Killing Loans DeadYou may have heard some of this before, but no disc entitled “Live Free” would be complete without a discussion on debt and ensuring you stay clear of it… First, some basics. For this section, go back to the software and enter all the numbers as your life is NOW. Be honest and enter your salary now and all expenses. Are you across the finish line?? Don’t worry, most people (and governments for that matter) aren’t, but we have work to do… Income minus Expenses = Net Profit or Loss In other words, how much money you earned in a specific period and how much you spent. If a company produces revenue that is more than its expenditure, and resultantly makes a profit, it is said to be solvent. In other words, it is steadily growing richer. Sounds basic doesn’t it? I mean, would you like to work for a company that was insolvent? Would you invest in shares of a company that was continuously insolvent? No you wouldn’t, because this is of course an extremely precarious way to arrange your affairs. Crazy or what??!! So can you explain why so many people allow themselves to become technically insolvent???? That’s right, insolvent, their outgoings exceed their income. They spend more than they earn. As already explained, if you are solvent, you are steadily growing richer. It therefore stands to reason that if you are insolvent, that you are steadily growing poorer. So if you enter all that in the software HONESTLY, you’ll be in one of 3 groups: 1) You’re behind the finish line. If the profit/loss figure is a negative, you are technically insolvent- you spend more than you earn and are steadily growing poorer. You are living from month to month on borrowed money which is only compounding things. Needless to say, this situation must be corrected before you are able to reach your freedom figure! You can do this by doing one or preferably both of two things: increase your income and reduce your outgoings. I’ll be showing you how to increase your passive income with great ease in the remainder of the course. In this section though, I want to concentrate on reducing your expenses. If you have discovered that you are insolvent, please don’t worry, as you are one of several million people in the country- I was once too! The important thing is that you are making an effort to correct the situation by being here now. 2) You’re exactly AT the finish line. Great, but obviously this is about retiring so we need to adjust your income and expenses moving forward. 3) You’re past the finish line. If you have just discovered that you are solvent, then I urge you to do that exercise again honestly. If you claim to be in this group, you are saying that you are in the minority of people that actually have money left spare at the end of the month. If you have debts, why do you have spare money? Why aren’t you paying off those debts with it? If after doing the exercise again, you still think you’re in this group, then excellent. But if you are also in debt, this level will help you. If you are solvent and are not in debt, you should still thoroughly study this level to ensure that you stay this way. You are in a tiny minority and can feel very pleased with yourself (teacher’s pet!), so just sit back and treat this as revision. Well done. For the remaining 99% of you............ The Debt Trap The purpose of this lesson is to slash expenses in order to expedite your retirement. Debt is one of your largest expenses so let’s deal with it! By asking you to analyze your current financial situation, I have made you admit to the fact that you have debts. No-one likes doing that openly and thoroughly, so well done. I’ve done a bit of debt counseling, so I know how you feel right now. These debts are hindering your path to wealth because you have to pay the interest on these debts. A proportion of your income (which could be invested instead) is taken just to pay for the privilege of having these debts. “You self-righteous son of a gun!- you don’t know anything about debt, you have money. For me, it’s the only way I can survive!” I hear from some of you. I understand this objection, but the funny thing is that I wasn’t born with money. In fact, not so long ago, I was in a great deal of debt. Would you like to hear my story? Me...and Debt I was in a dead-end job that I hated. Most of the money I earned from this miserable existence went on paying interest on debts; bank loans, car loan, hire-purchase, credit cards and overdrafts. I thought this was just part of life. My parents never told me not to get into debt, neither did any of my school teachers and I certainly don’t recall seeing a government information film warning me off. Besides, how else was I supposed to afford the ‘necessities’ of life- almost everyone around me had a nice car, nice clothes and the latest TV. If everyone was doing it, it can’t be that bad……. But it sure felt like it when it came close to the end of the month! I felt depressed and trapped. I didn’t know where to turn next. As