Posts Tagged ‘finance’

Debt Liability

Posted: October 21, 2014 in Debt
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“The last thing you want to do is go into debt to finance a liability…” –J. Reeves

Do you want to be like everyone else?  Are you one to follow the beaten path?  Does conventional wisdom seem like the most comfortable place to be?  Let’s take a peek at what others are doing before you give a final answer.

The news is filled with, what is to me, troubling discourse.  Bloomberg News reported on March 9th that “global debt exceeds $100 trillion”.  They explain this to be a 40% increase since 2007.  Wow, that is a lot of money!  “Governments have been the largest debt issuers,” according to the Bank for International Settlements.  How long will it take to pay that off when governments have to borrow more money to cover their current expenses?!!

In a DailyFinance article from January 2, 2014, another bubble seems to be forming in automobile loans.  They give an example of a gentleman who had just filed for bankruptcy, yet received a check in the mail from a finance company for $30,000 to purchase a car from any car dealer in the area.  He went out and purchased a used BMW.  They report that “88% of GM’s North American financial receivables are firmly in the subprime category”.  With delinquencies on the rise, this cannot be a good sign.

What do these examples mean to you?  Are you currently a part of the credit growth people and governments are experiencing?  Can this discouraging news have any positive benefit for you personally?  Well, that depends!  Positive things can only happen if someone takes advantage of a situation.  The only way it can benefit you is if you do something other than the majority.

You can be different from those treading in their own sea of debt.  They are simply trying to meet their current expenses, paying interest but making no headway on their debt load.  This may even be you.  However, a simple yet willful defiance to increasing debt is the starting point.  It takes a first choice to turn the negative compounding of interest payments into your own financial reservoir.  Is it time to make a willful decision to be different?

“One of the greatest misconceptions in finance is the idea that you need to take more risk to earn higher returns.  The reality is the less risk you take, the more money you make.” -Tom Dyson

A private reserve strategy is not only the ideal way to finance personal capital purchases, but also fights the damaging effects of the inflationary practices of the commercial lending sector. (see How Privatized Banking Really Works)

Prevent financial illiteracy:  1.  “Our kids must know that they are not entitled to money or wealth…or anything for that matter, even Christmas presents.  They must earn money.”  2.  “Our children need to understand debt.  Debt is expensive.  If you abuse it, it will destroy you.  It robs you of your independence.”  3.  “Our kids need to learn the power of compound interest and the best way to harness it.  Compound interest is the most powerful force in finance.  And it’s mathematically guaranteed.” -Tom Dyson

If you don’t like giving large sums of money to banks and mortgage companies to finance your cars, homes, boats, and other capital expenditures, then fund your own bailout using a private banking system.  -Lara-Murphy Report, May 2013