Neighbor Wealth

We were driving in the car and my youngest son, who is 8, asked me how much our house payment was. I told him and he just stared at me. Then my daughter, 13years old, asked me how many years it would take to pay off our house. I told her 30. I then told her that we would probably pay 2 - 3 times more for our house then the original purchase price.

My son’s response was, “I am just going to be a hobo when I grow up!

We all laughed, but would that be so bad! If you intentionally decided that you no longer needed physical things, think how simple your life would become. I’m not sure about you, but I think the average American ends up spending way too much energy paying for things that they probably didn’t really need.

I love my house and I am very happy in my house. My house is truly a gift! I continue to make my mortgage payments with the intention of paying it off in full. However, we have a lot of things in our house that are just sitting there. Some of them, like our skis, we truly use and enjoy. There are other things that we seldom use. We take a lot of items to the good will store, simply because we no longer use them.

Someone spent their time and energy to create those things that we have in our house. We paid for it and they received compensation for it, which I think is awesome! But what happens when a credit card enters the scene? That person put their time into creating something, we buy it using a credit card. The exchange is most likely fair the day you purchase it, but if you do not pay your credit card in full every month the exchange becomes uneven. You end up paying for something way more than what it is worth.

What if you did not have a credit card? You may not have even purchased that thing in the first place. If the person making it does not receive compensation they will go on and make something that is needed in the market place. If the credit card is not used, guess what! There is no need for credit card companies! Those people employed by the credit card companies will go on and do something else. The owners of the credit card company will come up with other companies. The crazy transfer of wealth from the consumer to the banking system will stop.

The more pure the transaction, the closer from buyer to seller it is, the more even and fair the transfer of energy. This type of concept is always stirring in the back of my mind. It is where I came up with the term NeighborWealth. The concept is that when you purchase something, the money represents an energy exchange. When the transaction is even and fair, then the transaction remains in balance. When too many parties, for example credit card companies, enter into the transaction the energy no longer remains balanced. This is a major contributing factor to our economic situation right now!

Consider the mortgage crisis. Banks were willing to come up with these crazy loans to get people into house. People simply stated how much money they made without providing proof. Low interest rates that adjusted after a certain period of time and interest only loans made purchasing a house very easy. Even if you could not afford the house, the bank would still figure out how to get you into the house. This lead to a high demand on houses causing the price to spiral up. As long as the bank financed buyers the cycle continued. It continued until people were not able to make their house payment and the real estate market ran out of buyers.

The banks decided to foreclose instead of working with the home owners flooding the market with more house and dragging our economy to a halt. The transfer of energy from the home owner to the home buyer became totally unbalanced in this cycle.

If you lent someone down the street money to purchase a house, and you knew that the guy down the street was going to lose his house if you did not lower his interest rate, would you lower the rate? Most people would. A big organization worried stock prices would not!  Adjust the interest rate simply to help out another person is an example of NeighborWealth.

Here is something to think about. The only reason the mortgage industry is lower interest rates for home owners in trouble is because the government is requiring it.   The government is forcing them to be ethical.  These are the institutions driving our economy!

We are at a key decision point in our economic history. We can return to an economy that is driven by borrowing resulting in the uneven transfer of energy, or YOU the consumer can decide not to participate in this crazy system. Stop using credit except for very large purchases. Focus on paying that loan off as quickly as possible. Establish a savings account for emergencies instead of relying on a credit card. It is up to us what the economy of the future will look like not our government!

Give your neighbor the benefit of the doubt. There are some great opportunities emerging in the market place that foster the concept of money flowing from one person to the next. Look for these. Reach out to your neighbor. Look at what they have to offer and if it makes sense to have in your life purchase it. Purchase from a farmers market instead of the grocery store. Purchase something from a home based business instead of a store.

The way to recover our economy is to keep money flowing form one entity to the next. I believe that this money should be flowing from person to person and not through big institutions. The big institutions create systems resulting in the uneven transfer of wealth. Be open and watch for opportunities to help that local business out.

