Money withdrawls
So, the theory goes like this. Your traveling along in life, you have been getting gradually better and better wages and your lifestyle adjusts, the new house, the new car, the boat etc etc etc. You borrow more because you have the ability to pay back more, ie 4 credit/store cards not one. So you work to live so you can pay your bigger bills.
So what happens when it all comes undone. You lose your job, you fall ill, someone uses your credit and marks you for life.
I have been there, I had all of the above and more, had a great business I had built, and one day my illness got the better of me and I lost everything. Took a while but it did happen. I was making a big salary had the cars and all the toys. Went from that to nothing nearly overnight. What I find interesting is even though the money wasn't there any more I continued to spend as though nothing had happened. I remember thinking I will get out of this, I will think of something. Of course I didn't. It was a long drawn out end to what had been a very successful life.
So why don't we recognize the situation for what it is, why do we continue to borrow, to live a lifestyle that far exceeds our income ? I think its a couple of things. Firstly I think that we don't really understand the value of $1.00. When you are making big money $150-$500 isn't a lot of money so you spend it on things that you want. Once you lose the income and re adjust $10.-$20 becomes a lot of money, you have a far better idea of what it takes to get through with the essentials. Secondly I think its pride and a feeling of duty. Pride says that you don't want to admit your in trouble, to admit to your peers that you have somehow failed, The feeling of duty to those around you who you supported during the good times, that you are letting them down.
When it all comes undone no matter the reason it is an extremely embarrassing and painful experience. To have failed so publicly and in front of your peers leaves the person alone scared and leaves scars for the rest of their lives. Add to this a bankruptcy and you have made things 100 times worse for that person for the rest of their lives. Inability to gain credit for things such as homes means that these people unless by some miraculous happening and they manage to save for the full amount for a home will never obtain the great dream. Regaining credit after a bankruptcy is difficult to say the least.
I hear the chorus of "good he went bankrupt he isn't worthy of credit". Now that is not always true, repeat offenders I think should be marked for life, but after a reasonable period of time someone who had a one off blip on the radar should be treated far differently. Genuine illness can happen to anyone, and when it takes nearly 6 years to recover to a point where maybe you could look at rejoining the workforce, no income protection insurance is going to let you hang on the teat for that long. So why don't we allow people to regain their lives to rebuild? After all the banks got off the hook during the GFC for their poor money management what about the rest of us.
Why don't we, well its a thing called greed. You see those who loan you money want to see a return every time they invest, they want to see that money they loaned you making them a nice profit in return. The risk they take is paid for in fees and interest rates on loans. The higher the risk they higher the interest rates, i.e credit cards are considerably higher than a mortgage rate. What they don't tell you is that the bank insure the loan against loss, therefore minimizing their loss to basically interest only. The banks also factor into their interest rates an amount of toxic loans.
Now I understand that a lender has a right to have their money returned and a loan agreement is an agreement to pay, and therefore a default by bankruptcy is unacceptable. But why do lenders then continue to lock people who are outside their bankruptcy into a cycle where they will never get ahead?
I could go on for hours about how unfair the system is and how unfair it is to lock people into a situation they have no reasonable expectation of ever getting out of. What irks me the most, is that the banks have proven time and time again they are not good with credit, they fail and take thousands and thousands of ordinary people with them. They are forgiven their sins immediately yet the rest of us wait a lifetime for ours to be forgiven.
I have been there, I had all of the above and more, had a great business I had built, and one day my illness got the better of me and I lost everything. Took a while but it did happen. I was making a big salary had the cars and all the toys. Went from that to nothing nearly overnight. What I find interesting is even though the money wasn't there any more I continued to spend as though nothing had happened. I remember thinking I will get out of this, I will think of something. Of course I didn't. It was a long drawn out end to what had been a very successful life.
So why don't we recognize the situation for what it is, why do we continue to borrow, to live a lifestyle that far exceeds our income ? I think its a couple of things. Firstly I think that we don't really understand the value of $1.00. When you are making big money $150-$500 isn't a lot of money so you spend it on things that you want. Once you lose the income and re adjust $10.-$20 becomes a lot of money, you have a far better idea of what it takes to get through with the essentials. Secondly I think its pride and a feeling of duty. Pride says that you don't want to admit your in trouble, to admit to your peers that you have somehow failed, The feeling of duty to those around you who you supported during the good times, that you are letting them down.
When it all comes undone no matter the reason it is an extremely embarrassing and painful experience. To have failed so publicly and in front of your peers leaves the person alone scared and leaves scars for the rest of their lives. Add to this a bankruptcy and you have made things 100 times worse for that person for the rest of their lives. Inability to gain credit for things such as homes means that these people unless by some miraculous happening and they manage to save for the full amount for a home will never obtain the great dream. Regaining credit after a bankruptcy is difficult to say the least.I hear the chorus of "good he went bankrupt he isn't worthy of credit". Now that is not always true, repeat offenders I think should be marked for life, but after a reasonable period of time someone who had a one off blip on the radar should be treated far differently. Genuine illness can happen to anyone, and when it takes nearly 6 years to recover to a point where maybe you could look at rejoining the workforce, no income protection insurance is going to let you hang on the teat for that long. So why don't we allow people to regain their lives to rebuild? After all the banks got off the hook during the GFC for their poor money management what about the rest of us.
Why don't we, well its a thing called greed. You see those who loan you money want to see a return every time they invest, they want to see that money they loaned you making them a nice profit in return. The risk they take is paid for in fees and interest rates on loans. The higher the risk they higher the interest rates, i.e credit cards are considerably higher than a mortgage rate. What they don't tell you is that the bank insure the loan against loss, therefore minimizing their loss to basically interest only. The banks also factor into their interest rates an amount of toxic loans.Now I understand that a lender has a right to have their money returned and a loan agreement is an agreement to pay, and therefore a default by bankruptcy is unacceptable. But why do lenders then continue to lock people who are outside their bankruptcy into a cycle where they will never get ahead?
I could go on for hours about how unfair the system is and how unfair it is to lock people into a situation they have no reasonable expectation of ever getting out of. What irks me the most, is that the banks have proven time and time again they are not good with credit, they fail and take thousands and thousands of ordinary people with them. They are forgiven their sins immediately yet the rest of us wait a lifetime for ours to be forgiven.
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