Awesome PDF - getting out of debt slavery

[thomas70]

I just read it, it's absolutely awesome!
If everyone could read this, there would soon be no debtors!

Enjoy!

[PRICEPLUS]

Interesting read!

[greedy4chips]

1st post and not a bit of spam in that PDF file.

Good information in there.

[autoxer]

stock market: It is like a huge Ponzi (pyramid) scheme

The author is anti - stock market & even claims to not keep money in the bank: :

I contribute almost nothing to the banking system—neither paying interest, nor giving them money to lend out at exorbitant rates to other people.

Then says:

The same with real estate. When money can be made without any effort on my part, I become VERY suspicious.

But if you're lucky:

Plus, if you're lucky, your house might have gone up in value. So you can sell your house, pay off your mortgage, and still have $50,000 (or much more) left over to put toward the next house.

And thinks taxes are a total waste: 20:

So what difference is there between interest, which is a total waste, and taxes which are a total waste?

The authors views are a bit extreme, no wonder they remained anonymous.

[sweeps]

I was very surprised there was no "To find out how to do this, visit my web site." or "Just buy my book for $59.95."

One thing I found a bit puzzling is it goes on and on about getting rid of debt, but then when you get rid of debt, it seems to tell you to keep on spending. Don't save or invest, just spend all your surplus.

[bjl584]

Some if the author's views seem a bit extreme, but if you weed through that, there is some decent advice in the paper. I don't really agree that this person would seem to save and invest almost no money, at least if they do it must be buried in the back yard. It is possible to use the "system" that they refer to your benefit. Everyone is not an evil tyrant out to destroy you. The "system" is currently earning me quite a decent sum of money, and I am not enslaved or broken down. I'm doing fine.

[boefixepa]

It has some great points, but seems stuck on the 'get of debt' side of things, but no advice on what to do once you are there??

[Elgin526]

While the author makes several good points, he loses me with the "evil" of interest and earnings from stocks. Just what are you to do with your money if puting it in a bank or investing in stocks is "evil" and "getting something for nothing"? Stuff it in your matress?

Thanks but I'll take earning 8% long term on my money in a "ponzi" scheme over a lumpy matress any day (where I'd lose an average of 3% a year due to inflation!).

[disneysteve]

I agree with Elgin. He makes some good points about living within your means, but really goes off the deep end with statements like "Interest is legal theft." No it isn't. Interest is a service fee you pay in order to borrow money. Banks don't lend money for free anymore than grocery stores give away free food. Banks are businesses and you are paying them for the service they provide you by lending you money.

I don't know where he lives that someone grossing $2500/month is paying $1200/month in taxes. That certainly isn't the US tax rate.

He has a very warped description of how the stock market works. I won't even begin to explain how far from reality he is there.

There are so many errors in his information. Anyone who isn't educated about the world of finance would get a very twisted view of the way things work by reading this essay.

[thomas70]

The author doesn't say that you pay $1200 in taxes on $2500 -- go back and read it again.

The author is talking about the waste caused by giving too much of your income to the banks in the form of interest. That really is a good point.

And interest is NOT just a service fee. No one needs hundreds and thousands of dollars every month for providing a service that costs them nothing. The author is right that charging interest on loans (more than 1 or 2%) used to be against the law.

Of course you can make a bit of money in the stock market, but it's way over-inflated right now.

[Ima saver]

I read all 14 pages and I agree with getting out of debt. I too am puzzled about what you are supposed to do with your savings when you do get out of debt. I keep quite a bit of cash in the banks and I am happy with the 5.25% interest that I am receiving. I also have stocks and mutual funds. Where does he want us to keep our money?

[thomas70]

Well, you can always invest it as you please, but it would be foolish to do so if you were spending a lot on interest every month, right?

The pamphlet IS entitled "How to avoid debt slavery" -- what you do when you're out of slavery is up to you, right

At least the pamphlet has a good focus...

[disneysteve]

Originally Posted by thomas70

The author doesn't say that you pay $1200 in taxes on $2500 -- go back and read it again.

You're correct. My mistake. He says that "bankers get to legally steal almost 1/2 of that right off the bat." So for some reason he is suggesting that someone earning $2500/month would be paying $1200/month in interest charges. I'm not sure how he arrived at that amount. If you are paying nearly half of your income in interest charges, you are in serious trouble.

