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Income Up! Expenses Down!

Financial Education Course #3

Income Up Expenses Down

One fundamental concept to financial success is simple: increase income and decrease expenses. Although this concept is very simple, most people do not apply it. Throughout your life, your focus should be on increasing your personal income and decreasing your personal expenses.

Decreasing Expenses

Most people have misplaced goals when it comes to finances. One misplaced goal is to get the nicest house possible. Another misplaced goal may be to finally save enough money to buy a dream car. The problem is this: most people focus on what they want instead of the best way to get it. This focus – on achieving your financial goal without focusing on the method for achieving it – is doomed to failure.

Increasing Income

Increasing income is kind of a “no-brainer.” We all know the benefits of increased income. However, have you ever really studied diligently how you could run a business or increase your knowledge towards the goal of increasing income? Knowledge is power. Acquiring assets and financial knowledge almost always increases your income. For instance, when was the last time you went to a seminar about marketing or website building? How much time do you spend learning about how to acquire and manage assets? If you constantly “build” yourself up with personal abilities and knowledge, your income will increase. However, an important warning is necessary here. If you do not first apply the principle of decreasing expenses, all of your increased income will be worth absolutely nothing. The tendency of most people is to immediately find ways to spend increased income. A nicer house, better cars, indulging in hobbies and other personal habits – these things have a natural way of immediately exhausting additional income. First make a commitment to decreasing expenses. Make them as low as possible! Then, make a commitment to only use your increased income for new assets and other investments. If you do this, a better overall financial life will naturally follow.

Conclusion

Math Never Lies. We have all found ourselves in the dynamic of wanting nicer things in life. Houses, cars, vacations – we want it all and we want it now. Sometimes the “right- now” desire to live life overcomes our math skills. In order to truly have an easier financial life, we need to always be focusing on increasing our income and decreasing our expenses. The math of this truth never lies.

Take the Quiz!

Take Financial Education Quiz 3

Get Dynamic! Get Serious!  – Course #4
Never Take the “Easy” Way – Course #5
Do the Opposite of Everyone Else – Course #6
Action Plan – It’s Game Time!  – Course #7

How to Identify and Avoid Loan Forgiveness Scams

Loan Forgiveness Scam

Large loans make the borrower feel trapped.  With this trapped feeling brings desperation to find any route of escape.  Loan forgiveness scams prey on this desperate, “trapped” feeling.  This is especially true for student loans.   Student loans create the perfect dynamic for loan forgiveness scams.   A loan forgiveness scam claims that you will be able to have your loans forgiven if you offer them payments or personal information.    To protect yourself, you must be able to quickly identify and avoid loan forgiveness scams.

How to Identify a Loan Forgiveness Scam: Know How Scammers Operate

The signs of a loan forgiveness scammer easily identifiable.  You just need to know the way they operate.  Below are a few common signs that you are dealing with a loan forgiveness scam.

Scammers Want Personal Information

Loan forgiveness scams focus on collecting personal information.  The person on the other side of the phone may sound convincing.  They will ask for your personal information such as your social security number, date of birth, or even bank account information.

You should never give anybody this information over the phone if at all possible.  This especially applies when someone you cannot identify initiates the contact with you over the phone.   If they are offering to enter you into a “loan forgiveness” program after you give them your personal information, then you are likely falling victim to a loan forgiveness scam.

Scammers Need Payments

Loan forgiveness scams will attempt to set up either a single payment or a series of future payments over the phone.  The scammer will claim that the payment(s) will qualify you for debt forgiveness of the entire loan.  Any attempt from an outside caller to collect payments over the phone should immediately serve as a warning sign.  Never give payments over the phone unless you initiate the call. The tell-tale sign of a scam artist is a request for payments over the phone.

Scammers Will “Promise the World”

If it sounds “too good to be true,” then you are probably dealing with a scammer.   Loan forgiveness scams sound convincing.   Many times there is even a fake application process that allows you to build your comfort level with the caller.  Make sure to analyze the entire situation.  By the end, they will promise an unbelievable benefit by your participation.  If what they promise is disproportionate to regular reality in some way, you are probably being scammed.

Scammers use Former President Obama’s and other Politicians’ Names

Scammers will frequently use Obama or other politicians’ names in order to make their claim of loan forgiveness more believable.  It is all part of the “act.”  The scammers will use well known names, cite legal programs, or use official-sounding language.  It is all part of the scam to make it sound more appealing and believable.   Do not be fooled. Learn how to identify scammers.   Get them off your phone or email feed as quickly as possible.

 

Are There Any Rules to Follow at the Bankruptcy Meeting?

The bankruptcy meeting, sometimes called “the meeting of creditors” is an administrative hearing that requires the respect and timeliness of all who participate.   This “Section 341” bankruptcy meeting has a few rules that must be followed in order to have a successful meeting.  Let’s go over the few basic rules of the bankruptcy meeting of creditors.

Rule One: Be on Time and be Professional

Although the bankruptcy meeting is not as formal as some court hearings, it is critical to be on time and to act professional during the meeting.  Your bankruptcy meeting will be scheduled some 30 to 40 days in advance.  If you are not on time, then the court will know that it is your fault. The court and your attorney have given you several documents as to the nature and scheduled timing of the meeting.  If you are too late, the court will reset the meeting once.  A second late appearance could result in the case being dismissed.

During the bankruptcy meeting you must act and dress professionally.  You do not need to wear your best “high-dress” attire, but you need to come in a reasonable and respectful form of dress that is appropriate for a legal hearing. During the meeting, you should also remove any hats if you are a man.  Also, no one should be chewing gum or doing any other form of distracting activity.

Rule Number Two: Bring all Required Documents

The bankruptcy meeting also requires documents that must be brought to the meeting.  If these documents are not brought to the meeting, then you may have to come back because your meeting will be canceled or postponed.  First, you must bring your Drivers License and Social Security card: these two documents are absolutely necessary for the bankruptcy meeting to occur.  Second, you must bring your two most recent paycheck stubs.  Third, you must bring 90 days bank statements for each bank account.  This time period to bring must cover the 90 days directly before the bankruptcy case was filed.

In some cases you may already have brought these documents to your attorney at his or her office. However, the local rules require that you also bring these documents to the bankruptcy meeting. The above documents presented do not include every potential document that could be requested for your bankruptcy meeting. The above documents are only the basic documents that are required for every Chapter 7 case.

Rule Number Three: Tell the Truth

The most important rule to follow during the bankruptcy meeting is to tell the truth. The bankruptcy meeting is an examination where you are put under oath. If you do not tell the truth or be transparent during the examination, you will be breaking the law.  Not telling the truth can easily come back to haunt you later.  Resolve from the beginning to tell the truth every time both to your bankruptcy attorney and the bankruptcy trustee. If you always tell the truth, then your bankruptcy attorney can better guide you as to what your options may be an any particular situation.

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.  

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.