A way to get out of debt? A theory and a call to arms.?

Question

I have long thought that the current system of America's finicial instituions and government is designed to keep most of america in poverty , ie the rich get richer the poor get poorer.
I think I may have a solution- please give my your thoughts. with honest critisism -
If a group of people each chose to withold 10% of their income from their checks and when it was returned at the end of tax season - put each person 10% (or the remainder) into a single account and pay off the lowest of each bill among the group . Bills begin defined as non - utility (cable, phone, heat, lights, water,trash, rent) bills. In order to not have the system abused - demand a 5 year agreement from each member, and an independent accountant to manage the monies.

What do you think? Would it work to get a large number of people out of debt? -

I do realize that some people would pay more than others with the 10%.

thoughts?

Answer 1

Each person would have to WANT to participate in your system...and I don't want to do it that way...I just set a bit aside every month to pay it off.

Answer 2

I believe that we each can manage our own route out of debt, but it takes discipline. I don't agree to force, or enlist some other person into the picture. Then you run into risks of abuse.

The solution that I paid $40 to learn thru my community college is very very simple and elementary. See if you can follow, and that I don't confuse too much.

Gather all of your standard credit cards together.

Make note of the minimum payment due on each, balances and interest rates.

Determine from your household budget, after you pay the minimum balances, how much "left over" money you have left over.

Now, look again at your credit cards and do one of the following:
Choose the credit card with the minimum due, no matter what the interest rate is on the other cards. Use this ready-cash to pay down on this specific bill. Do this same amount over & over until that credit card is paid off.

Now, go to the next one in line, take the ready-cash that you have available and pay that and the minimum toward the next card. Now, pay it down until it is paid off. (you have eliminated the original card, so at least the minimum due can go toward card #2, with the money you have set aside each month for the paying off's).

As time goes by, the amount readily available to do your paying off gets larger & larger because the other cards are paid off, which frees up additional funds (since their minimums are no more).

This means three things:
1. No more adding to the current credit cards during this process.
2. Keeping with the program and increasing the $ amount of your pre-decided pay-off funds as cards are being paid off - don't start spending more again.
3. Do NOT add any new credit cards while you are doing this - you will wind up back where you started & possibly worse!

Self-discipline is the key to this being a success. You have to want this badly enough to say NO to impulse buying and putting off updating things. Being humble for a while will pay off in the end.

011007 12:07

Answer 3

I have to disagree with both your first statement as well as your plan. As far as the plan goes it's not a horrible idea but it wouldn't work...think about it...how soon would financial companies start offering individuals the ability to borrow against the funds being withheld?...probably about a day after the programs started and the individuals participating are exactly the people who would go borrow against it. Also, it's so easy for individuals to save on their own and the fact that they don't is a choice and therefore it's not very likely that the intended target audience your plan seeks to help would voluntarily participate. Re: your first comment I absolutely disagree....there is and always will be haves and have nots in any free market society but the average American is so much wealthier today than 100 years ago it's not even a worthy debate..and most of this can be attributed to our efficient financial markets and the wealthy who are the ones who are out there creating the jobs, investing in innovation and paying the majority of the taxes. As far as the government goes I believe their role is to provide only essential services not provided by the free market system as it is proven that the inefficiencies of government often decrease the wealth of our country. Individuals seeking to rise up out of poverty have to look at it as a generational problem that needs to be addressed through education...only then will poor families have the tools to participate in the free market process...I believe the government is doing as much as possible to provide the opportunity for all children to become educated and it is the parents of the poor that need to stress education to their offspring in order to change the fate of their future generations.

Answer 4

Interesting idea, but it wouldn't really work. Here's why: the majority of people that would be interested in getting involved in a system like this have debt because they aren't in a situation where they are living below their means. You'd find that many of the people who's debt was paid off would simply get into debt again.

The solution to getting out of debt is to live below your means and not accrue debt to begin with. Obviously the latter doesn't work too well if you already have a lot of debt, but most people that are in debt troubles will just end up there again. It's sad but true. Once you're in debt, you need to buckle down and pay it off a little at a time.

Answer 5

Even better.....avoid the debt altogether.
This buy now - pay later mentality is what got them there in the first place.