This Way To Debt

Have You Ever Thought Life Would Be Easier Without Money?

Chapter 2:

Have You Ever Thought Life Would Be Easier Without Money?
There have been many times when we have wondered why we have to have money in the
first place? It seems to be such a problem. Wouldn’t it be easier if everyone just helped
each other out and gave away stuff to people who needed it?
Of course, we probably wouldn’t want to go to work every day if we didn’t need to be paid.
And, we’d probably try to get everything we wanted without providing much for everyone else.
It might be fun for a while, but when food ran out and everyone was sitting around on
the beach enjoying the sunshine instead of growing more food, delivering more food,
and making our lives nicer with every service and product they provide, we’d probably
wish for money again.
Money has power, money has energy, and with money we can buy things to make our lives
easier, more convenient, and richer. We can pay someone to do things for us or make things
for us or provide products or services. We can even pay to learn new things. Money is
neither good nor bad, but can be used for good or bad purposes. It all depends on what
the person with the money wants to buy.
So, why do we even have money and how did our economy develop?…
Long ago, there was no money. People had to get their own food, clothes, and shelter. If
you didn’t have something, you had to go out and get it yourself. This was very difficult.
People had to work hard to provide everything they needed. Consequently, they didn’t have
much.
Then, there was bartering. People would trade something they had for something they
wanted. People lived in small communities. They didn’t have to travel far to trade their
goods. However, bartering had its limitations. The biggest and most obvious limitation
was that you might not want what the other person was trading. For example, let’s
suppose you had eggs and someone else wanted your eggs. They offered you spinach for
your eggs. Only problem was you wanted to get bacon for your eggs.
Not much you could do if you only traded eggs and they only traded spinach. You’d
have to live without bacon unless you could find another neighbor willing to trade bacon for
eggs. However, the neighbor with the bacon didn’t want eggs, they wanted milk. Serious
problem developed while trying to coordinate all that between the neighbors and their needs.
So, they started coming up with something that was valuable to everyone and it was used
for trade. This may have been beads, animal skins, grain, or shells. People would trade
the item that was used for trade for the goods they needed. In this way, they would pay for
things and have uniform prices (6 measures of grain for this and 2 measures of grain for that).
When paper money and coins came about, the paper was a note to trade in and exchange
for gold or silver coins. However, there was more paper money than the silver or gold
that it could be exchanged for. The coins became more valuable than the paper, because
they were made of the rare metals and they were honored most places. They were heavy to
carry and so they had their drawbacks.
Several steps leading up to our current monetary system:
• No money
• Bartering
• Trading Common Items (Shells, Beads, Skins, or Grain)
• Paper Money and Coins
Paper money was different from each bank and was not always honored from bank to
bank. It reminds me of arcade tokens. The only place you can use them is at the arcade that
issued them. You use them all while you’re there, and you just end up with a bunch of ski ball
tickets that are worthless anywhere else.
The money system became very confusing and there was no consistency or regulation.
Then, in 1861, the US Treasury printed the first greenbacks. They could not be
exchanged for gold or silver and lost their value. After several attempts and improvements,
they came up with a system that limits the amount of notes that can be produced each year
and makes them difficult to counterfeit. The kind of notes we have today are backed by the
federal reserve and cannot be traded in for silver or gold on demand. However, people have
become accustomed to this form of money and as long as people have faith in the value of
the dollar, there will be value in the dollar.
Problems with Current Monetary System:
• Electronically Figured and Moved (We never see it)
• Abstract Concept
• Disconnection with Money
• Hard To Keep Track Of It (So Many Accounts and Cards)
• Able To Spend Money We Don’t Have
With the invention of modern computers, on line banking and credit and debit cards, most of
our money is really not paper at all, but it is electronically figured and moved. Most
transactions today don’t even involve currency at all, but are electronically debited from one
account and deposited to another.
This convenient way of  keeping track of our money can also make it seem to be an endless
supply. Since we don’t see it disappear, it doesn’t seem concrete. It’s an abstract thing,
rather than real dollars that we can feel and touch. We have cards and numbers and
checks that we can produce money with whenever we want to buy something. We tend to
lose track and lose responsibility as well as losing touch with how much we actually have.
Many people have no clue what their bank account balances are. They don’t even balance
their checkbooks. They just spend with their cards and when a card doesn’t go through, they
spend with another card. This lack of responsibility comes from a disconnection with
our money. We can’t see how much we have and we lose track.
Accounting software can help to solve this problem and keep track of the many accounts that
we have. It is important to find a program that is easy to use and will track all spending
and income from each source. It should also track the debts we have and the credit we
have available. This way, we can get a handle on how much is really there. It’s better to be
realistic than to live in a fantasy world where money is created out of cyberspace and
magically deposited into an account somewhere beyond this dimension.
If you can’t find a program that is easy to use, you won’t use it…
This is really important when looking for a program. It may be worth the extra money to invest
in a good program that you can stick to for years to come. The money you will save by being
on top of your finances will pay for the difference in price.
Most people have tried to budget and have given up. It is imperative to have a budget in
order to get out of debt. Even a simple record of the money coming in and going out can help
a family to focus on what’s most important, financially. This may involve peeling back the
layers of hurt surrounding money and financial issues, but it’s worth it to face the problems
and move closer to your goal of becoming debt free.
Making a budget doesn’t have to take hours each month if you use a computer
program to keep track of the expenses and income. Looking at our past habits will give
us a more realistic view of our future. Even a simple ledger can help to organize our
expenses and income into manageable categories and if set up right will allow us to record
information month after month and compare how we are doing with other months.