Sorry Star Bucks. I love your coffee, but I had a cup at the local coffee shop the other day that was just as good. I learned the shop owners name. She actually was a school teacher in the same school that my son currently attends! This made the coffee even more enjoyable!

My Dad called the other day. He was just calling to check in with me, but he had no idea the impact of our conversation. He knows of my work with NeighborWealth. In fact I called him about a year ago and we talked about my ideas on how to help as many people as possible eliminate their debt.

Originally I had developed a pay it forward type of a system using PayPal. I thought that if I had enough people agree, we could generate enough money working together to help on another pay off debt. Dad agreed to sign up for a PayPal account so that I could test my system. It really didn’t work out for various reasons, and that was OK though because it was only a test.

Like I said, my Dad called today. He called and was excited because he started a new job that would bring in extra money allowing him to pay off his credit cards. He said he was going to call each credit card and tell them that he would no longer pay their existing interest rate and they had the choice of lowering the interest rate or losing him as a customer. He also jokingly said, “I probably have a bunch of money in my PayPal account from that thing you were working on last year!”

This conversation opened a huge realization for me. My Dad had no idea that I was continuing to work on NeighborWealth. The whole thing was to synchronistic for me to be written off as a coincidence.

I was pretty excited about my conversation with my Dad and what had happened. I told my wife about the experience at lunch and it occurred to me that my Dad was making a statement regarding his credit cards. He wanted to stand in his own power regarding his finances! He wanted to take his power back from the credit industry!

This is very representative of where many people are at this point in history. We are experiencing a contraction in our economy driven by the credit industry failure. Our government is bailing out financial institutions who routinely apply unethical practices to the consumer, a.k.a the tax payer! People are sick of paying high interest rates and getting hit with late payments and sneaky fees. My Dad helped me realize that we are ready to stand in our own power. We are ready to take our power back from the credit card industry and the mortgage industry!

What is the real problem with our financial sector? The thing that bothers me the most, about the bail out and all of these programs designed to get our economy going, is that we are so determined to return to the system that just failed!

We as a society have this mindset of borrowing. We want bright shiny new cars and we want them now! We want big fancy houses and we want them now! Everything you want is the matter of a credit card swipe away, assuming you have good credit.

Is it really necessary to have an unsecured debt of 50,000 or 100,000 dollars? Is it really necessary to have an unsecured debt of 5,000?

This may not be a bad thing, or is it? Our desire to have things and have them right away drove the world’s economy! On the other hand, our access to ridiculous lines of credit brought the world’s economy to its knees! The media is focused on the mortgage industry, but the credit card industry is just as much to blame.

Word net defines addiction as, “being abnormally tolerant to and dependent on something that is psychologically or physically habit-forming. “ Could we be abnormally tolerant of credit card use and borrowing?

Let’s look at the evidence. Almost everyone has a credit card. The credit card industry targets young adults because they know the rest of the market is saturated. If you get in over your head with a credit card, the system is designed to continue to give you credit only at a higher rate. This results in a tighter constraint on your cash flow, so you use more credit to continue your existing life style. This continues until you crash!

Most addicts do not admit that there is a problem until they have hit rock bottom. Have we hit rock bottom? Is the pain strong enough for us to stop? Are you ready for a life that is free from consumer debt?

I think the solution to our economic problem is simple, but it may not be easy. The solution begins with you! You can make a difference by changing your behavior. Our consumerism drives our economy. If we stop agreeing to ridiculous interest rates then the industry will stop pushing them. The only reason there are loans out there with any rate at all is because people are willing to use them. Don’t agree to high interest rates.

You should really sit down and do some math for any loan with an interest rate over 10%. Search on line for a debt calculator and figure out how much in interest you will pay over the life of the loan. Is that item worth it? If you purchased a car will you be upside down on the loan in 6 months because most of your payments are going to interest instead of to the car payment.

