After publishing, Financial Independence: Maybe You Don’t Want It Bad Enough, most of you agreed that paying back your debt is the right thing to do. The post has some tough love because it doesn’t help anybody to just blame the system or someone else for their problems. It’s much better to find solutions and highlight effective examples to show people the way.
If you want something bad enough, you’ll do everything possible to make it happen. If not, then be at peace with your circumstance, and let other people who have what you want also be at peace. Certainly don’t try and shame them for their efforts. And try not to let other people pay for your mistakes.
As someone who really enjoys hearing lots of different perspectives, I want to address a comment by an ex-Financial Samurai reader Mrs. Whipple who says that I lack compassion for putting the onus on the debtor to repay. Then I’ll share eight solutions on how to get everyone but you to pay for your debt. Let’s do this!
OVERCOMING A COLD HEART
Mrs Whipple writes,
Why on earth are student loans the only kind of loans subsidized by laws that make them impossible to default on? Why aren’t the banks required to face the consequences of their stupid decisions to loan money to students who aren’t good candidates for loans? Why are they allowed to reap all the reward without having to face any of the risk? It’s absolute madness.
The idiocy is in the society that sells the dream of a college education to kids who can’t afford it, and the price we pay is a whole generation of graduates who are left digging themselves out of a hole instead of building wealth in the first decade or two of their work life and a slumping economy as all of our extra dollars are poured down the mouths of the banks who gave out stupid loans.
You prattle about hustle and side gigs as though everyone in America should be willing to work eighty hours a week to get out of a negative net worth, as though it’s normal and not at all a system problem of inequity that’s been getting worse and worse as time goes on. You’re wrong.
I’m a high earner, self-employed, frugal, as bootstrappy as you can get, and still it makes me sick to read stuff like this that puts the blame everywhere but on the people in power that let things get this bad. It’s not the seventeen year old kid to blame. It’s not the twenty-two year old graduate who sees the reality of crushing debt and is grasping at straws to get out from under. It’s not the millenial who wants an iPhone (because forgoing an iPhone will solve the 50k loan debt, right?). Push frugality and hustle all you want, but don’t make the mistake of blaming people for problems that are so overwhelming and systemic that they have erased the wealth building capabilities of a generation. They are not to blame.
It’s the banks who don’t have to face the consequences of their high-risk loans. It’s the parents who force college down their kids’ throats, even when it doesn’t make any sense. It’s the corporations who have cut benefits and pensions completely, who thrive on outsourcing and high turnover even while decrying the lack of “employee loyalty.”
And it’s people like you who publish this yay-boostraps propaganda that ignores the real problem in favor of placing blame squarely on the people who have been hurt the most by the systemic issues in banking and education. Because if we can blame the students, we don’t have to face the real issues that are staring us right in the face, and we sure as hell don’t have to stand up to anyone in power and tell them that they’re doing things wrong.
I hope you find compassion within your lifetime, but you’ve lost a reader today.
After spending 7 years writing over 1,100 posts focused on helping people think about and resolve financial issues, it’s tough to hear that I lack compassion. I believe in finding solutions to problems, no matter how difficult a pill the solutions are to swallow. Take note. If you want to be a professional blogger, you’ve got to be able to take the hits and keep on going!
Let’s forget about all the free articles I’ve written, the time I spend responding to comments and e-mail, my eBook where all proceeds go towards helping an organization that tries to keep our youth off the streets, the six figures in income taxes I’ve paid each year for over a decade, and the private time and money I spend at an organization I never talk about because who cares. I want to focus on how we can get other people to pay for our financial mistakes because we’ve all made them.
Bad breaks happen all the time, as one reader so thoroughly explained. Sooner or later, a bad break will happen to me and you. Hopefully loved ones and strangers alike will have the compassion to bail us out. But hope is not a strategy. Below are eight steps you can take right now to create a larger safety net.
HOW TO GET OTHER PEOPLE TO PAY FOR YOUR FINANCIAL MISTAKES
1) Live in a non-recourse state. Creating a “heads I win, tails you lose” situation is always ideal when it comes to creating wealth. If you plan on buying a place, then I highly suggest living in one of the 12 non-recourse states: Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah, and Washington. If you foreclose or short-sale, the government can’t come after your other assets.