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Tags: accounting, currency, dollars, exchange, federal reserve, finances, money

What You Should Know About Interest

What You Should Know About Interest

Interest is compensation to the lender for forgoing other useful investments that could have been made with the loaned asset. These forgone investments are known as the opportunity cost. Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to obtain them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege. The amount lent, or the value of the assets lent, is called the principal. This principal value is held by the borrower on credit. Interest is therefore the price of credit, not the price of money as it is commonly believed to be. The percentage of the principal that is paid as a fee (the interest), over a certain period of time, is called the interest rate.

Interest is a part of our everyday lives. You can have it working for you or against you. Let me give you an example of what I am talking about.

Your mortgage is a closed end loan. It is interest which is working for the bank and not you. When you closed on your home, you were given an amortization schedule. This schedule is a schedule of every one of your payments to the bank, from your first one to the last one. If it is a 30 year mortgage, it will be for 360 months, a fifteen year mortgage will be 180 months. It will show you the amount of your payment that goes to interest, and the amount that goes to principle for every month that you have this mortgage. This schedule cannot be altered or deviated from. You must make every payment, as scheduled, on the date it is scheduled for. Usually there will be a late charge added to those payments that are late.

A mortgage for 200,000 dollars, at 6 % interest rate, for the next 360 months of our lives, requires a monthly payment of 1190.10 every month, but if I have some extra cash lying around, I could give that to the bank and ask them to put this extra money towards the principle balance of my mortgage. That would reduce my principle, thus adjusting the interest that I would have to pay. But what if I came up short one month and could not pay the full payment. Could I ask the bank to let me pay just 1100 dollars this month? Well, I could ask them that, but they would say no. The full amount is due every month and they will take nothing less.

Just as your mortgage is an example of a closed end loan, your credit card is an example of an open end loan. If you were to go out and charge up 500.00 dollars on your credit card, but when that credit card bill was due, you paid the full 500 dollars, how much interest would you pay on that credit card? If you said, none, you are absolutely right. You would pay zero, because the interest that you pay on a credit card is simple interest. It is figured on the average daily balance that you carry on that card. No balance, no interest. You can make as many payments that you want on your card. You can move money in and out of the balance; there usually are no limits as to how many times you can do this.

Ever hear of compounding interest? Compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. The act of declaring interest to be principal is called compounding (i.e., interest is compounded). A loan, for example, may have its interest compounded every month: in this case, a loan with $100 principal and 1% interest per month would have a balance of $101 at the end of the first month.

Another example of compounding interest is this; what would you rather have, one million dollars or a penny doubled every day for the next thirty one days? Take your time…. Grab your calculators…. Give up?

After thirty one days you would have, ten million, seven hundred thirty seven thousand, and four hundred eighteen dollars, and twenty four cents.

Compound Interest

As you can see, interest is a very much needed element in our economy today. We pay it, and we earn it but it is what keeps our economy working. As consumers, or entrepreneurs, we all need to learn every aspect of what interest is, and how it works. It can be the defining line on whether we succeed or fail.

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Tags: assets, compensation, credit, interest, loan, mortgage, principal

“There’s Nothing Fun About Debt” Book 1

Brian Gosur, Thomas Chandler, Amy Boyack,  Jeff Polhill, Linda Adleen Carpenter, Sherry Balcom, and Bill Beavers

Nothing Fun About Debt Series

Book One–There’s Nothing Fun About Debt

• If Debt Is a 4-Letter Word, Why Do We Have So Much…And What Can You Do To Get Rid Of Some?
• Have You Ever Thought Life Would Be Easier Without Money?
• What Can We Learn From Grandma and Grandpa To Help Us Today?

