Bury The Debt Monster: Part One
In this series of articles, you will be able to follow along at your own pace as you work to bury the Debt monster and regain complete financial control. Whether you were like a child in a candy store or you simply spent a little more than you made every month over a long period of time, your Debt can be crippling- and effect all other aspects of your life. Use this series of articles to turn it all around!
Lesson One: Opening Your Eyes
Many people don’t know how much debt they have, and whether or not they have a good balance of “good” and “bad” debts. Most people who have the most debt try to ignore the extent of debt they are in- in other words, they avoid reality because what you don’t know doesn’t hurt you, right? In this case, unfortunately, debt always hurts you over the long term!
The first lesson on the road to self-debt reduction or elimination is to understand how much debt you actually have, and what type of debt it is.
Make a List
Let’s start with the “bad debts”, since these are the ones we will want to pay off as soon as possible. Bad debts include store credit cards, car loans, and charge cards- any purchase that loses value instead of offering you potential earnings.
On a piece of paper or on a computer spreadsheet, set up your list like this:
Name of Card/Loan Amount Owed Interest Rate Estimated annual interest
Ex: Citibank $2,123 18.36% 2123 x .1836 = $389.78
Next, do the same thing for good debts. Good debts are things like school loans, mortgages, second mortgages, and other investments that may earn money. We will use your good debt list in a future lesson, but for now, let’s take inventory of everything you owe on two separate lists: “bad” and “good”.
Analyze Debt to Income Ratio
Once you have both your lists completed, you’ll want to analyze the amount of bad debt you have. Get a total amount of the “amount owed” column of your bad debt list and compare it to your annual after-tax income. The bad debt total should not be a large chunk of your income. You can find your debt to income ratio (and we’re just dealing with bad debt at this time) with a simple formula:
Total Bad Debt / After-tax income = bad-debt-to-income ratio
If you’re total bad debt is $5,770 and your after-tax income is 36,000, you would have a bad-debt-to-income ratio of 16%. The goal is 15% or less in order to keep your payments manageable.
How Much You Actually Flush Down the Drain
Now, for a real eye opener, add up the amount of estimated interest you pay annually on your bad debt accounts. WOW! While student loans or mortgages are considered debt worth paying interest for, look at how much money you are flushing down the drain each year on your credit card and car loan payments. Think about what you could do with that extra money on an annual basis!
Lesson one has probably been an eye opening experience overall for the majority of you. The first step for alcoholics and drug addicts is to admit they have a problem- the first step for people looking to get out of debt is to face the debt monster and see exactly how much money they owe. The next lesson will lay the foundation for eliminating the worst of our debts: credit card debt.
Debbie Dragon
http://www.articlesbase.com/finance-articles/bury-the-debt-monster-part-one-161087.html
The Long Rolling and the infaltionary State? Wrong view of the state? take a look and give your opinion?
Log-Rolling. Given these two very different conceptions of the state, one favoring the welfare state and the other favoring a warfare state, why don’t the visions cancel each other out? So intense is the desire of one group to have the state that it wants that it is willing to put up with another group’s desire for its conception of the state. The two conceptions decide to cooperate and erect a state that purports to behave both like Solomon and like the Samaritan. That is the origin of the guns-and-butter state, or the welfare-warfare state, or the modern state as we know it, one that purports to meet every need.
We see how this log-rolling works every day on Capitol Hill. One group wants more money for tanks and weaponry, and the other wants more for Medicaid and education. If both agree that politics is the art of compromise, they will put up with the other group’s priorities in order that their own vision can be fulfilled.
On the Right, we find that the love for the police power is more intense than the hatred of redistribution. On the Left, we find that the love of redistribution is more intense than the hatred of war and leviathan. They therefore work together to erect a massive and ever-growing executive. They are similarly unwilling to oppose the state in total. They fear that in doing so, the state as an institution will be discredited, and their conception of what the state should do along with it. Neither side particularly loves big government but both sides agree that it is better than the alternative of letting people alone. So they log-roll to support the public sector above all else, even when it means that they must sleep with their ostensible political enemies.
Rationale Number Four: The Inflationary State. Now we come to the reason this system is able to perpetuate itself. And there is something of a mystery to explain here. No people anywhere will put up with a leviathan that grows and grows forever. At some point, the problem of funding state expansion will result in too much violence against property, and the people will revolt. Indeed, if the federal government had to collect all its revenue through a tax of any kind, leveled right now against the public, I submit to you that it would spark a tax revolt on a scale never before seen in modern history.
Thus do we have the central bank to create money for the state. Thus do we have paper money that can be created in unlimited quantities. Thus do we have deposit insurance to make banks failure proof, so that the masses will never doubt that the credit pyramid is immortal. Thus do we have the Fed’s power to manipulate interest rates and control the flow of credit to the system.