For example, let’s say the bank lent you $500,000 when your house was worth $600,000. When the house’s value drops to $300,000, you decide to stick it to the bank by no longer paying your mortgage. Even if you have $1M in stocks with say Wealthfront, the bank can’t recover the $200,000 it’s losing after you’ve handed them the keys. Just be wary of the taxes you may have to pay on the debt forgiveness.
After one too many customer foreclosures, the banks will raise their lending rates, lower their deposit rates, and raise their standards for who can borrow. Only the best creditors will be able to borrow money. But you don’t care because you got the debt forgiveness you wanted. Screw your neighbors like me who kept paying their mortgage through the downturn. And screw future borrowers who have to pay higher interest rates because of you. If the law says there’s no recourse, then you have every right to break your promise if it suits you.
2) Strategize on how to get your parents to pay. The Baby Boomer generation is the wealthiest generation ever because they’ve been able to save and invest the longest. With the stock market and real estate market close to record highs, Baby Boomers are the largest practitioners of Stealth Wealth. Your parents are far wealthier than they let on, which is why you need to strategize on how to extract your inheritance from them before they die so you can live a better life.
Perhaps you realized too late that paying $200,000 in tuition for a Fine Arts degree wasn’t the smartest choice because companies like Fivver and Upwork have drastically lowered the cost and access to functional art. If your parents allowed you to borrow/spend that much for an Art degree in the first place, then it is HIGHLY likely they also have the money to bail you out. They had to co-sign your loan, after all.
I know so many Stealth Wealth parents who disapprove of their kids’ career path. “Go into engineering or computer science!” they want to say. But because they just want them to be happy, they let them make expensive choices for the off chance they become self-sufficient. Deep down they know their kids will fail, but like the IMF, they are ready and able to solve all their kids’ financial problems once they’ve learned their lesson.
3) Do public service. The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
Employment with the following types of organizations qualify for PSLF:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that provide certain types of qualifying public services
- Serving in a full-time AmeriCorps or Peace Corps position also counts as qualifying employment for the PSLF Program.
The drawback with the PSLF is that you’ve actually got to focus on service, instead of how to make money for yourself. Public service helps rid you of any entitlement mentality you might have and enables you to appreciate the government more.
4) Marry rich. You can work your way to the top, or you can marry your way to the top. Tom Branson was a chauffeur, and now he’s part of the wealthy Crawley family in Downton Abbey. To marry rich, you need to work on your physical fitness, speech, vocabulary, mannerism, personality, and knowledge. Because rich people tend to have more choices in a spouse, it’s imperative to focus on your appearance. Look at all the hideous wealthy men out there with attractive women and vice versa. Competition is stiff.
Once you’ve worked on your looks, read autobiographies by wealthy people in order to understand how they think. Listen to podcasts about politics, economics, and business. Thoroughly understand both sides of every story. Finally, hang out where rich people hang out. Finding a wealthy spouse is a numbers game. If you can marry one, they’ll pay off your debt in no time.
For more insight, please read: How To Get A Rich Person To Be Your Spouse
5) Encourage your spouse to work more. If you don’t snag a rich spouse, it’s imperative that you encourage your spouse to work more for the both of you. After all, the more your spouse makes, the more you make. Be supportive, loving, doting. Do the chores around the house. Give massages. Tell him/her how awesome he/she is every day. You are your spouse’s biggest cheerleader.
I know one early retirement blogger who no longer has to work a job he hated largely because he’s been so supportive of his wife’s work. He’s been able to convince her to work 10 more years as he lives a life of freedom. I know another fellow who grew up dirt poor, but married the daughter of a tech multi-billionaire and lives in a $50M house here in San Francisco. Once you experience a nice lifestyle, it’s difficult to go back. Support your life partner to the maximum!
For more information, please read: How To Get Your Spouse To Work Longer So You Can Retire Earlier.
6) Start a GoFundMe campaign. In 2014 more than 107,000 educational GoFundMe campaigns were created, raising a total of $13.14 million. I don’t have the numbers for 2015 yet, but I’m sure the number has grown even bigger. In the past, we had to painstakingly call or ask people in person for donations. How difficult and embarrassing. Now, thanks to the internet, we can share our story, post a picture, and make it easy for people to give. Asking for money is another reason you should start your website. I can easily put a Paypal donation button on this site if I want. But I don’t expect many of you to pay me for the hours I spend writing each post. Will you?