Book Two- Emotional Factors

• Why Does It Take So Long For Me To Pay Off My Debt…And How Can I Speed It Up?
• Does Everyone Want To Be Debt Free…Why Aren’t They Doing It?
• Why People Hold On To Their Debt… And How To Let Go.

Book Three–Getting Rid Of Debt…What is involved?

• What Are The Components, And Types Of Debt… And Some Ways To Get Rid of Each Type Of Debt.
• How Do You Get Into Debt…And How Do You Get Out?
• Your Credit Score And It’s Effect On Your Debt.
• How Do Your Taxes Fit Into Your Present And Future Debt Picture?
• How Do You Pay Off Debt…FAST?

Book Four–Using Banking Tools To Get Out Of Debt Part 1

• Things You May Or May Not Know About Checking Accounts, And How They Can Help You Get Out Of Debt.
• Amortization…Understanding A Key To Getting Out Of Debt Quickly.
• Debt And Your Home’s Equity…What Options Do You Have?
• 
  Secrets About Interest That Can Save You Money.
• FDIC Insurance…Are You Protected?

Book Five–Using Banking Tools To Get Out Of Debt Part 2

• Loan Modification Strategies To Help You With Debt
• Mortgage Financing Made Easy
• Short Sale Strategies And Overview
• Putting It All Together…The Ultimate Way To Get Out Of Debt In The Fastest Way Possible!

This book is a collaborative effort of like minded folks that work in the financial services industry. We know the burden debt places on everyone. We wanted to offer you information that would bring alternatives and hope. We want you to know there are things you can do to change your debt picture for the better. Most of these things are well within your grasp. We hope you will enjoy this book.

Disclaimer: All opinions expressed in this book are the opinions of the authors and should not be taken as anything more than that. This book provides information about debt and finances designed to help readers better understand the financial issues surrounding debt. But financial information is not the same as financial advice — the application of information to an individual’s specific circumstances. Although we have conducted research to better ensure that our information is accurate and useful, we insist that you consult a financial expert if you want professional assurance that our information, and your interpretation of it, is accurate. To clarify further, you may not rely upon this information as financial advice, nor as a recommendation or endorsement of any particular financial understanding, and you should instead regard this book as intended for entertainment purposes only.

Section 1: There’s Nothing Fun About Debt

Chapter 1: If Debt Is A 4-Letter Word, Why Do We Have So Much…

And What Can You Do To Get Rid Of Some?

There’s nothing fun about debt. When we’re looking for people to date or finding a mate, we definitely don’t look for someone who’s strapped with bills and having a tough time making payments each month. Imagine a reality show where beautiful contestants compete to be chosen to marry the guy burdened by debt in the end. It wouldn’t be a sizzling success like “Who Wants to Marry a Millionaire?” In fact, I’m sure they’d be hard pressed to find anyone willing to participate as contestants.

Debt is not a word that conjures up happy images or pleasant feelings. We don’t like talking about how much debt we have. We certainly don’t want our friends to know our debt situation, and the bigger and deeper the problem gets, the more we try to avoid talking about it.

We’ll spend our last dollar on a gift to give at a wedding or a dinner to treat our friends just to look like we don’t have any financial problems at all. Then, charge our groceries on our credit card because we ran out of money and had lots of month left. I know it sounds familiar. We’ve been there, too. Remember, money is always there, but the pockets change.

There are reports about the increasing debt in our country and we all see that the problem is huge.

“I went to an ATM today, and it asked to borrow a twenty till next week.”

But seriously, the economy is in worse condition than it has been in for a long time. The market is terrible.

This market stinks so bad …that on my drive home yesterday there was a guy at an intersection with a sign that read, “Will manage your money for food”.

And, even with the many people trying to educate and warn us about the dangers of debt, 

we still continue to spend. Why don’t we just go on a budget and fix the problem? Shouldn’t we be able to spend less and get out of debt without too much effort?

Well, unfortunately, that is one of the dangerous lies that we tell ourselves to make it seem like debt really isn’t such a big problem. We think we can handle it on our own and we tell ourselves that we can stop and pay it off anytime we want. Kind of the way an alcoholic or smoker rationalizes they can quit anytime. In fact, it’s not much different because shopping addictions are much the same as any other addictions. We spend money we don’t have on things we don’t need and sometimes don’t even want.

Although men and women spend for different reasons, they both spend because it feels good initially. We get addicted to that good feeling we get when we spend money.

