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Get Financially Savvy Before You “Take the Hit”

Get financially savvy before you take the big hit

Everything builds up in our financial lives. If we are moving in the wrong direction financially, eventually we are going to “take the hit.”  Years of bad financial decisions and no improvement on financial understanding will add up.  Eventually, it will lead to one massive, financial, knock-out “hit.”  It may come in bankruptcy, loss of relationships, a mental breakdown, or many other negative ways.  It all simply becomes unbearable.  

Savvy means workable knowledge.  Getting financially “savvy” can help you to avoid this future “hit.” It will also give you the hope needed to continue after a financial “knock-out” has already come into your life. 

Financial Savvy Requires Massive Life Changes 

You can read all the financial books you want. You can go to a multitude of financial seminars. However, knowledge is simply not enough.  You must be willing to make a massive life changes to become financially savvy.

If you are currently working so much that you have no time to relax or study, you are going to need a massive life change. It is better to shut your entire financial life down than to continue in financial folly.  You may need to surrender your house and everything you own.  You may need to file for bankruptcy.  You will still be better off in the end if you make the commitment to change financially and never go back to your old financial ways.

No Change No Gain: Get Out of “Payment” Bondage

Many people are unwilling to change.  They put financial education and financial savvy on the lowest part of their priority list. However, the same people work hard day in and day out to barely live paycheck to paycheck.  They somehow believe that they must hang on to the possessions they are barely buying on installment  through mortgage or car loans.   If they lose these items, it would be he highest anguish and a clear sign of personal failure.  This mindset is damaging and counterproductive. 

This “monthly payment” perception of financial reality is false.  You already do not own anything.  Only financial bondage follows.    The person with a 100 year old $75,000 house with two cars- all paid in full- this person is successful financially.   The person with a $400,000 house and two new cars -all with heavy loans- this person is in bondage.   If the paychecks stop, this second person instantly loses everything. 

The Payment Mentality Is Doomed to Failure: Drop it for Financial Savvy

To become financially savvy, you need to adopt the opposite of a payment mentality. Your mentality needs to be based on acquisition: the acquisition of financial knowledge and wealth.   Every month and every year should be measured by this question: has my wealth and my financial knowledge increased?  Every year a financially savvy person has a higher net worth.  Also, each year a financially savvy person has acquired more financial knowledge.  

Dropping the “payment mentality” is the first step towards becoming financially savvy. First, it frees up time and takes away all illusions.  What you own is what you own.  If you want to acquire something else, you seek new financial knowledge to do it.

Secondly, dropping the payment mentality will help you focus on acquiring true wealth. If your total assets are not slowly increasing every year, you will know something is wrong.  In such an event, you will make the appropriate changes. Essentially, you will no longer be satisfied to “spin your wheels” financially.   Being financially savvy will be a number one goal and sometimes even a pretty enjoyable hobby!  No longer will financial knowledge be dreaded.  Financial savvy will become a natural and desirable part of your life.  

Internet Bankruptcy Advice?

Bankruptcy Internet Advice

With the Internet being so readily available, many turn to the Internet for bankruptcy advice. Be careful.  Bankruptcy advice can only truly be given by a bankruptcy attorney.  Remember, legal advice is specifically tailored for each situation.  Seeking Internet bankruptcy advice can lead to undesirable outcomes.  However, there are advantages to using the internet to research bankruptcy.

Internet Bankruptcy Advice?  Stick to General Information Only

Using the Internet to educate yourself about the bankruptcy system can be extremely helpful. The Internet is full of general information on bankruptcy.  You can familiarize yourself with the various chapters of bankruptcy and their purposes. You can also sometimes find general help as to what is preferable in a bankruptcy situation and also what to avoid.

However, only general information should be acquired. The various bankruptcy resources online are designed for general information purposes only. No bankruptcy website is going to claim that it is delivering legal advice.  These sites are clearly not for that purpose.  Such advice would be impossible because legal advice must be specifically tailored to each set of facts. 

Never Seek Internet Bankruptcy “Advice” to Make Your Action Plan

Acquiring general information to create a specific action plan on bankruptcy is a mistake.  The problem is that you will not be as qualified or knowledgeable as a bankruptcy attorney. Remember, a free consultation is FREE.  Although you may have acquired a considerable amount of knowledge in bankruptcy, it is very likely that important gaps may still remain.  These “gaps” in knowledge can cause very undesirable situations to develop during your bankruptcy planning or filing process.

