How to Become a Debt-slave
My mother used to tell me: "Unless it's an emergency, don't ever pay for something on a credit card that you can't afford to pay off entirely by the time the first billing statement arrives in the mail."
And like most of the good advice I've been given, I ignored it like an utter and complete fool.
Now I wish my mother had tied me up in my bedroom and forced me to listen to brainwashing tapes for hours on end, instructing me in the dangers of dealing with legal loan sharks.
Not that I'm swimming in debt, especially compared to my friends who will be paying off college loans until their retirement, but I wanted to take this space to warn the youth of America.
Young people: Credit card debt is a euphemism for volunteer debt slavery. Write it down and don't forget. You'll thank me for it one day.
I offer myself up for example. I'm 33 years old, and it was only a year ago that I paid off my Discover card bill that dated back to when I was 22.
I charged that card up to $1,000. And I was paying on that same $1,000 for nearly a decade at 18 percent interest. About two years later, I bought a love interest of mine a $1,000 diamond ring. On credit.
That was really dumb, but this was my thinking at the time: I had purchased a new car with a price tag of $12,000 and that would only take me five years to pay off. The guy selling me the ring said the payments would be "only" $35 a month. I figured: shoot, I'll have this paid off in less than a year.
Something the ring guy forgot to mention was that his jewelry shop periodically sells it debt to a huge Fortune 500 company called Household Retail Finance. I didn't find that out until I started receiving statements.
Five years later, after hours upon hours on the phone with a "customer service rep," I was informed that even if I paid the $35 minimum payment on time every single month, only three dollars -- three dollars! -- went toward the principal I owed. Everything else went to pay off the interest.
And to get that little trivial admission from the corporate bureaucrat on the other end of the line was like pulling teeth.
In any case, at the rate I was paying, it would take me 15 years to pay off a ring that, if I pawned it, would fetch less than $300. Not that I could have done so, because at that point I wasn't even with the young lady I bought the ring for.
Of course, if the friendly ring salesman had told me about the slave shackles he was selling me before I agreed to buy them, I wouldn't have done it. In fact, I don't think anyone with a functioning brain would agree to such terms, if they'd only known.
And that brings me to my first point. Shame on me for being a financial ignoramus. But the flip side of the coin is: Billions of dollars in profit is being made by shameless and faceless credit card corporations precisely because they know a fool is born every minute.
You would have thought that this experience would have discouraged me from ever buying something on credit again. But with two kids to care for, I relented and got mixed up with Providian, another huge debt slave master who was "only" charging 11 percent interest.
When I got my tax refund back this year, I sent them $500 to pay down the debt to a manageable $1,000 balance. Two weeks later I received a statement that indicated my new interest rate would be 28 percent!
I called Providian to ask what in God's name was going on, and the only explanation I got was: "Well, we sent you a notice in the mail." What that has to do with the price of tea in China I don't know, but that's what they told me. And I was talking to a manager.
Then, to top it all off, just last week I received a collection notice in the mail, concerning a $742 bill they claimed I owed Fleet Financial Service Corp. I called the number on the notice and told them that not only have I never had a Fleet card or account, I could count the number of times I've used one of their ATM machines on one hand.
The guy told me: "Okay, I'll take it out of the system and you won't hear from us again." That was it, which tells me either the man is a bold-faced liar, or the system is so screwed up that these kinds of mistakes happen all the time. Had I not called, and just sent a check, how much do you want to bet they would have cashed it, no problem?
So we've got Christians, quoting scripture, getting morally outraged about gay marriage and liberal educators -- yet not a peep from them about usury, which, according to the Old Testament, is a moral crime. I guess they must have skipped that part of Leviticus in favor of scriptures that fit their political views.
And on the education front, our right-wing brothers and sisters love to talk about how dumb kids are today, which is why they support standardized testing, vouchers and so forth.
That's all well and good, I suppose, but if they truly believed in the concept of "No Child Left Behind," wouldn't they be fighting to make basic accounting and financial management a core curriculum class?
I'm finally reading the book "Rich Dad, Poor Dad," and it points out that rich people teach their kids things about money that poor and middle-class parents don't; namely, how to make money work for you and not the other way around.
Now, if any of us truly believe no child should be "left behind," as No. 43 likes to say, then we've got to see to it that working class students are financially literate. Of course, that would mean cutting into the profit margin of credit card companies and God forbid loan sharks would have to come up with a new scheme for hoodwinking the masses.
We need another abolitionist movement -- one that aims to eliminate debt slavery.
Sean Gonsalves writes for Cape Cod Times.