Part One: The World of Debt

How I see the Financial World


Part Two: The Teachings of Scrooge 

 Part Three: Credit Control 

The Merchant of Venice

Debt as a means of procuring wealth has been around for a long time. In the Merchant of Venice, Shakespeare shows greed and usury in its most formidable form when Shylock asks for a pound of flesh as payment for a loan.

Nowadays, most companies, like banks, credit card companies or even utility companies won't be asking you for a pound of flesh but will charge you high interest rates.

If you have amassed a large debt which you now find very difficult to pay back, you cannot be to blame. Life goes in cycles. Sometimes one is able to borrow and meet the payment deadline. And sometimes one's personal circumstances change and you simply just cannot pay back the loan. You have three choices:

  • You can work out a payment schedule plan on your terms
  • You can consider paying back only the principal
  • Buy a one-way ticket to your dream destination
Remember that financial institutions are all about risks. Why did they lend you money if you were a risky proposition in the first place? It is because the risk of not getting paid back costs them less than the profits they get from the people who actually pay all or some of the money. And this is so, otherwise they wouldn't be in business.

Monkeying with your money

Your hard-earned dollars go into a bank account. For this privilege banks may give you up to 5% interest. But for the privilege of you borrowing money from them they may charge you up to 19% interest. How unfair. Besides, they make money charging you interest on interest if, like some people, you are late in your payments. And if we consider that some people have more than one credit card, then the income generated from the credit cards increase exponentially. Why give these companies control over your lives? Since credit cards charge some of the highest interests around, these debts are the first to go...completely.

Six Plus Six is Thirteen

The idea here is to get someone with more money than you (a family member or a close friend) to buy your high interest loan in exchange for a higher rate of return than the bank gives him. Say you owe $20,000 at 19%. Mr Nice, a family member, agrees to pay off your loan if you pay him 13% instead of the 7% the bank gives him. By accepting this, you reduce the interest on your loan by 6% and he increases his interest on his investment by 6%. This allows you to pay off your loan, if not sooner, at a lower cost.

The True Story of the Three Little Pigs

The truth is that financial institutions exist to make money off you. You are just a little piece of ham for them. Don't believe their marketing campaigns that tell you how much they are doing for the world and how much you need their products. Be weary of financial advice that comes from financial institutions. There is a conflict of interest there. Of course banks are going to advice you pay your loans off first. Do they ever advice you plan a vacation or look after other expenses first?

Part Two: The Teachings of Scrooge