AMORTIZATION is the greatest source of financial victimization, it is predominantly perpetrated against the middle class. You scrap together 10-20% for a down-payment and lock in a 30 year mortgage. Of course a 15 year mortgage would save 10’s of thousands of dollars, but we have been trained to measure all monetary decisions in monthly payments.
Home, auto, all financing decisions are measured in monthly payments. It is the same with budgeting, the small amount of financial literacy education provided was basically a training program for monthly payments. Basic decisions about money for the middle class revolve around how much that decision costs monthly. Little to NO regard to the final sum of payments. 95% of those who reach 65 and older end up dead, dead broke or at best financially dependent. Only 5% reach financial independence. The direct cause of this dilemma is the damages from AMORTIZATION.
We are living in the richest nation in the world, some say the wealthiest nation in the history human civilization, and yet we have the highest rate of financial illiteracy. At the core of financial victimization is a distinct lack of financial literacy education. It’s no accident or coincidence that financial literacy education isn’t part of any core curriculums. We have to be trained to see money in a certain perspective which allows the banks, lenders, merchants, merchant banks and financial institutions to continually victimize the middle class.
The Advocacy Network has developed a story that helps the middle class become aware of the many mistakes with money that are embedded in our society. It’s a simple story of money management and financial independence. Its not about retirement, 401k’s. pensions, annuities, investments or any other story lines that misdirect the public from the issue of financial independence. Being financially independent puts you in position to do whatever you desire, whenever you want to and however you choose to. That is what independence is all about. You have full autonomy and no limitations.
The road to financial independence begins with the first step. What is the first step? It is stopping the ongoing loss of future dollars. Debt is all about FUTURE dollars. That mortgage is FUTURE dollars. When you borrow money you are putting future unearned income into play. It’s YOUR money, that is mistake #1, somehow we have the impression that it’s the bank’s money. It’s YOUR money, and you are able to borrow it based upon your future earning ability, your ability to repay and your history of repayment in the past, all referred to as your credit record.
Now, when you manifest these future dollars in the form of a loan, your cost for that is called interest which you pay to the lender. These payments of principal (amount borrowed) plus interest are paid over a time period, this equation is called AMORTIZATION. The future loss of dollars is created when you repay per the full amortization cycle and thus lose money in the form of interest payments. If you shorten the length of payments you save future dollars which can then be redirected into your own wealth accumulation. The first step to financial independence therefore is to STOP losing money into the future.
There are many money management methods to overcome these losses, yet the ideal method would be automated and not require you to use any additional money then you presently use for debt service. A system that allows you to simply re-allocate and re-distribute your monthly payments, thus allowing you to save future dollars. This is a first step we at the Advocacy Network have established for the middle class. We have also added to that first step the full systematic plan for achieving financial independence. As I said earlier it’s about FINANCIAL INDEPENDENCE and nothing else. You must have a focused plan to overcome the 95% landing zone.