One woman named Cassie raised $50,220 in 2014 from GoFundMe after she revealed just weeks before starting Vanderbilt University ($44,712/year in tuition alone), her mother took her life. Good cause! Unfortunately, not all GoFundMe campaigns are the same. After the Powerball jackpot rose to $1.6 billion, Cinnamon and her family claimed to have spent their entire savings on Powerball tickets. She threw up this GoFundMe page below asking for $100,000 to replenish her coffers so she could try the lottery again!
7) Vote on a president who will aggressively redistribute wealth. Despite Lehman Brothers going bankrupt and firing 23,000 employees, Washington Mutual and Bear Sterns getting taken under and letting go of tens of thousands of people, and millions of financial service workers losing their retirement savings, it’s not enough. It doesn’t matter that a bank employee working in the Asian Equities department had nothing to do with Joe Smith in America not paying his mortgage. It is the fault of all banks and their employees for having the audacity to lend money. Next time you’re depositing a check, it might make you feel better to curse the teller for ruining America!
The best way to exact your revenge is vote in a politician who ideally promises to punish banks with retroactive fines, and transfer that money to consumers. The Department of Justice successfully prosecuted Bank of America for predatory mortgage lending and fined them $16.6B. Part of the fine was to be used to help existing mortgage borrowers refinance at a lower rate. As a result, I was able to get a free loan mod on my 5.85% 30-year fixed Lake Tahoe property mortgage down to 4.25%. Thank you DoJ and Obama!
For redistributing wealth, it looks like Bernie Sanders is the best candidate. I believe in education, and he plans to make all college education free. The only thing is that education is already free thanks to the internet. You just have to find people who are willing to devote their time to writing articles and teaching people about their experiences. I find learning from those who do can be quite effective if you keep an open mind.
There’s nothing more empowering than being able to vote for a law that takes money away from one minority group and unconditionally redistributes the money into your own hands. The majority always rules. Therefore, during a revolution, it’s best to be part of the majority!
8) Start a revolution. There are 536 billionaires in America. To live a good life, nobody requires so much wealth, especially when there are people starving on the streets. Some 40 million people between the ages of 25 and 64 are out of work. I’m not sure how billionaires can live with themselves without doing everything possible to give back.
There are 318 million of us non-billionaires in America. Therefore, we outnumber billionaires 593,000-to-1. If we formed 536 armies of 539,000 people and stormed each billionaire’s mansion, we could hold the billionaire and his/her family hostage and demand that they return the money to the people of this great nation! We would will be more lenient with those who signed Warren Buffet’s giving pledge to donate at least half away to charity. Bill Gates would also get a free pass for all he’s done to help eradicate disease and poverty.
I can volunteer to be in charge of commandeering the homes of San Francisco’s billionaires if you believe I’m suitable for the job. I would need some trusted advisors who have expertise in reconnaissance, hand-to-hand combat, and strategic warfare. Bonus points for those of you who’ve seen the movie, The Purge, and know how to smoke people out of their homes. With over a million people reading this site each month, surely I could recruit a General from each major city to lead the revolution!
TAKE ACTION OVER COMPLAINING
Doing work that’s “beneath” you based on the education you’ve received or your family status is embarrassing. I wrote about it in Spoiled Or Clueless? Try Working A Minimum Wage Job As An Adult. But sometimes, you’ve got to swallow your pride and do whatever it takes to survive.
It’s also understandable that working more than the arbitrary 40 hour workweek can be bad for your health. A lot of my physical ailments went away after I left the workforce in 2012 while consistently working 60-80 hours a week for 13 years. But sometimes, you’ve got to recognize that many who are blazing ahead are actually putting in way more hours than standard.
We all know life is not fair. Some people are born rich and get to go to private school fully paid for by their parents. I could never afford to attend commenter Mrs Whipple’s alma-mater, Harvey Mudd College and pay the current $52,383 a year in tuition (~$72,000 total cost a year). Nor was I smart enough to get any grants from a school as good as hers. I made $3.65 an hour working at McDonald’s and my parents were regular government employees. So I made a choice to go to The College of William & Mary, a state school instead. Is it so wrong to try and hustle with gig economy work to just try and catch up to her situation?
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Complaining doesn’t do anybody any good. If you don’t want to start a revolution, then simply follow the seven other steps in my post to help improve your financial situation. And if you don’t want to follow those seven steps, please just pay back what you owe.
Updated for 2017 and beyond.