Debt Elimination while entering Fastlane

[eTyler19]

Hello everyone.

I have an idea I would like to run by everyone to get some feedback.

My wife (21 yo) and I (23 yo) are in debt about 25K, mostly credit cards. This was before we knew better, and before RK books, and before the Fastlane. We are both motivated to pay this debt off because its hampering our fastlane potential.

After all expense are paid each month we have left over about $1000. We both work two jobs and bring in about $45,000 year.

So paying off our debt would be 25,000 / 1000 = 25 Months

This seems like a really long time, and a lot of opportunities missed.

Here is where I had an idea, Let me know what you think.

There are a couple foreclosures in my area that I have located. The one I am particularly looking at is asking 34,000K bank owned. Its had years of neglect and pretty dirty. Comps all around that area are between 50K - 90K. I would like to purchase the house, offering around 20K, and fix it up to resell this summer. After resell I would plan on using the profit to pay off the bad debt we have in credit cards.


Thanks for your feedback. :thankyousign:

 

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[SteveO]

Paying off your debt with money that you make from your ventures is a strong idea. Your plan and the ensuing implementation is the critical part. Make sure you have a backup plan for the houses if the first exit strategy does not work.

 

[neverfastenough]

As far as the 25k, have you negotiated at all with the creditors to try to bring the amount owed down?

 

[rcardin]

In a perfect world maybe. But with this economy who can say. I can pretty much guarantee that you will not make near what you think you will. Never fails on the first couple of deals. You might be able to build up to 3 rehabs and pay it off but could you use that money elsewhere to make even more? After say 2 years of flipping houses you could probably have it paid off.

I was in your position this time last year. My wife and I went to our credit union and got a consolidation loan for all of our cards. We then cut them up. Our monthly CC payments went from roughly 1100-1200 a month to a consol loan of 600. Granted it is a 5 year payoff. This has freed up roughly 500 a month to invest otherwise.

Take this scenario to yours and you could consolidate the cards lowering your monthly payment to 600. take the 400-500 you are saving and put it with the 1000 you already save. Now you have roughly 1500 a month extra to invest. It would only take 4-5 months and you could have the down payment on that 50k house with payments in the 500 range. With your new savings this is easily carried if it sits empty a few months while getting it rented. Now this house is self sufficient and you can repeat the process.

Is it better to pay off the cards in 2 years and own nothing or better to take a five year route and possibly own 4 or 5 houses?

Just my opinion having been in those shoes recently.

 

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[eTyler19]

Paying off your debt with money that you make from your ventures is a strong idea. Your plan and the ensuing implementation is the critical part. Make sure you have a backup plan for the houses if the first exit strategy does not work.

The payment would be low enough we could afford if the house didn't sell fast enough. Another back up plan would be to rent it out. That would easily pay the rent and bring in a couple extra hundred a month by the numbers I ran. Thanks for responding.

 

[eTyler19]

As far as the 25k, have you negotiated at all with the creditors to try to bring the amount owed down?

No I haven't. With the credit cards, would I just offer them a lump sum payment to close the account? Would that effect my credit score by doing that?

 

[rcardin]

Negotiating a lower payoff can affect your taxes at the end of the year if the 1099 you for the difference.

 

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[eTyler19]

In a perfect world maybe. But with this economy who can say. I can pretty much guarantee that you will not make near what you think you will. Never fails on the first couple of deals. You might be able to build up to 3 rehabs and pay it off but could you use that money elsewhere to make even more? After say 2 years of flipping houses you could probably have it paid off.

I was in your position this time last year. My wife and I went to our credit union and got a consolidation loan for all of our cards. We then cut them up. Our monthly CC payments went from roughly 1100-1200 a month to a consol loan of 600. Granted it is a 5 year payoff. This has freed up roughly 500 a month to invest otherwise.

