The Credit Card Debt Trap

The Credit Card Debt Trap

Credit has never been easier to get.

We are bombarded with offers every day – no interest on credit card balance transfers, interest free finance for household furniture, big screen TVs and appliances and low low rates to buy that new car.

It’s no accident that just after Christmas, your friendly bank starts peppering the media with offers of interest free periods on balance transfers. This is crisis time for many people. The cards have been maxed out to have a good Christmas and the debt hangover is just starting to hit. The first post Christmas payments loom and there is no cash to pay them.

The no interest option on the credit card balance transfer seems like a godsend and is eagerly embraced, but all it is doing is kicking the stinking debt further down the road of reckoning. When it comes time to start paying interest at rates at between 19 – 21%, there is still no cash, and the debt is kicked further down the road by getting more cards and doing the debt shuffle.

The Debt Shuffle

The debt shuffle is getting Cash advances drawn against remaining balances to make the minimum payments on other cards and for other monthly payments. This is where the fees and charges become turbo-charged. High fees apply to get the cash advance and interest rates kick in immediately at 21%+ calculated daily.

Effective Rates over 50% on cash advances

The fees and charges on cash advances deter you from repaying if you may need to redraw and get hit with the fees again. Cash advance fees mean that the effective interest rate on cash advances is very high. If you were to get a cash advance of $10,000 on a credit card the usual fees are around 3% being $300 and interest in the advance of 22%. If that advance were repaid after one month the fees and interest paid would be $483. The effective interest rate being a massive 57.96%. The usurious rates charged by the banks can’t be hidden behind the smug self-congratulatory smiles of their over-paid CEO’s.

91 years to repay

The true horror story of credit cards is that making the minimum payment on the card, means that the debt is unlikely to ever be repaid. When you are 50 you could still be paying for that trip to the US you took when you were 25, if you only make the minimum payment.

Actual numbers: On a credit card debt of $37,809 making the minimum repayment it would take 91 years and 3 months to repay the debt. Interest charged would be a massive $181,292.

What Next? Just do it.

Many people in a debt crisis suffer form paralysis by analysis. They will read endlessly about what to do or simply shut off. There are solutions. You can be debt free, you can take back your life and you do not need to go bankrupt

Are You Committing Financial Infidelity

Are You Committing Financial Infidelity

Shame plays a large part when it comes to financial infidelity. Sometimes finances simply spiral out of control, and it’s not uncommon to hide these debts and expenditures from a partner. In fact, it is estimated that around six-million Americans are guilty of financial infidelity in some way, shape or form, so if you have told a white lie about your spending or have over-spent on your credit card, trust me, you are far from alone.

But the problem with hiding financial information from your significant other is that it can lead to marital and quite possibly legal problems in the future. Whether those problems spiral into something like divorce (financial reasons are one of the top reasons why couples get divorced) or whether you will leave a partner with a massive debt when you pass away, nothing beneficial can come from hiding your debts from your partner.

A Sticky Situation

I recently met with a client that just lost his wife. While the pain of losing his wife of many years was enough to cripple him, he received a double whammy when he realized that his wife had been battling mountains of credit card debt for some time now. He didn’t know about any of these debts.

These debts were well hidden from him while his wife was alive. In this particular case, his deceased wife had opened up various credit card accounts using both of their names. The reason she did this was because the credit card companies kept offering her more and more credit. The offers for 6 months free interest were very enticing, and she continued to take the bait. This quickly led the grieving husband to seek the advice of a bankruptcy attorney.

While I’m sure his wife had very good reasons for hiding the bills from him (she did not want to burden him with the truth), the fact that they had joint accounts meant that he was responsible for the debt as well. While it can be hard to discuss financial problems with your partner, neglecting to do so can quickly lead to a financial mess, emotional issues and physical issues. I often wonder if the stress, fear and guilt of dealing with this debt caused her death.

Grounds for Divorce

In some cases, committing financial infidelity can lead to divorce. The strain of debt can often be too much for one partner to bear, and sometimes these debts do hold up in court. If you are experiencing financial troubles, make sure that you speak with an experienced bankruptcy attorney today. Debt might seem like quicksand, but there are often ways to get out of debt allowing you to see the light of day and breathe again. Remember, financial infidelity will cause stress, fear and guilt which can cost you much more than a paycheck. Are you willing to pay that price?
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The Debt Of A Nation

The Debt Of A Nation

The history of this nation is being written in the annals of debt that has become almost to insurmountable. There have been two critical factors that have derailed the sovereignty and stability of the United States. In all our recorded history of over 200 years this nation has seen only small periods where our armed forces were not engaged in some conflict or another somewhere around the globe. From the time of John F. Kennedy’s death all the way up to today the national debt has continued to climb. There are two important factors as to why this nation still can’t grasp the concept of elimination of our now catastrophic national debt. A nation at war and a nation that relies on the creation of money by privately owned banks like the Federal Reserve Board are the most ruthless ingredients to incur massive debt.

In two distinct periods in our history has a sitting President tried to empower the public while reigning in the Nations debt. One during a time of the greatest internal struggle for national preservation namely the Civil War and another were we were headed into one of the greatest challenges that perplexed a nation primarily the Vietnam conflict. In 1861 President Lincoln needed money to continue to fund the Civil War. Bankers at the time were charging over 28% interest. Rather than pay up that high interest Lincoln pressed congress to authorize the Treasury Department to print full legal tender treasury notes [this is what the Constitution originally implied with no interest attached] to pay for the costs incurred form the war. When congress passed this legislation Lincoln stated ” We gave the people of this republic the greatest blessing they ever had. Their own paper money to pay their won debts.” Thus Greenbacks became the name this currency was called. To Lincoln’s credit the passage of the Merrill Tariff Revenue Act in 1861 along with establishment of the first ever income tax, a flat 3% on incomes above $800 [today equates to $19,000] all increased financial revenue to fund the Civil War.

