|
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,
Dianne Edgar
0431 480 795
dianne@AbundanceIsFreedom.com
| 
