Debt Pushers – They’re not your friends, they’re making money off of you

Just a little episode with debt pushers

 

Debt Pushers

Debt Pushers

 

We have a credit card account. Yes, despite all the talk about how bad they are for your personal finance, I do have one credit card. We mostly use it for online purchases (because debit credit cards are not very common in Canada yet as opposed to US) and paying monthly fees at YMCA. So, the balance always gets paid off, we never pay interest, and overall are more than responsible with it.

It just so happens that I had to put a business expense on my Visa. Now, usually it’s a fairly simple transaction – I put it in, and before paying the Visa bill, I cut myself a check for the expense amount, and deposit the check into my account. This way I don’t end up paying any interest or fees, business ultimately pays for the expense, and there’s enough paper trail for bookkeeping to be fairly simple. No big whoop. Now, this time around, the business expense was rather large. While usually our Visa bill is around $150 or so, the business expense sent it way over $3,000. Still, no big deal because I’ll just cut myself a check and pay it without any delays.

But what do I get in the mail along with my Visa bill?

 

” Dear Mr. Financial Underdog,

We are writing to you about your credit account and pleased to advise you that because you effectively managed your account, we would like to offer you a credit card increase. “

Nicely done, debt pushers. I can almost see your software ref flagging my account. ” – Hey, this guy usually spends only this amount on average, but this time around he went into stratosphere! Hey, may be he needs more credit? May be he’s in trouble and now paying his bills with his credit card, I wonder how much more business we can get from him? If we’re lucky, he lost his job, and we’ll hook him up with all the product he needs, just need to make it easier for him to access it. Let’s give him all he wants right now!”

Debt pushers are just like street gangs dealing drugs

 

Debt Pushers

Debt Pushers

 

There isn’t much difference between drug dealers and debt pushers. Same approach. A troubled customer is the best customer! Just a different product. And I especially like the part how they complimented me on effective management of my account! When people start putting on huge amounts on credit cards – that’s not effective.  Sure, my case is an anomaly, but in most cases it means people are out of control with their credit cards – and those are the best customers for banks, credit cards, and other debt pushers.

I’m not trying to say that banks are bad and credit cards companies are evil. They do what they do, and have a place in our economy. But at all times, you have to understand why they are doing what they’re doing. An increase in spending limit on your Visa benefits them, not you. Beware of snakes when you’re playing outside. Beware of gangs pushing their products on troubled customers – even if this product happens to be debt.

Secrets To Financial Fitness – Some similarities between financial and physical fitness and what we can learn from them!

A little intro to secrets to financial fitness…

 

Secrets to financial fitness – do they exist? Is there a set of things you can do that will turn you into a wealthy individual over a short period of time? Ever thought there might be one little thing you’re missing that will help you achieve financial independence?

I’d like to draw a parallel between personal and financial fitness. Once I’ve started thinking about it, I was shocked how similar these two areas are – and how similar are the struggles people face in each area. Ironically, I used to struggle greatly in both, but currently working really hard on improving these two areas of my life. Just like I used to live paycheck to paycheck and owed more money than I actually had – I’ve struggled physically by being out of shape, and almost having a heart attack when climbing stairs.

Eight months ago (33 years old and 55 lbs. overweight), I signed up for a gym membership. I walked into a gym and felt completely lost. I didn’t know what to do, I was afraid people will laugh at me if I ask them for help, and I wasn’t sure where to begin. But little by little, I’ve made some progress. I’m far from being in the shape of my dreams (if there’s such a thing), but I’m proud of the progress I’ve made so far.

Here’s some of my discoveries when it comes to secrets to personal fitness – and how they relate to secrets to financial fitness.

Secrets to financial fitness

Secrets to financial fitness

Nothing happens overnight – and there is no silver bullet

 

Despite what late-night commercials will tell you, you can never get into great shape by working out 8 minutes per day. In fact, it’s scientifically impossible! Getting into shape requires hard work, and constant improvements in your workout routine, diet, and lifestyle in general.

What about financial fitness? Same thing applies! You can’t just do one little thing and turn your paycheck-to-paycheck lifestyle into a life of luxury and prosperity. There’s no software program that will show you all the secrets stocks about to double – if there was one, nobody would be selling it. While I greatly respect Robert Kiyosaki, I’m very leery of his personal finance lessons. You can’t become a Ferrari-driving real estate tycoon after reading a couple of his books. It might be possible, but don’t read his books think you’ll implement his system and be on the way to riches in a matter of months. Won’t happen.