Take this scenario to yours and you could consolidate the cards lowering your monthly payment to 600. take the 400-500 you are saving and put it with the 1000 you already save. Now you have roughly 1500 a month extra to invest. It would only take 4-5 months and you could have the down payment on that 50k house with payments in the 500 range. With your new savings this is easily carried if it sits empty a few months while getting it rented. Now this house is self sufficient and you can repeat the process.

Is it better to pay off the cards in 2 years and own nothing or better to take a five year route and possibly own 4 or 5 houses?

Just my opinion having been in those shoes recently.

I have recently tried getting a consolidation loan from a couple diffrent places but have been rejected at all places.

I understand what you are saying about the longer term plan. I do have one problem that I might run into, and that is not being approved for even the 20K foreclosures purchase which totally eliminates the 50 K house.

Our DTI is pretty high right now, we have not paid anything late though.

 

[hakrjak]

I was in about the same boat 9 yrs ago when I started my real estate business. I was about $30,000 in CC debt (Credit cards... Too much partying, too many women, too many cars, etc)... and about $35k in debt on car loans... (I ran out and bought a new BMW as soon as I got my 1st job out of college -- big mistake...)

I wanted to get out of debt -- it stressed me out badly having missed my goal of becoming a millionaire by age 25 -- but it was more important for me to start my business and start building equity, so I used a 3% down FHA loan to get into my first property at about 90% FMV. Within about 18 months I moved out and rented it for $50 a month cashflow, and bought my next property on a 0% down loan at about 95% full FMV.

Both of those first 2 deals were big mistakes and I didn't realize it until I had lived in the 2nd property for about another 18 months. Like any mistake -- I used them as learning opportunities and I moved forward. At that time, I bought 4 more houses each at about 75% FMV, and I put 5% down on each of them -- each cashflowing about $200 per month. That was more like it!

A few years later after observing that none of my properties had appreciated a cent since I bought them, I decided to force appreciation. I started rehabbing them on average of a couple a year and selling them for prices about $20k above what the comps were in the neighborhood. Because I had done such a nice job on the rehabs the comps didn't matter and I was able to pocket not only the equity that I locked in when I bought the homes, but also the equity I forced by fixing them up so nicely.

Long story short -- I repeated the process a few times over the last 8-9 years adding long term holds when I could, and rehabbing & flipping out of rentals each time someone trashed them and left me holding the bag, etc... (I figured -- why pay good money to fix something up for another renter to just trash again? When this happens, it's time to rehab and sell for profit...)

If I had waited to pay off my debt, it would have taken me a lot longer to get started -- and I honestly don't know how long it would have taken me. At this point though years later, I'm debt free (except real estate) -- car loan free, and have six figures worth of equity in the properties that I'm holding along with monthly cashflow from them.

Even today I meet skeptical people who say things like, "You are flipping in this market?" or, "You're buying real estate now?", or "You must be crazy!", etc etc... But I've had people telling me that throughout the entire process, so you can't let that type of thing distract you. Listen only to people who are qualified to dispense advice, and disregard the rest. The people that want to discourage you will go through their whole life without taking any action to better their situation -- and you've got to get past that and force yourself to take bigtime action as soon as you decide on a direction. Get that momentum rolling in the direction you want and things will become easier and easier as you move...

I wish you the best of luck --

- Hakrjak

p.s. ---

One thing worth noting for me was that after I got about my 3rd property, I began saving about $10,000 per year on taxes (By employing RK's tax strategies from RDPD and Cashflow Quadrant), and getting huge tax refund checks every year. I would put this $10k directly towards paying off my debts & car loans, and that helped to speed the process of getting out of debt considerably!

 

[rcardin]

Find a credit union you can join. They are much easier on loans. Can you save enough to offer 15-20% down on a consol loan?

 

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[Runum]

I see that you are from Michigan. I just saw his week that your state is losing population. That means less buyers and less renters. This is something to consider. Also, as Hak learned, you want to be in the property, finished, for less than 75% of FMV. I would really want to be in, finished, about 50% of FMV. This will be the area that will cover your rear when things go wrong. One other thing, make sure you have good cash reserves. The reserves allow you to keep your cool when everyone else is freaking out. Good luck.

