It
is often said, “The Rich Get Richer while the Poor remains Poor.” That division
line of classes is a fine one. The habits of the economically inclined are
different than those of the economically challenged. The habits of the poor are
so common that there is a lucrative market for the exploitation of their
condition. Hopefully in this article you will easily free yourself from the
treadmill of reoccurring debts and find your way on the road to financial freedom.
I’m
not selling anything here. The only thing that you have to pay to get yourself
on the right track today is attention and apply this costless lesson to your
spending habits in the future. ‘Financial Freedom’ does not mean ‘rich.’ It
simply means that you will have more control of your buying power which that
peace of mind is everything that builds the driving force of financial wealth.
The
first thing I will address today are the money pit schemes such as Payday Loans
and Tile Loans. If you notice, you don’t see these establishments on the
prosperous sides of town in abundance. If you or someone you love has fallen
victim to these legal scams then pay close attention. For all of you don’t know
the detriments of dealing with Title Loan and Payday lenders I will quickly
brief you.
A
Payday Loan is where someone with challenged credit goes and writes a check to
the Payday lender being that he can’t get a loan at a bank or from any other respectable institution. They encourage you
to borrow a high amount and when you do this, you’ve signed the rights over to
your paycheck for as long as it takes to get off of the treadmill. If you
borrow $600 then you write a post-dated check for $650 as collateral to the
lender. If you fail to pay the $650 then the money is taken out of your bank
account and more than likely send your account into overdraft.
The
average customer of a payday lender lives from paycheck to paycheck. That $600
that you borrowed overtime turns into a significant amount more than borrowed
being that people find themselves re-writing the loan to have enough to make it
to the next pay period. Take this equation by the hundreds of people that fall
into this trap. The store profits heavily from the re-writers.
The
angle to deal with this situation is legal and clever. First these places will
tell you that if you write a bad check then they can prosecute you for check
fraud. However, you can’t be prosecuted being that when they took the check,
they had full knowledge that the money was not in your account and there are
documents of the date that the check was written and given to them on your
paperwork. If you don’t believe me then ask any lawyer.
Secondly,
what you will need to do ASAP is to go to your bank and get overdraft
protection on your current account. This will secure your bank account from
going into the negative when I give you the next step. The next step is to KEEP
YOUR MONEY! Don’t pay that store another dime. Yeah, they may call you and give
you a spill of how they can have you arrested and you tell them to get to work.
Nothing is going to happen. Afraid that they can report it on your credit? Well
if your credit was in pristine condition then you would’ve went to a bank for a
loan in the first place.
Now
in the occasion that the bank still throws your account in the negative, then
on that note, close down your bank account and leave it be. The bank will be
lenient towards the payments that you can make to get it straightened out
versus the Payday lender wants all of that money at once. Don’t leave the
negative balance with the bank stagnant! You will need to pay back that bank in
order to fix your credit so you don’t have to use a payday lender again. Just
make payments that you are comfortable with paying.
Now
I will address the car Title Loans. This is where you are given a loan by
signing over the title of your vehicle. Pretty much this game isn’t designed
for you to win either. If you sign over your vehicle for an amount of $600 then
you would think that it would be easy to pay back, right? Wrong! The interests
rates are so high that you will end up paying to the title lender in most cases
more than the vehicle is worth in bluebook value. The money that you will end
up paying back can buy a second used car for the household.
The
strategy to dealing with this situation is simple as well. Most of these places
will write you a loan and they advertise by giving you a 90-Day interest free
special meaning that if you pay the $600 back within a 90-day window then you
will only owe $601.00. If you must resort to a title loan then here is the
discipline and the responsibility that you will need to have.
First
you will need to know that just because you have some extra money that it is
not free money. They bank on your habits of going out and buying things that
you don’t usually do such as going out to an expensive dinner, buying a new
electronic gadget or simply just needing all of that money at once so you can
get yourself out of the hole. Nope, only spend what you need, and give back the
difference on your next check.