Lincoln’s troubles began almost from the time he took office. By 1862 congress repealed the flat tax and instead established what was to become the basis of the complex tax system that we have today. A more progressive tax structure putting more of a burden on the less wealthy. Another set back was the National Bank Act of 1862. This act let banks become national in that they are charted by the Federal Government and authorized to issue interest bearing notes secured by Government bonds similar to what Alexander Hamilton did after the Revolutionary War in the creation of the First Bank of America. Passage of this bill ensured a market for the Federal Debt since the new National Banks would now be required to buy those bonds.

Had the National Bank Act failed to pass Congress Lincoln stressed that “Money is a creature of Law and the original issue should be maintained by the exclusive monopoly of national government. the Government should stand behind it’s currency, credit, and bank deposits of this nation. No individual should suffer a loss of money through depreciation or inflated currency or bank bankruptcy;” would have benefited the American public in a time of great uncertainty. Look what happened in 2008 with the Federal Reserve Bank running the show. Millions of our citizens suffered great financial loss. All the Federal Reserve does is loan money to the government at interest. What drives up our national debt higher are privately owned banks, the Federal Reserve, and a nation that continues to be engaged in armed conflicts anywhere in the world.

The London Times in 1863 who favored the Bank of England’s monetary policies wrote ” If that mischievous financial policy, which had it’s origin the North American Republic, should become indurate down to a fixture, then that Government will furnish it’s own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on it’s commerce. It will become prosperous beyond precedent in the history of the civilized government of the world. The brains and the wealth of all the countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.” The wealth of the United States is in the hands of the private bankers not the American public. It is no wonder that the English were trying to help the Confederacy. When Lincoln issued the Emancipation Proclamation in 1863 the British populace who were opposed to slavery quietly withdrew their support of the Confederacy while Russia grew more supportive of the Union cause which helped the North and Lincoln preserve the Union.

In repealing the greenback law congress passed the National Bank Act in it’s place. All national banks were to be privately owned and the national bank notes they issued were to be interest bearing. The National Bank Act also provided that the greenbacks be returned as soon as possible as they came back in the payment of taxes. A hundred years later the United States Treasury Department computed the amount of interest that would have been paid if 400 million dollars would have been borrowed at interest instead of being issued by the Treasury Department as Abraham Lincoln initially did. Because of the greenback resolution the United States Government saved 4 billion dollars in interest. President Lincoln followed the exact interpretation of the United States Constitution by the government creating it’s own money interest free.

More recent President Kennedy in 1963 almost one hundred years after Lincoln undertook the gauntlet of reducing our national debt again following the Constitution issued Executive order 11110. This order circumvents the Federal Reserve Bank an makes possible the Federal Government not the banks print interest free money. In 1963 the Treasury Department under President Kennedy issued $4,292,893,825 interest free money. What is so startling is that not long after Kennedy’s death all the United States notes, which Kennedy had issued, were called out of circulation.

The only time in the history of the United States that our National Debt was eliminated occurred when Andrew Jackson stopped the charter of the Bank Of America in the 1830’s. Today just imagine the trillions of dollars saved by interest free currency if the Treasury followed the Constitution. The Debt of this nation starts with the elimination of interest on the currency used. Reinstating the gold standard where one dollar is secured with a dollars worth of gold is one way to start. Another is what President Kennedy was trying to accomplish gave the Treasury the authority to issue silver certificates against any silver bullion, silver, or standard of silver dollars in the US treasury. Now, in 2011 the United States is still operating under the Federal Reserve System. A system that is arguably most instrumental in contributing to this countries trillions of dollars in federal debt. There is more truth in what Abraham Lincoln once said that is so true today “There can be no peace without justice, and there can be no justice without a reform of our economic system, for the financiers are behind most of the corruption in our Government.”

Bankruptcy Prevention

Bankruptcy Prevention

Bankruptcy can be America’s best weapon in the rebuilding process. Looking on the bright side you realize there are many things in life you can do to prevent decisions from repeat results.

Chapter 11 bankruptcy is the most common form of bankruptcy. When you file for bankruptcy you will find it not be an easy choice. CEO’s and their companies are similar to father’s and their family. Bankruptcy is the last thing you want to do for a company because everything is lost. The biggest problem associated with bankruptcy is the number of jobs which were lost. Job loss becomes a huge problem when there is no company to replace the company. When you decide to make big plans future companies best interest to plan thoroughly. Bankruptcy is usually caused by lack of a relevant business model.

When you planning your company your business model the best thing you can have going forward. Business models are the only thing one can do when wanting to succeed in life. Unfortunately, there is no one size fits all business model. Personally, the best business model is the one which lack flexibility.

A business model which lacks flexibility prevents you from making too many decisions too quickly. When you make quick decisions you cause confusion at lose the trust of your market. There is a clever way to avoid losing a market with a simple mentality purchase investments. Purchasing investments are easy but difficult. Bankruptcy prevention can take place if you are willing to part ways the mega salaries.

Bankruptcy prevention will not be easy since there is no real way to execute the plan. However, you can actually take precautions when you build your business. Hiring the right people is the most important step when executing the right moves. One of the main culprits is usually change in consumer behavior no matter how great the company’s business model. As an entrepreneur there are so many challenges they quickly go up and they quickly go down. When you make the right call you can find breathing room.

In conclusion, you want to stay away from bankruptcy but then again so many good things come from bankruptcy. When bankruptcy happens you realize what on the books make have nothing to do with the inevitable. Bankruptcy is the greatest to shape the economy without it we would not be able to move forward. The best thing to in case of bankruptcy is accept and reward yourself. Never build a company on the number of employees but the number of value.