 

[eTyler19]

Find a credit union you can join. They are much easier on loans. Can you save enough to offer 15-20% down on a consol loan?

I did try at a credit union. I actually work at a bank and tried through my bank and was denied also.
I could save up the 15% in about 3 months.

 

[hakrjak]

The payment would be low enough we could afford if the house didn't sell fast enough. Another back up plan would be to rent it out. That would easily pay the rent and bring in a couple extra hundred a month by the numbers I ran. Thanks for responding.

You don't want to do a mortgage on a $20k flip house -- that would just be ridiculous. Closing costs would be about $5k and eat away a huge chunk of your profits right there. Can you scrounge up $20k on credit cards, borrow it from a family member, or take out a line of credit at your bank or something?

I used plastic and bank credit lines effectively to get started in the early days, although some people will say it's risky, etc -- but I don't consider it to be any riskier than a mortgage. You might even say that it's less risky, since if you default on a CC -- you're not even going to lose the house.... vs. a default on a mortgage that will bring a foreclosure down on you.

Cheers,

- Hakrjak

 

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[TaxGuy]

wow I was just about to post a similar thread as I'm in a similar situation.

Goal- become debt free and start investing!

Situation- Considering refinancing now while rates are low, my current mortgage is 7yr IO- 6.25% which was the best I could get back in March w/ good credit, but short credit history and stated income(had just graduated from college in Aug '07). I have about $50k in student loan + CC debt and about $65k in equity. On top that my fiance has about $20k in student loans so we wouldn't be able to roll it all into the mortgage and probably wouldn't want to go above 90% FMV to avoid ending up upside-down on this loan. We also need to get her name on the loan not only to share the burden(she pays "rent" now), but to help get better rates.

Question- Should I refinance now and roll the debt into the mortgage at a fixed rate(hopefully <6%) OR just open a line of equity and have it available for REI or other business ventures I plan to embark on in '09?

As far as a credit union option there is one I can join through work, would like to do some research as it does sound "too good to be true" and I hate for-profit banks anyways, even the guy I got the mortgage from who is a family friend is someone I don't fully trust and want to be as objective as I can before I sign any re-fi paperwork.

 

[eTyler19]

You don't want to do a mortgage on a $20k flip house -- that would just be ridiculous. Closing costs would be about $5k and eat away a huge chunk of your profits right there. Can you scrounge up $20k on credit cards, borrow it from a family member, or take out a line of credit at your bank or something?

I used plastic and bank credit lines effectively to get started in the early days, although some people will say it's risky, etc -- but I don't consider it to be any riskier than a mortgage. You might even say that it's less risky, since if you default on a CC -- you're not even going to lose the house.... vs. a default on a mortgage that will bring a foreclosure down on you.

Cheers,

- Hakrjak

Unfortuanlty I think im all loaned out. My family has no money. A mortgage would be the only way I could grab this property.

My area.

Avg. listing price:$630,373-94%Avg. sales price:$150,762-77%

They are asking 34K

2 br 1 ba 871 sqft Single-Family Home

Been on the market for more than 30 days.

House across the street sold for 90K in August '08

Even with paying the 3K - 4K and cleaning up and repairs, that would put me pretty far under the FMV wouldn't it?

 

[hakrjak]

wow I was just about to post a similar thread as I'm in a similar situation.
Question- Should I refinance now and roll the debt into the mortgage at a fixed rate(hopefully <6%) OR just open a line of equity and have it available for REI or other business ventures I plan to embark on in '09?

I wouldn't worry about the student loans. That's usually very cheap money and tax deductable, so I wouldn't pay it off any sooner than I had to. Don't you already have a good interest rate on that? I know my fiance has about $120,000 in student loans, but we're not too worried about them since she's got a tax deductable loan and it's about around 4.5%... She's going to just pay the minimum until the end of time, or until we are so rich that we can just pay it off.

