeting at work. Do I allow my goal of completing my daily report to slide? It was a late night out with friends, do I sleep in or stay committed to that daily run?
If we allow everything in life to become a special event then we are also allowing everything in life to disrupt our good habits. ‘Lets look at the desert menu, we haven’t been out with these friends in so long, this is a special night’. ‘I can catch up on these reports tomorrow, that sale deserves to be celebrated’. ‘I can run longer tomorrow, last night was a pretty exciting time’. Nothing is bad or wrong, yet everything is under our control.
While we participate in the events in our life, be they special or ordinary, we also tend to turn our goals into events. A diet becomes a special program. A family budget becomes is a special plan. Reading a book a week is a special goal. And now that they are events we place them into a certain time frame. Right after the holidays I will begin my diet program. Our family spending plan kicks in on January 15th. I plan on getting to the library this weekend. The problem is that good habits don’t have ending points like events do. An event eventually ends. Most of us will always be eating something, spending money and hopefully reading for the rest of our lives. No end to these activities.
By making a goal an event we also can blow it. We get off track by missing a deadline, a workout or eating too much. The event is over and we’ll have to decide when to start again. Until then we just fall back into the bad habit routines anticipating the next starting date.
Not everything is an event! Just like the airplane on it’s flight across country, course corrections are not an event, they are routine and necessary to a safe trip and successful landing. When we accept the list of good habits as our travel plans through life then each day is simply a matter of making small course corrections. Our knowledge of what is good and right in our lives is our standard, the place to which we come back to on a daily basis. “I had a donut from the break-room this morning, the chicken salad looks good for lunch” is a lot better than “that donut I had blew my diet, no reason not to have the burrito plate for lunch”.
By allocating the habits which we know to be good, those that lead us through a life of love, peace, kindness, good health and self control, to be our standard for living, our daily objective is clear. By regularly renewing our minds to keep on course, to return to the standard, our lives become a sacred dance. While not everything is an event, the gift of life itself is a celebration. By focusing our thoughts and actions on the standard of good habits and ignoring our past deviations each day becomes a sacred celebration.
Even if we have wandered far off course, our choice to simply renew our mind and return to the proper course of what is right and good for us is a decision and not an event. This mindset allows us to think and act in terms of who we are now, not who we were or what we did in the past. We are not a participant in an event of a life change, but rather a person living life according to a standard of predetermined healthy habits.
The scripture is the best place to begin building a standard of daily habits. How we treat our bodies, how we go about our work, how we treat others, how to pray and study are all given as examples throughout the bible story. Since God has forgotten our past deviations we need to do the same. Just as God calls us back to Him regardless of the date or time or place or how long it has been since we were last in His presence, we can return to a lifestyle of habits that will edify us and others – any time and all the time.
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