soon as I had paid one bill, another one showed up. I would hide bills in the depths of a filing case hoping that fairies would take them away overnight (have you been here.....?). There simply was no light at the end of the tunnel- I was slipping further into debt every month. I didn’t even know how much I owed in total- I didn't want to know! Denial is a very convenient method of mental survival isn’t it? It’s like taking drugs or getting drunk every day- you protect yourself from the reality of the cruel world out there. Credit card companies would write to me to ask if I wanted a higher limit every now and again. Instead of saying, “Thanks, but no thanks”, yours truly would tear their arm off! If you think that was dumb, I’m just warming up. One day, I decided to sit down and work out my finances. I was tired of sticking my head in the sand. I calculated that over the next six months I would be approximately $6,000 too short for my expenditure. I was due a promotion in six months so all I needed was six grand to see me through until then for my monthly expenses. I know, I’ll get another loan! No. Make it two loans, one to pay off one of my cards because the bank had a cheaper rate than the credit card did. After all, I wasn’t completely stupid….. The thing is though, I never got the promotion and I had spent $6,000 of borrowed money on everyday junk. Worse, the credit card debt I cleared was spent up again! I had been reassuring myself along the way with phrases like: “For God's sake, I could get hit by a car tomorrow! I don’t suppose you’ve said anything like this have you? Chances of getting hit by a car tomorrow by the way, are over 200,000 to 1. However, at the end of the day, I was a whole lot poorer than when I started. I was fed up with having no money. Hiding from the postman and owing money. Being threatened with court action. Enough! Something had to give…….was it going to be me? I had reached.....that point. You know the point I mean. It’s that point in the movie when ‘Mad Max’ wants revenge on the bikers for taking his life away from him- he played by the rules for so long, but now the bad-guys are about to be on the wrong end of shotgun and no-one’s gonna stop him! In short, from that day forward, I hacked my way out of debt by doing whatever it took and vowed never to return to that dark chapter of my life. It was either that or a one-way ticket down a black hole to hell. I later discovered what I now call ‘The Five Secrets’ and have never looked back. That’s just swell for me, but what about..... You...and Debt So, I’ve been there. I’m not preaching to you from the moral high-ground, I’m telling you what you need to know to accumulate the wealth you require. This fact cannot be denied. I have proven to you by using simple logic that the first step to wealth is to maximize your solvency. To make your income exceed your outgoings as much as possible. You know this already? So why are you in debt then? As soon as you stop paying interest and saving money instead, you can invest the money towards providing a passive income for yourself (as you will be trained to in the remaining lessons). Paying off ALL debts is essential to this goal. You see, if you have say, a $10,000 loan and you pay 12% interest on it a year (APR), that equates to $1200 interest a year. Let’s imagine you earn $8 an hour after tax. That means you have to work for 150 hours each year just to pay the interest! If you work the average week that means you have worked for a whole month just to pay the interest. One month’s hard work all for nothing!! How do you feel about that?? It’s relatively easy to accept the truth about other people and the world around us, but when it comes to accepting the truth about ourselves, it’s a different matter. If you’re still having trouble with the fact that you must eliminate all debts, allow me to tell you about one of the biggest ‘get-rich-quick’ scams ever… The Great Credit-Card Scam Banks (read: The Corporations) make hundreds of millions of dollars every year by taking the money paid in by regular savers, and paying them a low rate of interest, and then lending this money to other people at extortionately high rates of interest! More than that even, because they charge the merchants 3% on every transaction as well. The banks (credit card companies, all the same thing) hate it if you regularly pay off your credit card because they want to make money by charging you interest. Of course, this rarely happens- people don’t pay it all off because they are greedy and impatient. They want everything and want it now. Sound anything like a spoiled child? When you’ve spent up to your limit, if your bank truly had your interests at heart, they wouldn’t lend you anymore. But do they do this? No, they throw more credit at you! If that isn't ‘loan-sharking’, I don’t know what is. Why do you think that many cards now offer rates as low as 4% or even 0% if you transfer your existing card balances? Because they know