Regarding your mortgage -- that's up to you, but I know that I am predicting interest rates will continue to drop into the 4.5% range, and so is my Realtor and my mortgage guy. When it hits that point I will refi a couple of my loans. There is simply no upside pressure on mortgages right now at all -- and the entire economy's success is built upon the assumption that they will decline further to revitalize the mortgage market, otherwise we're screwed -- So might as well go along with it.... I don't like the idea of taking money out at a fixed rate though -- get a HELOC if you want access to your money for flips or whatever else, as that is about the cheapest money you can borrow right now, it's interest only, and you can pay it off anytime you think the rates are rising to more than your comfort level. (Right now I have a $55k HELOC that I am paying about $220 a month on... whoohoo!)

Cheers,

- Hakrjak :coffee:

 

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[hakrjak]

Even with paying the 3K - 4K and cleaning up and repairs, that would put me pretty far under the FMV wouldn't it?

I don't know what the house specifically needs, but hopefully I haven't met the 900 sq ft 2 bedroom house yet that I couldn't fully rehab into a new custom home for under $20k, but you never know. Don't forget to include 6% for realtor commission. For such a small amount, I'm sure a realtor worth their salt won't want to wheel and deal on commission, and they shouldn't have to if they do their job well.

If the most recent comp was from 2008 and it was $90k, I would estimate my sales price to be $70-75k just to be kinda safe. In this market you can never guarentee you'll get what was last got...

Looks like a good deal though, worst case scenario you could always rent it for good cashflow I'm sure. Check rents in that neighborhood with a local property manager for your "Plan B" exit strategy, just in case.

Cheers,

- Hakrjak

 

[TaxGuy]

Thanks Jak!

I think what the issue is, is that I have 3 different student loan pmts that total about $330/mo that I would like to consolidate and possibly get down to about $280 or less as well as just making one payment for piece of mind. I guess what I can do now though is get the credit cards into the mortgage, cut them up and start from scratch with a defined budget(I have been tracking expenses for about 5yrs since I got my very first credit card, but still have yet to set a budget b/c I have never had a set source of cash-flow due to school and running my own biz for about a yr :nonod

 

[hakrjak]

Thanks Jak!

I think what the issue is, is that I have 3 different student loan pmts that total about $330/mo that I would like to consolidate and possibly get down to about $280 or less as well as just making one payment for piece of mind. I guess what I can do now though is get the credit cards into the mortgage, cut them up and start from scratch with a defined budget(I have been tracking expenses for about 5yrs since I got my very first credit card, but still have yet to set a budget b/c I have never had a set source of cash-flow due to school and running my own biz for about a yr :nonod

You know they'll let you consolidate or refi those student loans atleast once... I'm not sure if you can do it multiple times or not, but might be worth looking into refi'ing those independently of the house in the near future since interest rates are nearing an all time low.

Budgets are hard -- I set one every year and I don't stick to it. It's my main resolution for 2009 to restrict spending going forward. Good luck with yours

Cheers,

- Hakrjak

 

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[andviv]

eTyler, without knowing too many details about the two of you, I'd say that you are not ready to buy this or any properties yet.

hakrjak is right. A loan for that amount is not the best deal due to other related costs. It is doable, I just don't know if it is economically savvy.

I can only assume your credit score is less than good. That's why your loan applications are being rejected.

I also assume you don't have any savings, do you?

Also, what has really changed in your life that now allows you to stop increasing the debt?

***********

In you situation I suggest you hunker down, take every penny you get to pay the credit card debt, it should take you less than two years.

Cut the tv cable service, sell your car and buy a cheaper one, do a garage clean up and sell everything on eBay, do a budget and stick to it, use coupons for grocery shopping, buy bulk, reduce the cell phone plan, cut the land line if you don't really use it.