Internet Bankruptcy Education is Better than “Advice”

The internet can be a tremendous tool for researching bankruptcy.  Although you should never seek advice on a specific situation, understanding bankruptcy and other areas of law can be life-changing. When you understand various areas of law, you can confidently pursue your business and personal goals.   Using the internet to educate yourself on bankruptcy can be an important part of your overall financial education.  Financial education is extremely valuable wherever you can find it, including sources on the internet.  Developing a thorough knowledge of bankruptcy from books or the internet is very beneficial.  It adds to your background of financial knowledge. 

Should You Be Able To Get Rid of Student Loans Through Bankruptcy?

Find out if student loans are discharegable in bankruptcy

The answer to this question is probably “Yes.”  You should be able to discharge student loans in bankruptcy during most situations.    However, under the current law you cannot discharge student loans in bankruptcy with almost no exceptions.  Many strongly argue that the legislation which culminated in the complete banning of student loan bankruptcy in 2005 is immoral and biased.  The legislation was clearly motivated by private business interests.  It has created a “student loan debt crisis,” a new hot topic of interest and debate.   Some say this “crisis” is next “melting point” our economy will face.  

But, more importantly, what about the moral perspective?   From a moral perspective, you SHOULD be able to discharge student loans in bankruptcy. But why?

Student Loan Lending is Oppressive and Should Be Against Public Policy

Student loan lending is clearly oppressive and should be against public policy.  The student loan industry has quickly transformed education into an “industry” as well.  Higher education should never be allowed to grow into a profit-driven industry.  Education should be affordable or free: it should always be about the students or society as a whole.  Higher education in the past was promoted and controlled by churches, charities, and true non-for-profit organizations.  Higher education should be a mainstay of freedom.   Higher education should remain untainted by corporate greed and economic oppression.

Higher education has grown into a monster funded by never ending student loan funding.   Astronomical building projects, sports programs, and other non-necessary ventures dominate the higher education world.   This money-raking beast has replaced previous higher education system.  The old system was focused on the students, the welfare of society, and higher ideals.   

Students are charged astronomical rates to attend classes.  These 18-19 year old students are told not to worry: just sign the loans documents.   However, most of these students have never had a job or a loan in the past. The students have no concept of the oppressive debts they quickly assign to themselves so early in life.    

What do the students get in return?  Many times absolutely nothing.  In fact, many places of “higher” education are so devoted to a profit model that they accept almost anyone with no regard to their drop-out rates.  Other schools are slightly more dignified, but almost the entire system has been corrupted by this student loan legislation.   A good part of these problems can be eliminated over time with a single law change: the full discharge of student loans in bankruptcy. 

Falsified claims of “immoral” bankruptcy filings were the Trojan Horse

The Trojan Horse was simple: some people were filing bankruptcy to immorally discharge their student loans.   However, these minor immoral occurrences were showcased intentionally to get law changes passed that were clearly against common sense public policy.   Student loans became the norm: this far greater evil quickly seeped into our entire higher education system. 

By intention, the real question at hand was improperly phrased: should the government allow and support a large student loan industry?  By progressively disallowing the discharge of student loans in bankruptcy, two new industries for profit developed.  The “big” education and the “big” student loan industries. Both of these industries are very bad for society.  They should have never been allowed to develop.  Education was once considered a “sacred” institution.   Can such a claim of sacredness still apply after the changes “big” business has made?

Student Loans are Not Dischargeable in Bankruptcy . . . But Probably Should Be

The non-dischargeability of debts is oppressive in any case.  Obviously, it is very oppressive for the government to support non-dischargeable loans for young students who have no proper financial understanding.  When educational debts were forbidden for discharge, many undesirable, profit-driven aspects began to be woven into our higher education system. 

Therefore, should student loan debts be discharged in most bankruptcy cases?  The answer this question is probably “yes” for obvious societal reasons.  Current legislation forbids student loan discharge.  Hopefully, the future will see the need to change this law after the full effects of our altered education system become apparent.   

PERSONAL NOTE: I write to support law change.  Student loans should be discharged like any other form of debt.  This is not due to personal reasons: I have no student loan debts.  Instead, I have seen this immoral system and it’s result “up-close.”  My experience as a Bankruptcy attorney and with higher education have clearly revealed all the abuses that are taking place under the current legal system. 

