By Matt Paul
November 25, 2018
The newest gadget, a new car or home all of this can be had if you sign on the dotted line.
If you have a job or are self-employed with a notice of assessment, you can get whatever you want right now. Saving is a concept for the rich and the rest of us, we live this life in debt until we part. It is a game and the score keepers are the credit bureaus. Pay on time and more than the minimum managing a low percentage of your overall available credit and you get a high score. Credit is the great equalizer, manage it well and you can get 5 % cash back on your purchases with no risk because you pay your balance.
The system is rigged in favour of the banks; they pay no interest on your savings and take fees off of all investments whether you trade yourself or one of their funds. Also they charge you if you miss a payment, dishonor a cheque or go over your limit. Credit Unions are other institutions are quite a bit more customer-centric, however, the debt based economy is a danger place to engage in. You need to carefully consider how much you want something before you buy it on credit. Most people are not encouraged to do so until it is too late.
As a debt insider, I worked for a leading financial institution for 9 years and I can tell you that credit defaults are common place and a built in factor to these bottom lines. People are cultured to spend and spend. Then the banks condition the person to pay and pay. When things happen and that stops they call and call. When people get sucked into the buy and buy eventually they will receive the other end. It is sad, day after day to see thousands of people being called about past due bills and made to feel that they did something wrong by using their debt products that they are now having trouble paying for. As little as 10 years ago the industry was aggressively demonizing these people and now they are taking a kinder and gentler approach?
The truth is that delinquency and default is priced into the business of charging 11.99 to 27.99 percent annual interest on money that they either have on deposit paying less than 1% annually or money they borrow from the Bank of Canada at 1.75 %. When the bank borrows money from the bank, the principal balance is created by the Bank of Canada. The interest on that money to pay it back is not created, so in order to pay it back, the Bank has to find additional value in the economy and someone, somewhere, is going to default because the interest is not created.
The fundamental element of our system of money in debt is a scam.
If you feel bad when you can’t pay your bills or loans or mortgage, just remember that things will get better and that you will pay when you can. If a collector calls from a bank, ask them to waive interest or settle the debt. Do not let them guilt you into paying what you cannot afford. Do not let them contact you outside your comfort level. If you don’t make a deal, your account may end up with a collections agency who have even less leverage. No one can force you to go bankrupt either, so a trustee should really not be a consideration for small amounts of debt. The only leverage they have is by messing with your credit score and they can only do this for limited time per your province’s statue of limitations. If your balance is under $10,000 they will not take you to court of garnish your wages, it just doesn’t make sense.
Do not be scammed by these people on the phone’s working for the banks in Collections. They are incentive-vised to get your money. Pay yourself and your family first.