But what do you do when you just can't pay? You've done your best, but your income is not sufficient to make all the minimum payments because somehow and for some reason your balances have, like, exponentially increased and your minimum payments have skyrocketed. It feels like you're in the twilight zone. And you feel guilty, like you really owe something to these legalized loan sharks we call credit card companies.
Let me tell you something. Go ahead and ask a credit card company for a copy of your contract with them to pay back the money they have "loaned" you. Chances are, there is no contract. They might send you a sample contract. That's because credit card companies are always changing the contracts. My opinion: if the credit card company cannot produce a contract, you're under no obligation to pay them back for anything. They just gave you free money. (Caveat: I am not a lawyer or financial advisor. None of this is legal or financial advice. It's just my personal opinion.)
Let's look at how credit works. The credit card company gives you a certain amount of credit to use with the expectation that you will carry a balance. In fact, that's what they want. Because their profit margin comes from interest payments and other fees. The prime objective of the credit card company is to put you into debt and then rely on the fact that your misguided moral compass will lead you to make monthly payments that count primarily towards interest.
That's why your balance continues to increase and your interest owed increases with it.
The credit card companies, armed with analysts, will extend lines of credit to multiple individuals. Here's the other thing. Chances are the credit card companies aren't really lending you their money. They're lending you money that has been given to them in the form of investments, savings, and checking accounts-presumably for safe-keeping by individuals just like you. So, in essence, the credit card company is extending lines of credit using other people's money and earning pure profit from interest and fees charged to you and merchants. It's a racket.
You give your money to a bank for safekeeping. The bank turns that money into a vehicle to make profits from extending lines of credit to people just like you. In fact, your creditors should be thanking you for putting money in any bank anywhere because they are using your money to make themselves rich.
Your moral compass, that little voice in your head telling you to pay your debts at all costs, just does not realize that the banks are using your hard-earned money to make huge profits from charging high interest rates to people just like you-to you, in fact. If you want to get overly simplistic about it, well, it's almost like you're giving your money to the bank and the bank is lending it back to you and charging you an interest rate to use it.
So, really, the banks should be writing you a thank you note rather than sending you a collection notice. The system is rigged to turn you into a profit center for the banks. And if the banks fail, guess what?
We've seen what happens.
The federal government will use the tax dollars you paid it to bail out the banks.
So if you are up to your ears in debt, don't feel bad about it. If you've put your money in the banks and paid your taxes at any point in your life, then you have already helped the rich get richer. You earn your money through hard work. The banks earn their money through the manipulation of the masses. In fact, your bank probably does not even really have your money. Your money is somewhere else, amassed in a great pool of other people's money, making the bank richer. The banks just rely on you to keep giving them your income and then borrowing money from them at high interest rates.
If everyone went to the bank right now and tried to withdraw the money in their accounts, the whole house of cards would collapse, because the money isn't really there. Even the FDIC does not have enough money to make good on its promise to insure all accounts. But guess what? Even if you tried to withdraw your money, that hard earned cash you've given to the bank for safe-keeping, the chances are that the bank would not allow it. Banks are smart. They establish maximum daily withdrawal limits. In short, once you've given your money to the bank, the bank can take your money and hold it prisoner. How's your moral compass feeling now?
Well, there are some ways you can come out ahead. The first step is recognizing that banks are using you as a profit center both by accepting your income and by extending you lines of credit with high interest rates. If you've put money in a savings account or borrowed money to buy a house, rest easy. You've done due diligence to make the rich richer. And when you can't pay those minimum balances because you lost your job or the payments just got too high, don't feel bad. Feel empowered. If you're practically penniless and living on credit, then you can just think of yourself as enjoying the benefits of having been used as a profit center for most of your life. Don't cower when the debt collectors call. Yell at them. File consumer protection complaints against them. Ask them to prove that you actually owe them the money they're telling you you owe them. Chances are high that they have no signed contracts to prove you owe them anything.
When Citibank once told me I owed them $35,000, I asked them to prove it, and you know what? They could not. Either they lost the original signed contract or there never was one in the first place. Recognize that when you are penniless and up to your ears in debt, you are now also in a position of power.
There is a little thing we have in America called Chapter 7 bankruptcy which you can declare and which will magically make all of your debts vanish. The banks, as of yet, cannot stop you from washing your hands of unwanted debt, as long as you qualify for Chapter 7 bankruptcy and as long as you got into debt as a kind of honest mistake. Sure, you get punished for a while when you declare bankruptcy. It may take you about a year before you can open up a brand new line of credit and get back in the game. Why are they letting you back in? Because the merry-go-round must keep spinning. We're Americans. We live beyond our means. THE ECONOMY NEEDS US TO BUY THINGS!!!
We are borrowers and buyers. So go merrily into debt if you must and fight back when the debt collectors call! If you are an American, you have most likely paid your dues. Let yourself off the moral hook. You've borrowed money from amoral institutions. Be your own Robin Hood. The financial laws of this free country allow it, just like they allow the banks to screw you over. Debt is fun and it's even more fun when you tell the debt collectors that you're going to stand strong and strike back with a bankruptcy filing. Don't be afraid, and always live richly!
If you've enjoyed what you've read and you're looking for some more "zany tips" on how to thrive in a mad, mad world of debt and sorrow, you may want to try reading my books, HOW TO BE RICH IN TEN MINUTES, and its companion piece, HOW TO BE HAPPY IN TEN MINUTES. Click on the images below to buy the paperback versions. (Also available on Kindle).
Author Dan Sullivan is a writer, storyteller, consultant, and consumer and civil rights advocate. If you need assistance, he can be reached at (202) 340-6724 or firstname.lastname@example.org.