I know this advice sounds like not fastlane (and I am very careful of defining something as fastlane or not because the official definition will be released in MJ's book).


*************


I can only say that you will fly higher if you don't have to carry the debt weight.

And I am also saying that you are not ready to buy the property because it seems you don't have the experience. Starting with a property that needs repairs is harder than it sounds. Are you pretty handy, or will you need to hire workers or a GC to complete the repairs?

Being a landlord requires cash reserves. Ask any of the landlords here.
And time. Lots of time. Maintenance takes up more time than what you can expect.
Selling (flipping) has some other costs (agents, taxes, holding costs, etc). Read JScott's blog about it, that will give you an idea.

Rehabbing also consumes lots of time (ask hakrjak, RussH, JScott, phlgirl --where is she, by the way?). Will you have the time availability to deal with this second job?

**********

Sorry if my advice sounds kind of harsh.

Some call it "tough love"

And, by doing what I'm mentioning, you will learn way more about yourself.

***********************

Trust me, two years (or less, if you can come up with another way of bring cash in meanwhile) pass very quickly. Use that time to learn. Prepare yourself.


How would you like to get paid for learning?


What if you get yourself a part-time job rehabbing properties? That will help bringing a little bit of cash in, but remember, you wouldn't be doing for the money but for the experience.

And what if your girlfriend takes a second job at a real estate company, for the same reason?

That would accomplish both goals, would accelerate your debt elimination, while learning a lot about the investment vehicle you want to follow.

****************

Let me close this large, maybe boring post, by mentioning that SteveO's advice is very solid. Problem is, his advice is just two lines but it is worth a lifetime of knowledge. If Steve would make his advice more reader-friendly you would see that he's telling you that, yes, the idea is great (our investments pay for your debt), but the success depends on the implementation. That's why I am saying "learn while getting rid of the debt". Successfully implementing this plan requires knowledge, practical experience and discipline. Do you have those three already in place?

*****************

Again, all of this is based on my assumptions of your situation: debt, bad credit score, no experience in RE --rehabbing, and no cash reserves. If that is not the case, please ignore all of my BS and this message will auto destroy itself in ten seconds.

 

[hakrjak]

Very true stuff in that post... A lot of people do think that you just buy a house and pretty much show up to collect your huge paycheck a month later. This couldn't be further from the truth. I'd caution any newbie from entering the realm of Real Estate without the proper knowledge (Have you read atleast 10 books on the subject yet? Do you have friends in the business? Are you a member of your local real estate club?, etc etc...). Don't get me wrong, Real Estate is easy to be successful at, but it's probably just as easy or even easier to fail at it -- So you enter at your own risk.

Cheers,

- Hakrjak

 

[fanocks2003]

Hello everyone.

I have an idea I would like to run by everyone to get some feedback.

My wife (21 yo) and I (23 yo) are in debt about 25K, mostly credit cards. This was before we knew better, and before RK books, and before the Fastlane. We are both motivated to pay this debt off because its hampering our fastlane potential.

After all expense are paid each month we have left over about $1000. We both work two jobs and bring in about $45,000 year.

So paying off our debt would be 25,000 / 1000 = 25 Months

This seems like a really long time, and a lot of opportunities missed.

Here is where I had an idea, Let me know what you think.

There are a couple foreclosures in my area that I have located. The one I am particularly looking at is asking 34,000K bank owned. Its had years of neglect and pretty dirty. Comps all around that area are between 50K - 90K. I would like to purchase the house, offering around 20K, and fix it up to resell this summer. After resell I would plan on using the profit to pay off the bad debt we have in credit cards.