Simplicity makes great sense

 

When I need a good laugh, I pick up a magazine on personal fitness and read a couple of articles. Good god, how many workout programs are out there – and why are they so different? It seems to me that every single fitness writer came up with his own program. In reality, all these programs and approaches do nothing but confuse new members. But if you talk to an experienced coach or trainer, they’ll tell you right away – most of the results can be achieved by doing a number of exercises over and over, again and again. Here’s a barbell, you can squat with it, you can bench press it, you can dead lift it. Do eight or ten exercises for 12-24 months, do them repeatedly and really well, and you’ll be in great shape. Maybe then it will make sense to target some obscure muscle by doing an exotic exercise, but most people shouldn’t be thinking about it.

Financially, it’s exactly the same. Yes, there are some tricks and creative accounting techniques – The Smith Maneuver, flow-through shares investments, etc. But for most average people most of the results will come from a set of simple rules that need to be followed day after day to achieve great results – and they are very simple too. Live on less than you make, invest part of your paycheck wisely, don’t spend money on stupid things, and keep track of your spendings. Yes, it’s hard to do it, especially in the beginning. But it ain’t complicated.

Pay attention to yourself, not the guy next to you

 

Want to completely confuse yourself about working out? Start paying attention to what other people doing more than to what you’re doing. I had to force myself to stop trying following other people at the gym (figuratively speaking). You see a guy slightly smaller than you bench press 180 lbs. and you automatically think – “- Oh, I should be able to do it no problem.” Wrong. What you don’t know is that he might have been doing this for months. Start with what you’re comfortable with, and go from there. Trying to chase other people will only cause you pain (emotional and physical).

On the personal finance side, chasing other people will get you in trouble too. Ever heard of “keeping up with the Joneses?”. It’s not productive to say the least. You don’t know financial situation of everybody, and looks can be very deceiving. Just because your neighbors or friends have nice luxury cars and big houses, doesn’t mean you should follow suite – they might be actually be able to afford those things or they’re deeply in debt. The only thing matters to you is your financial health, not your neighbors’. Don’t pay attention to them, follow your financial plan.

Start small

 

Secrets to financial fitness

Secrets to financial fitness

Things won’t turn around overnight, so there’s no need to go “all in” when you step into the gym for the very first time. You won’t be Mr. Universe (rather ironic title considering there’s only one planet involved) after a month of exercising, so start small. Start going once or twice a week – no need to promise yourself a rigorous 5 days/week schedule. No need to go on a “fruit-only” diet for a month hoping to shock your system into submission – just add an apple or a salad to your normal way of eating and go from there.

When it comes to your money, secrets to financial fitness are just as simple as personal fitness. Start small – try to pay off some of your debts to see how awesome it feels to be less in debt. Instead of promising yourself to eat nothing but cheese and crackers and invest 50% of your paycheck to retire early – try doing 2 or 5% first! Once you work out an appetite for financial fitness – then increase your workload.

Beware of the industry

 

When you start paying attention to your health, you’ll notice how huge the industry of personal fitness is. There are magazines, TV channels, countless websites, and late-night infomercials that are designed to do nothing but take money from you. I love Chuck Norris movies, but after going to a gym for a few months, I’m quite sure that Total Gym endorsed by him (along with other products) is total garbage. There are countless products appear out of thin air every year that are targeting novice gym members – or more like targeting their wallets.

On the financial fitness side things are just the same the same – there is a huge industry and everybody is trying to sell you a product. Educational classes, exotic types of insurance, personal finance software, and personal finance books – all whispering in your ear that these are essential products and you can’t live without them. Some are excellent products, and some are total garbage. You have to be aware of the fact that there’s a small army of salesmen out there trying to sell you something – and this industry is very good at marketing their products. Be aware and beware.

 And the most important “secret”:

 

Never ever ever ever give up.

Secrets to financial fitness

Secrets to financial fitness

 

My name is Financial Underdog, and I’m currently rewarding myself with a nice smoothie for a very exhausting visit to a gym.

Happy Friday!

Somethings good things just happen. Sometimes you tell yourself : “- I can do anything!”. Sometimes you kick ass all day at work, and grab some tasty beer on the way home. And sometimes, when you get home you check your mail and pull out an unexpected check!

We made an investment in this company just couple of months ago – they acquire and operate apartment buildings in United States. On top of capital appreciation (prices of apartment buildings going up), they send out quarterly dividends. Not much, but I’ll take it!

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It feels great to have money working for you – as opposed to working for money. While I have no problems with work – in fact, I’ll be working this weekend because it’s been so dang busy – but to have money produce money without moving a finger? That’s like free money!

Happy Friday! I’m The Financial Underdog, and I like unexpected surprises!