Credit Card Havoc May Follow 2017 Federal Reserve Rate Increases

The Federal Reserve has reported that it anticipates raises in the Federal Reserve prime rates for 2017.   This raise in rates may have a massive “trickle down” effect that will alter many current financial norms.   Among these “norms,” credit card interest rates may soon be increasing.

Credit Card Interest Rates are Adjustable

Credit card interest rates are usually set to a variable or adjustable rates according to the terms of the credit card contract. This essentially means that credit cards rarely have “hard terms” when it comes to minimum payments or charged interest.  When the Federal Reserve changes the prime rate, the entire financial industry makes massive changes to adapt to these increases.   Many mortgages, investment loans, and smaller loans like credit cards will instantly become much more difficult to repay or even service monthly.

Credit Card Interest Rate Increases will Create More Payment Defaults

Essentially, the moment that interest rates increase on credit cards via prime rate increases, everything becomes much more expensive. All the items purchased through the credit card and the continuation of the credit card services greatly increase in price.  Because the total cost of servicing the credit cards increases, this increase can sometimes break an already tight budget.  Once a credit card payment is missed or late, many times the interest rate then increases exponentially. Interest rates as high as 24% in such situations are not uncommon. This can equate to charging up to four times the original amount or greater for the good or service that was purchased through the credit card.

Credit Card Defaults Frequently Lead to Bankruptcy

Because credit card defaults are very difficult from which to recover, bankruptcy frequently follows.  An already stretched budget cannot accommodate such large required monthly payments. In fact, the increase in interest rates cause defaults across the entire financial spectrum.  Credit cards are not the only avenue to bankruptcy during a Federal Reserve rate increase. 

The Rates Must Increase: Are We Living on Borrowed Time?

Because of the nature of our financial systems, eventually the Federal Reserve Bank rate must increase. The United States currently operates on an excessively over-leveraged, debt laden financial system.  As a nation, we may only be living on borrowed time.  Massive changes to our nation’s financial and debt systems will likely be required to put things back on track. If you are in need of a personal financial overhaul, do not take it personally.   The entire national financial system is right there with you. If you need to talk to somebody about debt relief or possibly about bankruptcy, do not hesitate to give our office a call.   

Why Does God Support Debt Forgiveness?

Open bible

Did you know that God supports debt forgiveness? The Bible lays out a formula for the full forgiveness of debts every seven years.  God does not intend debts to be collectible forever.  God understands that society must periodically forgive debts in order to prevent oppression and other unjust practices. 

God Wants Brotherhood not Oppression

The Bible strongly supports good stewardship and productive business practices. However, the Bible requires that all business practices take place in the atmosphere of brotherhood and not oppression.  God does not support business profit when it results in defrauding or oppressing other members of society.  God intends for us to take care of our fellow countrymen with sense of honor, protecting and providing for those who are the weakest.

The automatic forgiveness of debts laid out in the Bible prevents creditors from oppressing debtors.  Without a bankruptcy system or the automatic release of debt, slavery (whether in its fullest form or just economically) would quickly follow.   God does not want a system that supports oppression and the defrauding of people.  Bad economic circumstances should not allow a fellow countryman to be forever imprisoned in a system of debts.

God Does Not Want Complex, Fraudulent Money Systems to Develop

God also supports the forgiveness of debt because he does not want complex economic systems to develop that defraud the common people.   God believes in protecting generational inheritances and preserving the rights and dignity of the individual.  God would prefer that wealth stays in its proper place: with the common people who work and save for it.  Everyone is to receive their just financial reward in God’s system.  Work and productivity is to be rewarded equally among all people.

Jesus, the promised Messiah and Son of God, drove out the money changers that were defrauding sincere visitors to the temple in Jerusalem.     The Bible also talks about God judging the wicked financial practices of a wayward, worldly economic system.  God has no tolerance for fraud and financial oppression, regardless of its “legality” or modern acceptance as a new societal “norm.”

Therefore, God strongly supports the automatic, periodic forgiveness of debts.  This forgiveness of debts prevents complex economic systems based on leverage and debt from developing in the first place.  The method in which people treat each other and handle their economic affairs is much more important to God than achieving maximum profits or higher living standards.  God wants to keep debt forgiveness as a common practice to make sure that everybody stays on an “even financial playing field” regardless of whether any individual is currently rich or impoverished.   This “even playing field” is stable.  It treats everybody according to their actual stewardship and economic contribution.   The manipulation of people’s hard work and the diminishing of the individual’s wealth is not possible in God’s simple and fair approach to economics.