If you are having difficulty getting a loan, or the only loans you can get are a high interest rate then you may want to consider another option. Don’t look at your inability to get credit as a problem, see it as a blessing. See it as an opportunity to find another way to purchase whatever it is you are about to buy on credit. Once you begin freeing up your financial life, you will also begin freeing up the rest of your life!

This is a pretty hot topic area. I am not going to slide into politics or play conservative or liberal, but here is my take on our existing situation.

I believe that the market place can and will take care of itself. I believe a major constriction occurs when the government steps in and imposes too many regulations or ‘bails out’ any business. If a company fails it is because something is wrong. The company was mismanaged, no longer relevant or acted on principles that are not condusive to the market environment.

Since our mortgage industry is at the forefront of this whole thing let’s talk about that for a moment. The companies that were about to fail and were rescued by our government were failing for a reason! We are talking about the mortgage industry! These companies had billions of dollars pouring into them in the form of mortgage payments. When the consumer had an adjustable mortgage and the interest rate increased beyond their ability to pay the mortgage industry foreclosed.

Lenders could have responded differently. First of all, they could have decided to work with the home owner to adjust the interest rate to a more reasonable rate. They could have had the consumer apply for the loan again and give them an interest rate that was within their ability to pay regardless of their credit score. This would have obviously benefitted the home owner and the lender. The homeowner would be allowed to keep their house and the lender would still have a flow of money coming in.

Instead the mortgage industry decided to foreclose and basically strangle themselves. That is fine. That is their choice. They should then suffer the consequences! If they lose their flow of income because of poor business practices then they should fold. The market will take care of itself. Any assetts that are of any value will be purchased by reputable companies.

There is no way we can possibly tell what the state of the economy would be right now had the government decided to remain clear of the financial sector. We have spent billions of dollars trying to rescue the lending industry.

Couldn’t that money have been used for programs to assist people who lost their home or their job?

The government could have set up a program to lend the homeowner money so that they could save their house. The government could have also set up programs to assist people who lost their jobs in developing new skills. The money could have gone to unemployment insurance. That money should be used to help people who are experiencing difficulties because of the situation. Our government should not be a welfare program for poorly ran companies!

It seems that the insanity just continues. President Obama signed another big check for another bail out. I must say that I did not necessarily agree with bailing out our financial sector, but I like his plan of stimulating the economy through jobs to rebuild our infrastructure.

The news is always on at work. Every time I walk through our operations area the CNN is blazing away at the latest sensationalism. We live in a small town in Colorado. Our economy has slowed down, but we just aren’t seeing the impact that the rest of the nation is seeing. My only real link with the recession is the news! My wife and I do not watch much TV at our house, especially the news. If I hear any mention of the recession on the radio, I change the channel. The fear created by the media is a major contributing factor to a mindset that is fostering our existing economic state! Let’s face it if everyone is afraid of the economy they are going to be conservative with their money and save rather than spend. Not that that is necessarily a bad thing! It just depends on how you look at it.

It just goes to show you that an economic recovery or economic correction is in the eye of the beholder. It is all perspective. If you have lost your job then you are in a recession. If you still have your job then not. It is all how you look at it.

Even if you have lost your job, this is a great opportunity to step back and regroup. Decide what you really want to do. Get excited about a new opportunity and go for it! At some point in time we will all look back and be completely clear on why all of this has happened.

Until then turn the news off! The media only fuels the collective mindset regarding the situation. Remember the media is in this to get you to watch. The more dramatic they can be the more viewers they have, which means they can charge more for a commercial spot.

Do not pay attention to the news or any fearful, doomsday talk you are hearing! Take a look at your existing situation. Stay focused on what is at hand and remain optimistic about the exciting things coming your way. Remember every thing that happens in your life is designed for your growth so that you can move on to bigger and better things! So TURN the news off and do something to keep yourself in a good state of mind!