Who is stealing your money?

 

Sam left the bank with $20,000 to be paid over 10 years.  A huge smile on his face, he felt good that he was able to gain the trust of the bank to loan him such a lump sum.  Everything looked fine. The loan was insured in case anything happened. The banking officer smiled on the returns that he would make on his sale.  Ching, ching… the officer has created a path to earn money over the next ten years; Sam  created a situation to pay triple the money loaned to him….(but if used properly, could also use that money to make more money – truth is it hardly ever happens because only 5% of start-up businesses actually succeed in the first 5 years!) 

Did you ever think of this nicely establish institution, with a nicely dressed officer, as a thief?  Only that it can be done legally with all the fine prints on the documents that need to be signed.  By the end of 10 years, Sam would have paid back over $60,000 in interest for this $20,000 loan.  Legally, it is all binding.

Two streets further, Mike, a father of two walks through the supermarket completely disillusioned.  He could not afford to pay for groceries because after all the bills were paid, there was no money left.  He lost his job two months ago. His wife’s income is not enough to cover their living expenses.  Although he gets a small amount from employment insurance it is not enough to cover the monthly expenses.  He had not anticipated the downsizing of the company he worked for.  Not knowing where to go, he grabbed a grocery bag from the cart of an absent minded shopper and quickly disappeared into the crowd. There must be something in there that he could take home.   He felt awful but justified his action by the thought that his daughters would be fed tonight.

If Mike is caught, he would be looked at as a thief.  He would be reprimanded, possibly fined…the consequences can be severe.  Is he really a thief?

 Lately, I have become  more aware of the financial stress that bears on many of us and the impact on emotional and physical well-being. I am appalled by the  statistics on financial stress, job loses, by the stats that 1/3 of borrowers never pay back, huge loans that students carry to get an education, the mortages  and foreclosures,  the number of insurance policies we pay (just in case something happens!) and the multi billion dollars that  financial institutions make from lending money on high interst rates and hidden fees that many consumers don’t take notice of.  In fact, today selling products (tangible products) is not the main way to make profit as it was before.  It is the actual financing of products that make profit…. think of your cell phone, credit cards, buying a car, taking a mortgage etc.

Take a look at these stats (it is all American base)

  • 2 % of the overall population of Americans  have a savings account
  • the average number of American families has more than eight thousand dollars in debts on their credit cards (which will take a lifetime to pay if you pay only the minimum)
  • worrying too much about their finances is the main cause of chronic stress which caused 25% of total population of Americans to be absent from work.
  • financial problems and  stress is the leading cause of divorce in the United States. Nearly each marriage goes through money problems and most couples would find divorce as the only solution to this problem. Divorce is the fist main reason for people who are filing for bankruptcy. A great debt will absolutely break a marriage and later on your family.
  • Two out of every three women who were interviewed named financial stress as the greatest threat for American families
  • Sixty percent said that they are more concerned about paying their bills for each month
  •  Only fifteen percent of those women who are interviewed said that they don’t have any debt while four out of ten women are overwhelmed with financial problems. Nearly half of the mothers who are married and who have children under 18 years also feel overwhelmed.

          Article Source: http://EzineArticles.com/4819390

The old folks saved money under the mattress and planned their expenditures over a long period of time.  I remember the process my parents went through when building their house – one room at a time – and most of the building was done during summer holidays because the children were part of the labour required to carry bricks and it did not cause a disturbance in school activities.  The children shared rooms until the house expanded gradually and by their retirement, they did own a beautiful home.

Today we have great financial institutions that make things happen faster for all of us.  In fact, it allows us to enjoy certain luxuries earlier in our lives that we may not be able to afford otherwise – even though we pay triple the price later. However, in making things happen faster, there is no end to what human beings can consume – and more than anything else, money is really a means to an end… and there is no end to what money can buy.  We always need one more thing to look prettier, to perform better, to keep up with others…. The constant stimulation of the media keeps us wanting more. 

More than that though, I think that the rules of the game have also changed.  There is general notion that one should save 10% of their earnings and I think that works well when there is constant work.  However, in  our fragile economies where contract work is taking over steady permanent jobs, it is harder to save; the cost of living and technology has changed and many “things” that could be considered as wants in past have become items of great convenience and keeping up with the times.  I have been surprised at the number of assignments kids are given at school that requires the use of the computer and internet.  It is now taken for granted that all homes have computers and internet access.   One can argue that people should make smart choices but at the same time the psychology of marketing especially on our youth, has an huge impact on their decision making which goes in the favour of product sales. As parents, we always want to give to our children what we did not have.  Also, some of the financial decisions we make at 25 years old, when we are single, can have a huge impact 10 years later… by which time other major things happen in our lives such as getting married, hving kids, expereincing job loss etc…

Security is important to all of us.  To know that we have a secure job, a secure home, a secure family, a secure future with good financial security.   Plan wisely… putting a penny aside for rainy days is still very much important and don’t feel that we need to have everything out there. Having much, which is all financed by someone else, is not real security. In fact, it becomes a liability… hence the collapse of multi-billionaires and million dollar institutions overnight. If everything is insured (which is another cost), the results can be different…

 Who is stealing your money?  Who are you giving your money to? Are you paying more than you should be paying for things?  Is your life-style too extravagant?  As a great friend said to me “It is harder to come down in lifestyle when you are living “up”.  Be mindful…climb slowly.

 LookGood!!! FeelGood!!! by paying attention to your finance.

 Love,

Magdalene

 
 
 
 
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