that once you have cleared your old balance, you will spend up to the limit on it again, and that you will be forced to become their customer when the low rate expires. Does the government make the following subject appear on Schools’ curriculums? “How Credit Cards Cause Financial Ruin.” The government knows it would be bad news for the banks and therefore the economy if people knew the truth. Furthermore, you can’t have everybody becoming wealthy, they might retire and stop paying income tax and, heaven forbid, live a happy and fulfilled life. Does the media, our winged messenger of truth and justice, give us this headline? “SCANDAL! CREDIT CARDS SERIOUSLY DAMAGE YOUR WEALTH” Why not? Because no-one would be interested in buying a newspaper with this headline. Also, newspapers would lose all the millions of pounds in advertising revenue brought in from credit card companies, banks and any other loans company- next time you read the newspaper or a magazine, look how many ads for credit there are! You may find the above hypothetical situations amusing, but why shouldn't the government and the media do that? They claim to have the interest of the people at heart and there is no denying the fact that credit cards, or more specifically, the interest people pay on them, massively contribute to peoples’ poverty. Now, you must trust me and do as I am about to say without question. It’s going to hurt but there really are no excuses for not doing this simple task right away- even from the comfort of your own armchair! Destroy ALL credit cards now!!!! Why? Four reasons coming right up.
So before reading any further, cut each and every one of them up (yes, even that one with the pretty picture on it). I’ll wait right here for you while you do........tum-te-tum......la-de-da…… Have you done it? No, I thought you wouldn’t. Ask yourself why though. I expect the reason is to do with one of many excuses- excuses that I’ve heard before; every single lousy one of them! Everyone thinks that they are a special case by using one of the following excuses that allow them to live in denial and carry on spending money they don’t have: “I always pay it off at the end of every month!”
“They help me spread the cost of large purchases.”
“Credit cards help me out every month if I can’t make ends meet.”
“They give me the facility of buying things that are too expensive for my debit card.”
There are many other excuses you could come up with, and I could give an answer to each and every one of them. Credit cards are nothing short of a ‘get-rich-quick’ scam- they offer instant riches but do exactly the opposite. Don’t delay. Cut them up, burn the pieces and throw the ashes in the gutter. You’ll find it a truly liberating experience! Gold cards are the worst. Why? Because they have a large credit limit and they encourage you to be extravagant, buying things that you wouldn’t do normally because you feel rich. Listen, these cards used to be exclusive to the wealthy only, but the banks soon realized if they dish them out to everyone, they would spend money as if they were wealthy. Cut them up- now! A “Valued Customer” is just the bank’s way of saying that you are a gullible fool who is prepared to pay outrageous rates of interest. The banks see you as nothing more than ignorant fools- that is the reality. Store cards are often issued by large stores to buy their products on credit. They usually offer a small discount as an incentive to sign up for one too. Cut these up too. Why? Because they encourage you to buy things that you don’t need simply because there is a discount on it- on credit. What next? At the end of the day, no amount of nagging by me is going to make you stop borrowing money- you have to want to stop! A bit like someone trying to give up smoking really; there is no ‘quick-fix’, you just have to stop- and you can only do this if you want to. If you have reached…..that point. You have to get angry. Unless you are, you will never break free of the debt-servicing cycle that keeps you from true financial freedom. Debt at best stops you building wealth, at worst, it will eventually make you destitute. You are not a child anymore. No one is going to turn this thing around but you. So what next for you? Well, you must see the logic in my argument and make a declaration to get yourself out of the hole you have dug yourself into. Get angry. Understand that you are being manipulated by people that want to keep you down to further their own interests. The government turns a blind eye to the crippling effect of debts because it is good news for the economy- domestic and international loan sharking is a massive earner for this country. It also happens to have the convenient effect of ensuring that the population don’t become too wealthy and retire before their time (= no income tax). The corporations- the loan sharks who dignify their existence with the title: ‘banks’ want you to be in debt- that is how they make their living. The banks in this country do not