If
you’ve fallen in this debt then you would be better off letting them
repossessing the vehicle and starting from scratch versus paying this loan back
for the entire life of the loan. You will spend more paying off the interest
than you would the principle. How the company survives is that once they’ve repossessed
your vehicle, they take it to the auction and sell it for it’s fair market
value and they still have the money in hand that you’ve paid them along the way
to get to this point.
Now
if you have a vehicle that has an engine that is about to blow or thinking of
scraping, this is how you can get over on the title lenders. Don’t scrap the
vehicle and don’t junk it for parts. Pour some Marvel Mystery Oil into the oil
chamber to muffle the knocking. Marvel Mystery Oil is sold at just about all
auto parts stores. The only thing that they will do to qualify the vehicle for
the loan is read the odometer and make sure that the car starts. There are no
mechanics on site there. Take out as much of a loan as they will give you
(which will be a whole lot more than junking the car or crushing it). Then
simply let them have the car. Nine times out of ten they will try and approach
you to buy the car back for a reasonable amount of money to settle. This doesn’t
report to your credit for there are no credit checks nor do they have your
social security number.
The
next trap that I will strongly encourage you not to fall into are the ‘Rent to
Own’ scams. I know that most of you want to have a nice bedroom and living room
suit. I know that you all desire the latest television and up to date appliances
in your home. This is where they sucker you in. You are told that you can have
that nice suit in your living room today…that high definition TV delivered to
your house today…that new washer and dryer in your house today…that new laptop
or PC on your computer desk today, the video game system you will be playing
today at your house! Today sounds good in words but on paper the feeling is
quite different. Don’t make the payment? Then they will come to your home and
take these appliances, clean them up and put the next sucker on the same
financial treadmill that you were on. You will pay so much in interest for
those things that you could’ve bought them three to five times over if you
successfully pay them off.
Separate
yourselves from this illusion of instant gratification. If you have some rent
to own furniture in your home right now unfortunately the only advice I can
give you is to either pay it off or to give it back. If you are planning on
making this move in your future to participate in a rent to own store then
simply don’t.
Nothing
comes over night. There is a saying, “You must crawl before you walk.” Simply
save your money and realize what things are by purpose of need. Okay, you want
to save some money by not going to the laundromat and spending all those
quarters to get your wash completed? Quite naturally you would need to have an
in-home washer and dryer. You can find both of those on craigslist all day and
every day in working condition for dimes on the dollar to what you will pay for
them brand new and pennies on the dollar for what you will spend at a rent to
own store.
It
may not be as cosmetically appealing as the brand new washer and dryer but the
purpose of the items are to wash and dry your laundry. Want a smart TV? Why
would anyone want a “Smart” tv when there is nothing smart about the television
or the person that would pay that much just to say that they have a smart tv.
Simply tether your laptop with an HDMI cord to your current television and you
have a smart tv. A smart tv has to be hard wired in order to function properly
and if it doesn’t it is sucking up bandwidth in your home. With a tethered laptop
that is geared to streaming on wi-fi will give you the option to even surf the
web on sites that smart TV’s can’t access.
With
strong discipline, place the money aside that you are wanting to buy newer
things with. Within less than the time it takes to pay off the rent to own
items, you will have enough to buy these items outright with the gratification
of knowing that these items are yours and you don’t have to work extra hours to
keep them and knowing that nobody can show up at your front door when you find
yourself in a financial hardship such as loss of income or a sudden need to
repair your vehicle.
For
all of you who find yourself in debt by ordering these different cable packages….STOP!
The only thing that you need to entertain yourself with in your house is
internet access. There are so many streaming sites that you can watch your
favorite shows and movies on that the days of cable tv are almost obsolete. The
only thing that you need to do is get a high speed internet account and you are
set! Even with an $8.00 subscription to Netflix, a $9.00 account to HULU and a
$14.00 subscription to HBONOW, you still are saving a ton of money compared to
how much you are paying your cable providers currently. Just do the math. If
you want to watch television, just get an HD converter at your local Walmart
for under $20.00.
This
is the amount of money that you can save for Christmas gifts, family vacations
and practicing one habit of the wealthy; your children’s higher education.
Just
because you have a higher disposable income, the secret is not to consume over
your means. The second you do that then you as the consumer becomes consumed.