Thanks for your feedback. :thankyousign:

My initial answer would be no. Why? Because:

1) I guess you would need cash to rehab. If you don't have the money to pay your debt it would seem strange that you have money to rehab. Unless you borrow, which would be strange also considering your debts. Unless you borrow from friends and family and that is usually not a good idea for several reasons. Also in my case it would seem impossible because my family is not that very supportive of my lifestyle.
2) If I really would consider buying it, then I would first find a buyer for it so that I had my own situation secured. So when I actually bought it I had someone signed up on an agreement so that I could just flip it easily to the new guy. Maybe you could just sign an investor up on an agreement and agree that you will fix it up for him in return for some percentages of the new valuation of the house (when he take out a loan against it you would get those percentages in cash). Then your only skin in the game would be the rehab costs which someone may joint venture with you on. Someone who could pay the costs in return for some percentages of your gain from the deal from the investor. Sounds complicated, but may very well work.
3) I would rather start a company. It doesn't cost very much to test demand. And you could use signed purchase agreements to start a company together with cash investors (angel financiers). Purchase agreements will be your stake. I think this is the cheapest of options. Especially if you start a company selling things on dropshipping terms. Later on you could use dividents or owners salary (or whatever) to pay down debt. Maybe even sell the asset of entirely and pay of all debt then and there and put the rest on a 5% (or more) account so you can bring in some interest income.

 

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[Dhappy]

You could buy some mobile homes in parks at 1k a piece and re-sell on a note with $500 down and $300 a month for 48 months. This is how I started many years ago. With 10 of these you would have 3k a month to pay down your debt. It is simple, but not easy. You will have to work to find deals and deal with park manangers, lower income people and do some repairs. Lonnie scruggs is the grandfather of this plan. It is a great read for only around 30 bucks. I bought a friend of mine the book for last christmas and has did seven so far at a average of 2k per deal and re-sold on a note at 19k each.

 

[BryanC]

I don't know, this may just be my opinion, but you may want to just abandon your personal credit till further notice. Say till you build a corporation with good Cash-Flow. Now may be a good time to learn the Corporate Laws and start building a corporate credit record and getting your accounting systems in order. Which is the first step, having all your paper work in line.

Start building a system of production like RK suggests in his books.

I have been reading all the different statutes & codes and how they apply to us. I started from the Federal Reserve out because they produce our paper money. The conclusions I have reached is that the system we inhabit right now is designed to work against the individual at all financial levels. It is designed for corporate risk taking and intelligent management of resources.

It kind of has to do with the way our society is structured and the Social Architecture. The powers that be grant certain rights and privileges to those who design systems of automation for business and production. The Federal Reserve creates Money from our Credit... I.E. - You deposit your Promissory Note into a bank and they issue you Federal Reserve Notes as claim checks against that p-note. Versus you depositing Gold or Silver into the bank and them issuing you Silver or Gold Certificates. But, anyway the people that designed this system provide us easy credit to build such a system. They write the laws. And their laws basically say that if you do these actions you pay 50% of your labor to us. If you do this we'll grant you limited liability, reduced taxes, and an eager, trained from cradle work force.

Plus, with the way the economy is going, it is going to be the corporate owners that win in the end. There is a certain perspective that goes with this thinking... but the way I see it now is: Doing everything under your personal name is like owning GM's stock without any options. The book value is -$100 and the market still says it is worth $3. At any moment bankruptcy is coming and you have no insurance against loss. It is the same way here for all of us operating only individually under THEIR statutes and codes. In this credit system the best insurance you can have is the corporate structure. Don't worry about your personal credit until you have a corporation in line.

Think of it as Monopoly. The best way to win is to force all other players into bankruptcy. You got the game played on you and you probably have more debt than credit which you have extended to debtors.

Another way to look at it: The only way to win the game is to have more debtors which owe you, than creditors which you owe.

Charter a corporation and find out what I am talking about and you can start with a clean slate. New Tax ID for the corp and all. There is so much to this stuff, but as you piece the puzzle together you get a better and more expansive picture of it and best of all your awareness grows exponentially versus looking through a straw like everyone else.