An economist at Lehman Brothers sent us an interesting chart the other day. It compares the level of price increases across many Fed regimes. Under the first Fed governor Charles Hamlin, the dollar declined 8% in value. Under Thomas B. McCabe from the late forties, it declined 7.2%. Under Arthur Burns, wholly owned by Nixon, the dollar declined 42% in value. Under Volcker, Mr. Tight Money, it fell 40%. And under Greenspan, who has a reputation as a great inflation fighter, the value of the dollar in terms of goods and services fell fully 44%!
Inflation serves the cause of the state by giving it room to run up debts without limit and fund its activities without making the people cough up more revenue. Indeed, that is the primary purpose of the inflationary state. People often say to me that a gold standard is impractical. In fact, that is not the case. It is very practical. It is the free-market answer. The state doesn’t need to produce money any more than it needs to produce shoes or shirts or clocks. The problem is that we lack the political will to stop the inflation monster.
Rationale Number Five: The Propaganda State. In every society control of educational institutions increases in tandem with the rise of the state. This is because the state needs these institutions to inculcate the civic religion of loving the public enterprise, and also because the less people know about the idea of liberty the more the state is provided the room to grow.
Consider the Department of Education. Ever since its creation, every Republican administration has come to power with an intention to abolish it. But once they get in power, they find that bureaucracy has its uses. Instead of cutting or abolishing it, they increase the agency and give it more to do. The more the state does, the more the state sees the need to control public opinion by controlling the schools.
Now, there is a point of optimism here. If any state could rule without propaganda, it would surely do so. Why then do states find educational control and the propagation of the civic religion in their interest? Because at some level, every state, in all times and places, is required to seek the tacit consent of those it governs. No state can control a society by use of the sword only and alone. It must also seek some degree of ideological conformity with its own goals. Otherwise its rule becomes threatened and destabilized.
The other side of the coin is that states can indeed be destabilized by the ultimate counterrevolutionary tactic of providing alternative sources of education. As Mises said, all of history is a battle of ideas. Where the ideas of freedom are triumphant, liberty prevails. Where the ideas of freedom are buried and suppressed, despotism prevails.
Our pathway is clear. It is a choice of the Mises Institute not to mix in the mire of a political system that is wholly owned or attempt to seek favor from influential opinion makers. Our path is one of education, pursued with high-minded ideals, advanced using the most modern methods, and animated by the spirit of guerilla warfare. There are Misesians and Rothbardians strewn throughout the academic world, financial and banking houses, law firms, and in every walk of life, not only in this country but all over the world.
We have worked for nearly a quarter of a century on a very radical project of advancing economic science and logic. We have pushed to keep the fire of freedom burning brightly. We have sought to teach anyone and everyone about the workings and benefits of liberty. We have come under pressure from left, right, and center. Yet the attention given to this body of ideas grows by the day.
We can prevail against the Propaganda State. So long as we are free to do so and have the means available, we will continue to do so. This is our weapon against power. It is the most effective weapon anyone could ever possess. If we win this victory, we win all others.
We thank you for supporting education for liberty, and for being part of the revolutionary vanguard that sees through the errors of our day and imagines a brighter future of freedom, private property, and peace. : Mises Institute
Yes… "It must also seek some degree of ideological conformity with its own goals." And here lies the problem… An awful lot of people fall into the two groups that wish to personally profit by these methods – they agree with the taking of wealth by force for the good of either themselves, or for others; to steal for the benefit of the oppressed at home, or for the oppressed in another land. You are arguing against socialism, with socialists… Bad call.
To engage with an enemy on his own terms is to concede the battle before it has begun. To agree, for instance, that an argument over ethics is about theism or non-theism by calling yourself an A-theist, plays right into the hands of the theists…
"I advocate a rational system of ethics."
An ‘individual’ who passively accepts that ‘force’ is inevitable, that some people need to be forced for their own good, that it is ‘right’ to pay your ‘fair’ share of communal commitments whether you personally benefit or not, that it is a social duty etc, is no longer an individual in the real sense of the term and cannot be treated as such.
To obey a law of logic or nature is not the same as obeying an arbitrary fiat of political ideology – to accept that a metaphysically given fact of reality is no different from a convention or tradition among men – is the tell tale, the un-ignorable red flag to any rational observer that reason is no longer valid, that persuasion is no longer a means by which to deal. In any attempted collaboration between faith and reason, it is faith that must win…
Attack being the best form of defense, a rational individual must TRADE amongst rational men using rational means; to the best of his ability. Until and unless GOLD is made illegal in all forms, use it; change your fiat currency into hard currency and use it… Use it amongst friends and anywhere you can… Place a small gold coin in the hand of a waitress as a tip, (lets see her divide it amongst the other waiting staff, or pay tax on it etc…) buy a lawnmower from your neighbor, offer it to your local grocer… Be careful, be discreet, be honest… They would have us believe that our only choice is between a vote and an armed uprising; but a trader knows that trade is the real alternative – “Real men use real money.”
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