Posted 6 years ago on March 21, 2012, 12:18 p.m. EST by unimportant
This content is user submitted and not an official statement
I have found a way to explain to you in words that even you can understand and relate to.
First some parameters. Your income is $100,000.00 a year Your current debt is $300,000.00
You have some commitments that take almost all of your income and leave you with a couple thousand dollars at the end of the year to try and pay down your debt.
Now this is not a great situation but at least you are not digging yourself in deeper.
Now I come to you and tell you about how great I am as a money manager and tell you that I can help to pay your debt down so that it is manageable and that you will eventually get out of debt. You sign a four year contract with me to manage your life.
In the first year an uninsured motorist runs into four of your houses. This causes a massive amount of damage that you have to pay for. I initiate a large legal battle that there is not hope of financial recovery from hoping to keep these types of drivers off of the road.
The first year I take that few thousand dollar surplus you had to a massive deficit of $20,000.00 so at the year end you are now $320,000.00 in debt. I continue and increase the litigation costs to force this guy to pay up because he has now hired attorneys and is fighting back. My actions increase your budget deficit and you are losing $40,000.00 this year and are now in debt $360,000.00. This trend continues for another year and you are $400,000.00 in debt.
I find another target that I think will cause harm to me by the way they are driving and so I begin litigation against them as well. The budget deficit is now around $60,000.00 and so by the end of the fourth year you are in debt $460,000.00 with no real hope of stopping this train.
I approach you and convince you that people that drive reckless and fast are zipping around your town and that they will come and kill you or your kids so you give me four more years of controlling your finances.
Over this time I continue the trend and by the third year you are $640,000.00 in debt. I have signed two contracts with two firms to continue representing you for a four more years so that you get the maximum safety from my efforts. So unfortunately you are committed to at least three years more years of representation by these law firms seeking to control how these other drives drive.
On top of this, you have lost your job, your wife and children have needed specialized care so your funds are completely gone and you have had to borrow funds just to keep afloat.
By the end of year four, you are about $700,000.00 in debt, on unemployment and have a no way to even pay the interests on the funds you have had to borrow to pay your debts. Your family is about to be evicted and now have control over your funds.
How long will it take for you to stop the spiral of debt, regain any control over your economic future? This and the housing crisis is what Obama walked into.
It was your elected financial adviser that created the mess we have today; and the Todd/Frank bill.