 

[eTyler19]

I don't know, this may just be my opinion, but you may want to just abandon your personal credit till further notice. Say till you build a corporation with good Cash-Flow. Now may be a good time to learn the Corporate Laws and start building a corporate credit record and getting your accounting systems in order. Which is the first step, having all your paper work in line.

Start building a system of production like RK suggests in his books.

I have been reading all the different statutes & codes and how they apply to us. I started from the Federal Reserve out because they produce our paper money. The conclusions I have reached is that the system we inhabit right now is designed to work against the individual at all financial levels. It is designed for corporate risk taking and intelligent management of resources.

It kind of has to do with the way our society is structured and the Social Architecture. The powers that be grant certain rights and privileges to those who design systems of automation for business and production. The Federal Reserve creates Money from our Credit... I.E. - You deposit your Promissory Note into a bank and they issue you Federal Reserve Notes as claim checks against that p-note. Versus you depositing Gold or Silver into the bank and them issuing you Silver or Gold Certificates. But, anyway the people that designed this system provide us easy credit to build such a system. They write the laws. And their laws basically say that if you do these actions you pay 50% of your labor to us. If you do this we'll grant you limited liability, reduced taxes, and an eager, trained from cradle work force.

Plus, with the way the economy is going, it is going to be the corporate owners that win in the end. There is a certain perspective that goes with this thinking... but the way I see it now is: Doing everything under your personal name is like owning GM's stock without any options. The book value is -$100 and the market still says it is worth $3. At any moment bankruptcy is coming and you have no insurance against loss. It is the same way here for all of us operating only individually under THEIR statutes and codes. In this credit system the best insurance you can have is the corporate structure. Don't worry about your personal credit until you have a corporation in line.

Think of it as Monopoly. The best way to win is to force all other players into bankruptcy. You got the game played on you and you probably have more debt than credit which you have extended to debtors.

Another way to look at it: The only way to win the game is to have more debtors which owe you, than creditors which you owe.

Charter a corporation and find out what I am talking about and you can start with a clean slate. New Tax ID for the corp and all. There is so much to this stuff, but as you piece the puzzle together you get a better and more expansive picture of it and best of all your awareness grows exponentially versus looking through a straw like everyone else.

Are you saying stop paying the monthly payments? and use the money to start a business?

 

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[BryanC]

Are you saying stop paying the monthly payments? and use the money to start a business?

Yes, that is what I am saying. You may as well step up to bat and try to hit a home run. Start building your network of Debtors to your business and doing what the Credit card company did to you. Put people into your debt and keep the money your business owes to a minimum. Only buy things on Credit to satisfy the needs of your network of Debtors.

It may be your easiest way out of your personal debt. Transfer the obligation to other people in the form of a product or service.

There is many different strategies... but I believe the best I have come up with is: Increase your Credit by increasing the people indebted to you. Then your line of Credit with the banks will increase. You may as well realize like I have that you are only going to be a middle man in the end. No matter what you do, you are only going to be using the bank's wealth.

We are all playing a game with the bank's money. The bank and government own and control everything. The only way to win is to use a Corporation where all your Liability is isolated in a legal entity. Your corporation is a pass through between your debtors and the banks credit. Your job is to expand your Debtor base to twice your extension of Credit from the bank. Or have twice as many Debtors as Creditors. The bank is the seller of credit, you are a credit broker, and the buyers of your product/services are the banks buyers. You are connecting the bank with consumers.

What's in it for you? You get to gain more and more control of the banks wealth by accumulation of deed's, stocks, bonds, etc. But seeing it is all priced in dollars, it is going to end back up at a bank somewhere. It is just a matter of passing the liability on to somebody else. LoL.

 

[Runum]

I hope I am misreading your advice Bryan. I respectfully disagree. Business is built on trust and being a person of your word. Tyler signed agreements to pay for the things he put on his credit cards. He was not under duress. He enjoyed the products and the use of the cards now it's time to pay for the good times. I agree with getting creative about finding ways to pay the obligation but I do not agree with stopping payments.