And interest is NOT just a service fee. No one needs hundreds and thousands of dollars every month for providing a service that costs them nothing.

How do you figure that servicing your account doesn't cost the bank anything? They have to pay rent, utilities, taxes, employee wages and benefits, maintain computer systems, print and mail statements, etc. Don't they have the right to charge for their services? .

[poundwise]

I'm not going to put anyone's efforts down, however, my opinion of this article/PDF is not very positive. While some good points are made, especially in regards to how we get into debt, I believe that the article is overly repetitous and that some of the information is misleading as well as misguided.

[bjl584]

There are a few good points to be had, but other than that, I wouldn't listen too closely to what the author is suggesting. "Interest is legal theft", for instance. Interest is a fee like any other. You may feel that it is too high, but no one is making you take out a loan. You did that on your own. If you don't like it, either shop around or do without. I would really like to know who this person is. I have a feeling that it is someone that got burned pretty bad financially from making one bad decision after another. Now they feel the need to take out their faults on the stockmarket, banks, creditors, and the entire "system." Okay advice about frugality, but the rest is biased and quite flawed.

[thomas70]

Originally Posted by disneysteve

He says that "bankers get to legally steal almost 1/2 of that right off the bat." So for some reason he is suggesting that someone earning $2500/month would be paying $1200/month in interest charges. I'm not sure how he arrived at that amount. If you are paying nearly half of your income in interest charges, you are in serious trouble.

According to the PDF, if you had a $180,000 mortgage you'd be paying $972 a month in interest. And that's with an average 6.5% rate.

What about student loans, credit cards, car payments? You could hit MORE THAN $1200 real quick.

[bjl584]

The author is focusing on the wrong evil. He made the mistake of overextending himself if he is paying $1200 a month in interest charges. Did the evil banker make him buy that new house, car, or designer clothes? Was it the evil stock market's fault? Was it the system trying to hold him down? No. It was his personal choice to live his life the way that he did. The more I think about this paper the more I think that this is just another case of victimhood whereby someone is trying to blame all of their shortcomings in inadequencies on someone or something else. It's time for this person to suck it up, take responsibility for their own actions, and do what they need to do to make things right. I hate excuses and mindless blaming of other factors on your problems. Stand up, brush the dust off, be a man, and make things right.

[Broken Arrow]

Since most everyone has hit the technical details, I'll just focus on the message in general.

Well, before that, I just want to state that I prefer the more pragmatic approach of just running the numbers. For example, why am I contributing so much to my 401k as opposed to paying down my student loans? I think, by now, everybody on this board knows just how much I despise my student loans. However, the reason I'm not paying it down is because of *drum roll* the numbers. My dollars simply goes farther this way.

Back to the message itself, I would say to be careful of extremist rhetoric of any kind. Yes, while it can be empowering, we can also run the risk of causing short-sightedness. For example, if I did absolutely nothing else except to pay off my student loans, I would indeed be debt-free fairly quickly, but at what cost?

Having said that, I also have no problem with such rhetoric. I too would very much would like to be debt free sooner rather than later. I just don't want to do so at the expense of limiting my long-term financial potential.

[thomas70]

Originally Posted by bjl584

He made the mistake of overextending himself if he is paying $1200 a month in interest charges. Did the evil banker make him buy that new house, car, or designer clothes?
...
The more I think about this paper the more I think that this is just another case of victimhood whereby someone is trying to blame all of their shortcomings in inadequencies on someone or something else.

Um...did you even read the PDF?

The first few lines:

I am very unusual. I have almost no debt (I still owe $8,000 on my house—but I have only been a homeowner for 2 years). I have no car loans or credit card balances. Our expenses our low, so I can work at a job that I actually enjoy doing. My job is not high-stress, nor do we have to worry about our bills. My wife can stay home to raise our family, because no banker overlord forces us to do otherwise.

[disneysteve]

Originally Posted by thomas70

According to the PDF, if you had a $180,000 mortgage you'd be paying $972 a month in interest. And that's with an average 6.5% rate.

What about student loans, credit cards, car payments? You could hit MORE THAN $1200 real quick.

But a $2,500 monthly income is only $30,000/year. Someone earning 30K isn't likely to have a 180K mortgage. Heck, I earn over 4 times that much and don't have anywhere near a 180K mortgage. That's more than our house cost.