When It’s OK To Do Nothing

Posted: August 4, 2008 
Filed Under: Answers To FAQ, Observations

In our fast-paced Western culture of go-go-go and do-do-do it’s tempting to think that all problems can be solved by being proactive and *taking action*. However, that’s not always the case, especially when dealing with financial problems.

As the saying goes, “You can’t squeeze blood from a turnip.” And with regard to creditors, they can’t take what you don’t have. Therefore, there are some unique situations where sitting idle and *doing nothing* (at least in the short term) might be the way to go.

Here are two examples …

Example #1:

Let’s say you’re presently unemployed and you have few or no assets to your name. Thus, there’s no wage for a creditor to garnish and there’s no car or property for them to seize. A creditor could huff and puff and do their best to intimidate you, but if you find yourself in a situation like this there’s not a whole lot that a creditor could do to you to really hurt you financially.

Example # 2:

Let’s say you’re retired and your only source of income is a pension or social security check. In most cases, this type of income is off limits to creditors. But what if you’re a homeowner? Ok, fine. A creditor could sue you and get a judgment against you, then they could attach a lien to your house. But they won’t get any money from you unless you sell your home. So if you don’t plan on moving any time soon, that lien could sit there for *years* before the creditor collects a dime.

The concept we’re talking about here is being “judgment-proof”. Yes, it takes some intestinal fortitude, but ultimately your creditors can only do so much if there’s nothing there (financially) for them to go after.

Now please don’t take this the wrong way. I’m not suggesting that you deliberately do things to try and screw your creditors out of the money that you rightfully owe them. Not at all.

But what I am saying is that if you’re going through a rough patch financially, there are some unique situations where you’ll temporarily be just fine by *doing nothing*, and it won’t cost you a dime. Certainly you are going to want to straighten things out eventually. But sometimes the best course of action in the immediate moment is simply to sit tight, remain calm and do nothing.

Naturally if you are *working* and/or you have some *assets* that creditors could go after, that’s a different story. In other words, if you are gainfully employed or you have assets that could be at risk you might need to actively pursue a solution to your present financial dilemma while you still have the opportunity to do so. (Translation: Don’t become a sitting target for your creditors.)

In most cases you will need to be proactive and take action to solve any financial challenges you are faced with. However, as described above, there are some unique situations where you’ll be just fine by doing nothing.

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The Debt Elimination Scam … Version 2.0

Posted: March 6, 2008 
Filed Under: Observations

When people are faced with a difficult financial situation, sometimes they make decisions out of pure desperation that they’ll later live to regret. One such decision is taking the “debt elimination” plunge.

The basis of the debt elimination “procedure” is that promoters claim that you never actually borrowed any money on those credit cards, because credit card debt is not *real* money. Hence, there’s nothing to pay back.

Yeah, tell that to the judge, then let me know how that worked out for you.

My good friend, Charles Phelan, of www.zipdebt.com, just published an excellent article on this whole debt elimination thing. It’s definitely worth reading. Here’s a direct link to his article >> www.zipdebt.com/blog/debt-elimination-variation

Over the years I’ve seen the debt elimination scam come and go, and apparently it’s making it’s rounds again with so many people struggling financially these days. And sadly, there will be unwitting people that will sign up for the debt elimination procedure and it will make their financial predicament even worse. Just don’t be one of them.

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Warren Buffett: U.S. In Recession

Posted: March 4, 2008 
Filed Under: Observations

Last night I watched a fascinating (to me, anyway) interview on CNBC with billionaire investor Warren Buffett. Among the many things he talked about, he came right out and said, “From a common-sense standpoint right now, we’re in a recession.”

Ironically, I published an article on this blog just last week stating the exact same thing, even though many in the media and government are presently waffling on the topic and afraid to come right out and say it. Here’s the link to my article in case you’re interested.

The numbers don’t lie. They are what they are.

On a positive note, though, he did restate his view that over the long-run the U.S. economy will do fine and that each generation will live better than the one before it.

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Is The U.S. In A Recession?

Posted: February 28, 2008 
Filed Under: Ask Mark, Observations

While watching the evening news the past few weeks, there have been several stories about the “possibility” that the U.S. “might” be headed into a recession.

Might?

Yet today President Bush told reporters at a news conference that “I don’t think we’re headed into a recession”.  

Huh?

You don’t need to have graduated from the Harvard Business School to know that we already are in a recession. Maybe certain business leaders or people in the government don’t want to “scare” the American public by actually uttering the word r-r-r-recession.

But come on, give us a little credit here. We all know what’s going on. Things are not going that well financially for a lot of Americans right now. All you have to do is take a look around.

And you know what? As much as I hate to say it, I think it’s probably going to get worse before it gets better. You don’t just snap your fingers and halt a juggernaut overnight. It took years (perhaps a couple decades) for us to get to where we are right now, and I believe it’s going to take a few years or longer to get this thing turned around.

Sorry to sound like Mr. Doom-and-Gloom, but you can’t ignore the facts.

But in a strange way this cloud could have a silver lining. I actually think some good can come of these challenging financial times.

With all the financial pressure and uncertainty, we’re all eventually going to be forced to make some new choices that will require all of us to …

From a financial perspective, I believe each of us needs to reduce our debt burden and simultaneously consume less and less to break out of the cycle that traps us in financial servitude. As we do that, things will settle down, and we’ll start to experience freedom again by not having to work so many hours to support our prior spending habits … and we’ll probably conclude that we didn’t need half of the crap that we thought we needed anyway.

And maybe one day we’ll get back to the day where it’s socially acceptable to just sit on your back patio with your neighbors on a July evening and just listen to the baseball game … or play fetch with your dog … instead of checking your email 20 times a day from your iPhone.

No doubt it’ll take some courage to walk away from the illusion of excessive consumption, and consider the possibility that your quality of life will be just as good (or even better) without the burden of all the “stuff” you thought you needed.

OK, I think I’ll go take a nap now.   :-)

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The Effect Of Difficult Economic Times And Its Impact On Debt Settlement

Posted: January 22, 2008 
Filed Under: Answers To FAQ, Ask Mark

During the past couple weeks, numerous people (both clients and colleagues) have posed the following question to me:

With the U.S. and global financial markets presently experiencing a lot of stress and turmoil, how do you think that’s going to affect credit card companies’ willingness to settle for less than full balance on delinquent accounts? 

At first glance you might be tempted to say, “Gee, in difficult economic times with so many people struggling financially and unable to pay their bills, credit card companies would probably be very eager to accept just about anything they could collect.” However, my experience actually suggests just the opposite.

What I’m saying is that when we are in a challenging or recessed economy, it is common for large financial institutions to actually be less willing to write off a substantial portion of the debt that you might owe just because profit margins aren’t what they used to be (when the economy was booming).  In other words, when profit margins are down they just can’t be as generous in writing off large amounts of debt.

Now that’s not to say that you still can’t obtain settlements for less than full balance on delinquent accounts when we’re in a tough economy. Quite the contrary. It’s just that you might have to work a little harder because creditors might put up more resistance than usual because their coffers are not as full and there’s less margin for error. When the economy rebounds, it’ll more than likely return to business as usual.

Just my opinion and observation after working in this industry for over 12 years.

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