by Owen Sullivan
On Jan 24, 2018
According to the credit bureau Experian, as many as 73% of Americans die still owing debt in one form or another. Here’s how to pay off your loans as soon as possible (and save you dollars in the long run).
by Owen Sullivan
On Jan 12, 2018
Folks tend to find the idea of paying off their mortgage rather daunting. And I understand we’re talking about hundreds of thousands of dollars here. But mortgage is a debt like any other and can be paid off early with simple strategies and techniques.
Dear Money & Crisis Reader,
I’m sure you’ve heard the nasty fact that humans each consume about eight spiders every year.
Eight whole spiders, legs and all.
Everybody knows that it’s true, right?
Except it isn’t…
The spider-eating “fact” is a lie. It’s a fabrication conceived by columnist Lisa Holst in 1993.
Ironically, Holst wasn’t actually trying to fool anyone — quite the opposite, actually.
At the time, a list of fake facts was circulating via an email that went viral. In an article for PC Professional, Holst debunked the list and warned about believing everything you read (especially online).
To prove how easy it was to make up fake truths, she also included a list of silly facts she fabricated — like how we swallow eight spiders a year.
Little did she know she would accidentally be spreading one of the most parroted fake facts of all time.
But that leads us to one of the most dangerous factoids in finance.
Separating Fact From Fiction
Here’s something I’ve seen posted all over financial forums online. But unlike the spider myth above, this financial lie could end up ruining your future:
There’s no sense in paying down debt, since in a collapse it would be uncollectible. — Anonymous internet user
It is crazy the number of times I’ve seen this idea repeated online.
It’s irresponsible, totally unfounded and likely to get anyone who believes it into dire financial straits.
Now, I think most folks are savvy enough to ignore this advice. But we now know that if something is repeated enough, people will start to believe it.
Just this morning, I spotted a gentleman in the comments section of a finance blog sharing his tactics for dodging debt. I’ll spare you the details. But it essentially involved paying off debt with — you guessed it — even more debt.
It’s easy to see how this line of thinking arises. Folks want the instant gratification of houses and cars without any of the consequences.
But like any argument built on a foundation of laziness, the logic is flawed.
The key problem with this kick-the-can-down-the-road thinking is that it fails to account for the myriad potential disasters on the horizon.
Sure, if the world instantly transforms into the movie Mad Max, you might get away with a strategy like that.
But disaster comes in many shapes and sizes — most of which would still require you to pay for your debts.
Let’s break down three actual facts about what happens to your debt in a crisis…
Fact #1: If a state of emergency is declared in your locality or you’ve been displaced by a natural disaster, you may be able to legally defer your payments for a time. But this is far from a blank-slate situation. Your debt isn’t going anywhere. You just get a little breathing room for a month or two.
Fact #2: Even the total collapse of a civilization — like our debt dodger above is banking on — is more likely to be a slow and shambling descent. It won’t happen overnight but in a series of difficult and unpleasant stages.
Fact #3: Flailing companies will be desperate to keep their heads above water. They’ll try to recoup their losses by collecting their debts — aggressively. And at a time when you should be focused on your family’s comfort and survival, you’ll have to worry about trying to hold onto your car or home.
This isn’t wild speculation. We saw this cruel tactic in action when the bubble burst in 2008.
Money lenders foreclosed on the homes of 10 million families across the U.S — one of the largest displacements of Americans in modern history. We saw it again in Argentina during their financial crisis when a record number of people were made homeless.
Bottom line: Debt is an all-too-common part of modern living — and it’s something I plan to cover in future issues. But it’s downright dangerous to dismiss it.
Being ready for a crisis means being prepared on all fronts. And your finances are a large piece of that puzzle.
All the best,
Editor, Money & Crisis