Building a cashflowing business is going to take some time and effort. It may take a few months or it may take years. No guarantees. To stop making payments on your obligation so you can build your own business, what a violation of trust IMHO.

 

[BryanC]

I hope I am misreading your advice Bryan. I respectfully disagree. Business is built on trust and being a person of your word. Tyler signed agreements to pay for the things he put on his credit cards. He was not under duress. He enjoyed the products and the use of the cards now it's time to pay for the good times. I agree with getting creative about finding ways to pay the obligation but I do not agree with stopping payments.

Building a cashflowing business is going to take some time and effort. It may take a few months or it may take years. No guarantees. To stop making payments on your obligation so you can build your own business, what a violation of trust IMHO.

I am not trying to make it sound like a violation of trust. I understand what you are saying. My message is basically this: It may take him years to get out from under the debt working for a wage. Why? Well, oppressive taxation on wages, wages are a difficult form of income to acquire, and the interest that is going to compile on the loan while only making bare payments is like rowing a boat with one ore going in a circle. If he got out from under the employment trap and used the financial stimulants the system offers he may be able to return the capital to source much quicker. If he temporarily delayed the payments, started a business and used the advantages offered by the corporate structure, he may be able to pay it off quicker.

It may take years working for wages. Using the system for what it was designed for and paying off those debts quicker just seems like a better idea to me.

 

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[Runum]

I am not trying to make it sound like a violation of trust. I understand what you are saying. My message is basically this: It may take him years to get out from under the debt working for a wage. Why? Well, oppressive taxation, wages are a difficult form of income to acquire, and the interest that is going to compile on the loan while only making bare payments is like rowing a boat with one ore going in a circle. If he delayed the payments, started a business and used the advantages offered by the corporate structure, he may be able to pay it off quicker.

It may take years working for wages.

Yes, I agree, it will take years with wages. That's just about a guarantee. But you know that not paying is going to ruin his personal credit. He will go into collections, his state may allow garnishment or there will be a judgment. That's also a guarantee. Building a business has zero guarantee and even worse than zero for a first timer.

If he wants to delay payment without negative consequences he would need the cooperation of his lender. How would you suggest he sell this to the lender to make them want to go along with this? Am I missing something?

 

[BryanC]

Yes, I agree, it will take years with wages. That's just about a guarantee. But you know that not paying is going to ruin his personal credit. He will go into collections, his state may allow garnishment or there will be a judgment. That's also a guarantee. Building a business has zero guarantee and even worse than zero for a first timer.

If he wants to delay payment without negative consequences he would need the cooperation of his lender. How would you suggest he sell this to the lender to make them want to go along with this? Am I missing something?

Well, it's all a subjective matter. And one he is personally going to have to deal with. All that happens from here on out is going to be a matter of mental and emotional power. I myself see it as: What's the worse than can happen?

I would suggest he just tell the lender what the deal is. Walk right in there and say, "I am starting a business. You can either accept my new terms and conditions, put the loan on hold, and this is how it's going to be. Or watch me default. I got to start somewhere, sometime, and it's either now or never! I ain't going to live forever."

It's his life man. He is going to have to go through all of this anyway. It is better to get started sooner than later. The sooner he gets out there where there is no guarantees and gets started on his own, the sooner he will win and the debts repaid...

He ultimately has to learn how to make it on his own. The longer he is stuck in the rut, the longer he is dependent on a job.

It is just my opinion to get out there and get started NOW. Versus letting a debt hold you back. I guess that sounds like mistrust but we are all operating in a state of bankruptcy. The only ones that win are the ones that go for it and just keep sticking to it. So if he starts now, fails, and keeps going he will eventually make it.

Defaults and bankruptcies are built into the system to give the dollar value. Seeing we all usually owe more dollars than we earn, there is built in demand for it. I can't change that and neither can you. He may as well put up with the consequences sooner or later.