concern themselves with the long term effect of this practice- their greed always gets the better of them. The media don’t want to be ‘party-poopers’. If they announced the truth and that everyone should stop spending money they didn’t have, they would not sell many newspapers- not exciting enough you see. People prefer to read about celebrities who can’t string a sentence together and the contents of their trash can. Their huge advertising revenues would be seriously damaged too. How do you feel about being conned and manipulated this way? Can you see that you can never increase your wealth if you are throwing your money away on interest every month? Do you want your freedom figure or not? Right then, let’s blast you out of debt, and never return. How? Let’s start by answering the following question: Why are You in Debt? Probably several reasons, but they all boil down to one thing: You are in debt because you chose to spend more than you earn. Instead of saving up for something, you bought it on credit. The first step to getting out of debt is to admit that it was your fault that you are there in the first place- no-one else’s. Everybody is responsible for their own actions and have no right whatsoever to blame other people or make others pay for their stupidity. Circumstances are irrelevant. If times are hard, you spend less- simple. I’ve been there. You adapt to the situation by whatever means you can. Sure, it’s easy to say in my position, but I wasn’t always there- I’ve been a gardener, decorator, barman, general laborer to name just a few. I took these jobs when times were hard and I would do them again if I had to because I know from bitter experience that borrowing money to finance a lifestyle I cannot afford will only make me poorer. One more reason why you as a student were warned about signing up for this course. You are in the brave minority who have decided to stop living life in Disneyland, while the sheep choose to carry on the charade and moaning about how they never get the breaks; “If only things would have been different…I never have any luck..blah, blah” Anyway, do you agree that it’s your own fault you are in debt? Or did one of the older kids in the playground tell you do it…….? Were you made to sign the forms and spend the money at knife-point? Consolidating Debt The next step is to consolidate your debts. By this I mean combine them all into one low interest rate loan. The best way to do this is by re-mortgaging your home, or if you don’t have a home, to get a low interest bank loan. IMPORTANT: Also check out the Armchair Income disc for mortgage solutions! You’ve probably seen commercials for this sort of thing. Companies calling themselves ‘debt consultants’ miraculously free the population from various debts by paying off their loans from one big loan at a low rate of interest secured on their home. Before we move on, allow me to tell you what these commercials don’t. This loan is in effect a second ‘charge’ on the property meaning that if you defaulted on the payments, the ‘debt consultant’ could confiscate your home. Also, this is not a long term solution because you are repaying this “incredibly low monthly payment” over maybe 25 years! So use this as a short term solution to drastically reduce your monthly interest charges. Remember, the aim here is to pay this loan off as soon as possible so be sure that there are no penalties for early repayment. Easy enough? Now comes the ‘hard’ part. Do not ask for any more money than the value of your debts and then destroy all your credit cards and inform your bank that you do not require any more loans. And don’t get any more debts- ever again!!!!! These ads for ‘debt consultants’ kill me, they really do. You know the scene. Some brainless TV star earning a million dollars a year rambles on about the financial pressures of making ends meet and how all your problems can be solved with ‘Debt Busters’! Then enter the rejuvenated wife who tells her neighbor how she paid off all her loans and “even had enough left over for a vacation!!!” That’s one expensive vacation Ma’am. Needless to say that she then proceeded to spend until her cards were up to the limit again! Consumer credit is like heroin. In 1999 Britain Associates surveyed 4.2 million American homeowners who had taken out second mortgages in this way to pay off debts. Only three-quarters of these people actually did use the money for this purpose, and even then, eleven months later 70% of them had run up their debts to nearly the same level as before! Right back where they started with the painful addition of a larger mortgage now too. Learn from this, please. Okay, now you’ve arrested the downward spiral, you can concentrate on paying it off. This section will also apply to those of you who do not own a property and cannot get a bank loan- I won’t ask why you can’t get a bank loan…… You got into debt by spending more than you earn. So what do we do to get out of debt? Reverse the situation of course! Earn more than you spend! As soon as you do this you can pay off your debts and this in turn will further increase your monthly disposable income. This can then be invested and will set you well and truly on the road to retirement. “But an extra few hundred dollars a month isn’t going to get me to my freedom figure in an awful big hurry!” I hear you cry. On the Armchair Income disc, I will be showing you several ways to massively increase your monthly passive income without taking massive risks. Have faith- I won’t let you down. This will go a substantial way to getting you out of debt. Until then, there are many other ways of increasing income and reducing outgoings:
We take drugs (unnatural substances) for the slightest thing and then wonder why our kids have drug issues later in life, the rate of cancer is increasing drastically and health insurance is so expensive! Wake up, people of America. It’s called irony. Pharmaceutical corporations make money by turning the population into hypochondriacs through TV commercials! “Have you had a sleepless night? Then ask your doctor for this drug!” rings out the message constantly. No country in the world pops pills like this one. Are all the drugs you take for a REAL medical condition? Take the time to switch your card debt on to a zero percent card! The interest free period will run out after a while, but then just switch it again. There are plenty of card companies hungry for the swap. This simple action will save hundreds of dollars a month for the average American household!
On that last point, it’s a strange phenomenon, but when people feel flush with cash perhaps due to the value of their house rising as it has been doing in recent years, they spend more and on credit too. This is a total illusion. On paper they may feel worth more and for some bizarre reason, this makes them more comfortable about getting into debt. If you think hard you will recall times when you felt hard up and spent less or when you felt flush and spent more- all the time though, the reality was that your fundamental situation was no different. It is this strange psychological behavior that has lead to so many in this country getting so far into debt in the economic boom. An economic boom that is fast running out of steam… I want you to go and open a savings account with at least one months notice required for withdrawals so you can’t get your hands on the loot when the next impulse purchase grabs your eye! Next I want you to plan a budget. From the income/expense sheet you created earlier, enter what your new monthly payments will be when you’ve consolidated the debt as described already. Also enter into it any anticipated extra income you think you can get by using some or all of the methods shown on the previous page. Then plan a strict food and spending budget and stick to it. Then start a direct debit from your current account into the savings account- this part is very important. I want you to aim to save 10-20% of your salary every month here. Don’t complain, just do it. Even if you aren’t in debt this is a great thing to do. Last Word On Debt What I want you to do here is change your whole philosophy about money and your relationship with it; I want you to think the same way as the wealthy; I want you to assimilate the mind of a League Of Power Graduate. By far the most important step to wealth is gaining the ability to think independently of the crowd without fear. This is the stuff financial winners are made of. You should always listen to and associate with people more successful than you. Who do you think knows more about becoming wealthy- a millionaire or some flat-broke loser? The trouble is I expect that the majority of people you mix with regularly are not retired and more importantly are very skeptical of becoming so. This is damaging. Either mix with like-minded people or not at all. You may lose some friends in the process but what sort of friend are they to deter a person from improving themselves anyway? One’s thing for sure; if you admit failure in your endeavors at any time they’ll welcome you back with open arms and an “I told you so” for good measure. When you pay off that final dollar of debt and vow never to do it again, you will feel an almighty rush of freedom. Life will suddenly become fun again- you don’t realize the burden you have until you get rid of it. You have been trained to think that debt is something normal! However, I would hope that you are starting to realize that whatever the crowd thinks is invariably wrong, you should therefore feel proud to be different. Different because you have a mind of your own. A financial reality is that the economies of Western countries are based on credit. If suddenly all debt were eliminated there would probably be a prolonged and severe recession. Banks would collapse and governments would be voted out of office. Is it any wonder why you’re conned into debt? The Government Tax You For Saving Money But Give You A Tax Break |