Slavery was outlawed in the United States.
But many people don't realize that debt slavery is alive and not so well today.
What do I mean by debt slavery? Let me give you two examples.
First, the credit card companies.
They look at your FICO credit score and they raise your interest rates to 20%, 24% or 29% as the "default rate" even if you haven't defaulted.
They say you've become riskier as a borrower.
And of course, you agreed to this rate in that mess of fine print when you got their card.
If you call and ask them for a lower rate, the customer service person punches your name into their computer and says that this is the best they can do.
If you are paying at this interest rate, it will take you a number of years to pay off the credit card.
And meanwhile you are working for this debt.
You are a debt slave in this fashion.
Second example is your mortgage.
Let's assume you are "upside down".
You owe more than your house is worth.
Are you really a "homeowner"? No.
I say you are a HomeLOANER.
Your bank owns your house.
You don't own anything.
See, as a renter, I can move out.
As long as I pay the rent, I can stay here.
My landlord is bound by law to fix things that break and provide a general level of good repair.
But as a homeowner, you are on your own.
You owe more than your house is worth so it is hard to move away.
And all the repairs and all the headaches are yours alone.
I say you are a homeloaner in this case.
And you are a mortgage debt slave.
You are working very hard in order to pay too much to a lender.
Where is your life? And you worry about where you are going to live and how you are going to pay for a medical emergency or temporary period of unemployment or disability.
So we've discussed two examples of people who are in a form of debt slavery.
How do you propose freeing yourself? First, don't run through all your savings (if you have any savings.
) You must become self-sufficient.
You must have savings to meet emergencies and take care of yourself and your family.
Second, start a plan to work out your debts so you are no longer a debt slave.
Engage your mortgage lender in negotiations to lower your mortgage payment or approve a mortgage short sale.
A mortgage short sale lets you find a buyer even though the house isn't worth what the buyer brings to the closing table.
The lender gets the money even though it falls short of paying off your mortgage.
And the lender releases your mortgage.
Third, begin to live within your means.
If that means renting a smaller place, then so be it.
What you cannot do is what so many Americans are doing.
You cannot live beyond your means and expect someone else to take care of you.
That is your job.
Am I advocating that you simply walk away from your house or your credit cards? No.
I developed the Mortgage Relief Formula which is a home study course, a step by step guide to getting out from under.
Out from under a house that you cannot afford.
Out from under a crippling mortgage.
Out from under crushing credit card debts.
And I think you can do all this and actually improve your credit score.
That's right, your FICO score can go up.
So if you think you have no options, that you are locked in to this debt slavery let me assure you that you are not.
I got out from under years ago, in the last California real estate crash.
I thought I was trapped but I found out I wasn't.
I did a short sale, rented for awhile and then used the same bad sellers' market to my advantage and bought a gorgeous house for next to nothing down.
I didn't go to the bank for a loan, either.
The sellers let me pay the payments on their existing loan.