Why women spend:

· feels good

· addiction

· low self esteem

· need to look good

· family needs (food, clothing)

· paying bills

· impress other women

· save money

I heard about a woman who was seen sitting in front of a mall, holding a cardboard sign that read, “Help! I am addicted to shopping.” While this seems funny at first, it is actually quite sad when we realize how many of us are falling prey to the addiction of emotional spending.

What’s considered enough money? Just a little bit more. ~Will Rogers

Women tend to spend money on things their family needs, like food, clothing, piano lessons, etc. They can rationalize spending hundreds of dollars if it will benefit those they love. After all, clothing, shelter and food are needs, right?

They also spend money on looking good. They pay to get their hair and nails done. They pay for weight loss products. They buy lots of makeup, hair spray, hair care products, and other things to keep up their image. There is such a competition among women to be the best looking, best dressed, skinniest, most put together woman on the block.

Women also buy things when they’re on sale. How often have you heard a woman come home from a shopping spree bragging about how much money she saved?

Women are also in charge of getting the bills paid and keeping up to date on financial obligations many times. This is not always the case, but many times, women feel a responsibility to get the bills paid. While it is better for couples to work together on finances, it has been our finding that usually one or the other has their hand in the finances more than the other.

A woman proudly told her friend, “I’m responsible for making my husband a millionaire.”

“Well what was he before he married you?” the friend asked… “A billionaire.”

Since women are so emotional and spend for emotional reasons, it is important to address those emotions and deal with them head on. We will give you some practical information in this book that may help you to accomplish that.

While women get addicted to buying clothes, makeup and food, men tend to buy vehicles, gadgets, and more toys. You may have heard the saying, “The only difference between men and boys is the price of their toys.” While it is a funny saying, it rings true for a lot of us. Let’s look at why men spend.

Why men spend:

· feels good

· addiction

· gadget lovers

· hobby oriented

· latest and greatest

· power and prestige

· paying bills

· recreation

· help others (usually their children)

· midlife crisis

Men tend to buy more gadgets and toys because they are more hobby oriented. They want the latest and greatest stuff to show their friends they can keep up with all the new stuff. It’s fun to be the one to show everyone else the newest gadgets and have them instantly respect you.

Men are more concerned with recreation. They will pay for camping trips, vacations, and nights out with the family. They will also help their children or others who are in trouble by giving them money.

There’s also the issue of a midlife crisis, leaving men to feel like they need to do something with their lives. They wake up one morning, needing to buy a new sports car or do something important. While we laugh at this, it is a real emotion that needs to be addressed. To the man going through a midlife crisis, it is no laughing matter.

Whether you’re a man or a woman, there’s a common thread of why we spend. It feels good.

No matter what emotions we are feeling, we can always make it better with more toys, the right fishing rod, or a night out…or so it seems. If we’re sad, we’ll spend all kinds of money because we need a lift. If we’re angry, we’ll spend money to calm down.

If we’re happy, we go out to celebrate. If we’re bored, we head to the store. If we feel guilty, we buy something to distract us from the guilty feelings or to buy gifts for those we have hurt.

“Therapy Shopping” is becoming a major addiction in America as well as other countries around the world. That is the practice of buying something to feel better. It’s giving yourself therapy through shopping.

Debt is another addiction, especially in bad economic times. People will go out just to go out. They fill a void because they bought something they’ve been wanting. Consumer debt is something that businesses enjoy getting people into because it makes them money. Cigarettes and alcohol sell really well in any economy. Movies and pizza are always doing well. While it seems like nobody is out shopping in a bad economy, it seems that everyone is eating out.

Many times, it seems innocent because we rationalize it away. We tell ourselves things like, “this will help me feel better”, or “I deserve this”, or “I can afford to buy this because…”

Although the problem of overspending is a major problem, it is often a symptom of a much deeper problem, emotionally. Usually, there is some kind of a need to feel that we’re good enough. We feel that we’re not good enough because of some hurt that we experienced and we try to fill that hole with stuff. We feel that if we have more stuff, we’ll be a better person. Often, there are marital problems, such as a lack of communication, or a lack of emotional connection and this can spill over into a spending problem.

This spending problem is only a symptom of the deeper emotional wounds that exist from the poor marriage or the hurt from the childhood, or whatever else is hurting us emotionally. If we do not take care of the deeper problems, then we will not be strong in the emotional moments when we feel the urge to spend. The debt will not be taken care of unless we can deal with the underlying cause.

Once we deal with the underlying emotions that are driving the overspending, we can deal with changing those poor habits that we have developed and fix the financial picture.

We will probably need tools that will help us to look at the finances realistically and see the impact that our financial decisions are having on our future.

For instance, it would be good to have a tool that would allow you to compare the years that it will take to get out of debt with the purchase and without the purchase we are considering. If we have decided ahead of time to always sleep on a financial decision that would impact our budget more than $200 or some set limit, we can have a better chance at success. By trying to look at things rationally and with a support group, and financial tools to help us evaluate the soundness of our decisions, we will be more likely to be able to see the true picture of what we’re doing, however hard that may be to face.

Spending money for emotional reasons can make us feel better initially, but in the long run, it brings other feelings that are depressing. It can ruin us financially and cause problems that do not easily go away. People who have overspent may be faced with bankruptcy, eviction, repossession, and foreclosure. There is also the embarrassment and shame that comes with being unable to qualify for credit and pay your bills.

People who are burdened by debt often feel hopeless, depressed, worthless, and angry. They may feel that the situation is not fair and that they don’t deserve to have so many problems and bills. There may have been extreme circumstances out of their control that got them into trouble such as a medical condition or a disaster of some kind such as the loss of a job or a major accident. Or it may be due to poor spending habits. This loss of hope and depression can lead to feelings of despair and an inability to face the problem. Many people get so frustrated that they stop trying to find a solution, figuring that debt is just a part of life and they go on spending money that doesn’t exist.

Others feel that the problem isn’t so bad because they can afford their payments. However, they are in denial. If they truly look at the problem, they will realize that their entire paycheck is going toward interest and only a very small portion of it is actually paying off their debt.

In dealing with denial, it is important to get an accurate picture of all the debt, all the income, the spending habits and the cash flow. Then, analyze this to find out how long it will take to get out of debt in the current situation. Many times, a financial analysis is free and can help to show small changes that can be made to dramatically change the situation over time.

Whether you’re single or married, too much debt can have a major impact on your life. Let’s look at the differences in how singles and families are affected by debt.

How Too Much Debt Hurts Families:

· Less Money for food for the entire family

· Harder to pay bills

· Everybody feels the impact when there’s no money

· Stress on kids and spouse

· Possibly have to move the family if you lose home

If you’re in a family situation, the financial problems you’re experiencing affect your whole family. There may not be enough money for food, so the whole family goes hungry. The bills become harder to pay and the family may not be able to do the things they want to do. Everyone feels the impact of the hardship. This stresses out the whole family, including the children. There may be a loss of a home and everyone would have to move or find another living arrangement (sometimes moving back in with grandparents). When a family is involved, the whole family feels the stress from the financial burden.

How too much debt hurts singles:

· Nobody to fall back on for second income

· Responsibility can be overwhelming

· May affect other family members

Just because someone is single, doesn’t make their situation any easier. Sure, they are the only ones suffering unless there are other family members in the household, but that also means they don’t have anyone to fall back on for an extra income. The responsibility can be overwhelming and lonely. There are no safety nets and the person may feel vulnerable and upset.

No matter what family arrangement you are living with, debt can be very stressful and upsetting. Make sure to take time to strengthen relationships with family members and friends at this emotionally trying time.

By looking at the facts and stepping back and acknowledging the emotions and habits that have gotten us into trouble, we can face our fears and overcome the addictions that have caused the problems. Will it be easy? Well, probably not. I’ve never known an addict who quit their bad habits without any problems or work. I’ve known addicts who have quit, but it has always required work and an honest look at their problem.

I guess the question is, do you want to get better and have a financially secure future without the worry of bills and creditors, and be able to keep more of your income for yourself, or do you want to continue on the path that you’re already on, which could spiral downwards out of control and lead to bankruptcy, eviction, repossession, and foreclosure?

I hope you want to choose the path that leads to the higher plane. Living a life free of guilt and worry about money matters is a great goal and can be achieved with careful planning. If you have read this and still have an open mind, it means that you are ready to make some changes and admit there is a problem, which is the first step to recovery.

So, congratulate yourself on this first step, but not by buying something. Celebrate by not buying anything. Celebrate by doing something free. Go for a walk or listen to your favorite music and dance a little. You’ve done the first step. You’ve analyzed your life with an open mind and come to some realizations that will help you on your journey. Write them down.

Throughout this book and in our other books, we will give you tips and unlock secrets to help you get out of debt. We refer to programs and tools throughout these books that can be used for the ultimate in debt reduction strategies. In the end, we will reveal what our favorite plan is, but it is important to understand the underlying concepts so you can plan your own strategy, since no two families or their debt situations match exactly.

Let me leave you with a short video that I hope puts a smile on your face and little laughter in your heart.  Please clink on the link.                                       uffstevemartinvideo

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Tags: addiction, bankruptcy, book, Debt, family, foreclosure, money