Kate Phillips's Open Salon Blog

Fiscal Fitness: The Best Option for Consumer Debt Relief?

Fri, 2 Dec 2011 09:12:50 -0500

"Debt is like any other trap, easy enough to get into, but hard enough to get out of." -Henry Wheeler Shaw

Sometimes good people land in bad financial situations due to poor financial habits, or circumstances such as job loss, divorce, illness, death in the family, and so forth. They find themselves with seemingly unmanageable debt, sometimes accumulated over years, at other times, practically overnight, the result of a personal crisis or business loss.

Debt has become an American epidemic. As of May 2011, US consumer debt totaled a whopping $2.43 trillion, according to creditcards.com. Over 70% of the population - 177 million card credit card holders - report an average household credit card debt (per household with credit card debt) or $15,799. Bankruptcy filings are up a whopping 250% in the four short years from 2006 to 2010, with personal bankruptcies alone totaling over 1.5 million.

But what's the solution?The most common ways people try to get out of debt are:

Chapter 7 or 13 Bankruptcy
Credit Counseling
Consolidation loans
Debt Settlement
Or simply keep making minimum payments, if you can, and hope that things get better.

Let's take a look at some of the pros and cons:

Bankruptcy legally reduces or even erases debt, and it stops creditor harassment the best of any method. However, it will also severely affect your credit rating for many years to come. A bankruptcy can stay on your credit for 10 years, affecting your ability to buy a home, rent an apartment, purchase insurance, cars, or cell phones without high rates and fees, and - in some cases - even get a job.

Those with higher incomes (or homes in foreclosure they wish to keep) will be forced to file a chapter 13 bankruptcy, which takes 3-5 years, requires partial or full payment of debts, and forces the borrower to live on a strict bankruptcy-court-determined budget. Only about 35% of debtors complete their chapter 13 bankruptcies. The remainder default, and stand to lose homes and other assets to creditors.

I recommend you consult a recommended bankruptcy lawyer, but also, explore the downsides so you don't become one of the many who regretted their decision.

Credit counseling programs offer some consumer education, but also negatively affect credit ratings (similar to a chapter 13 bankruptcy), but typically without the benefit of lowering balances. Interest rates and payments may only decline slightly, if at all, and most clients do not complete their programs. The fact that the agencies are generally paid by the creditors creates a conflict of interest when it comes time to negotiate for the borrower, plus, what seem like "small monthly payments" add up to thousands over time.

Because of the minimal benefit and how much it can impact your credit, you might consider negotiating with your creditors yourself if you only need "a little help" on your debt. Many creditors offer better deals to consumers than a credit counselor can negotiate, though you typically must be behind on your payments to be offered reductions in rate or payments.

You can find reputable credit counseling agencies at this government website.

Debt consolidation may lower interest rates or payments when a borrower consolidates (or pays off) several smaller debts with one large loan. However, it does nothing to lower the balances owed. (Actually, they will owe more because hefty loan fees are usually added.)

And qualifying for a debt consolidation loan can be tricky - if the consumer's credit is not excellent, they will likely only qualify for very high rates and/or a secured loan - "secured" by equity in a home, car, etc. This is risky business: if the borrower uses their home as collateral, they now risk foreclosure should they fall behind on payments.

Loans from family members may be an option, but again, you must weigh the "what if" factor should you find yourself unable to make payments. Many a relationship has been lost over money... is it worth the risk?

Be sure you read all the fine print about any consolidation loans, and understand the fees. And if you are borrowing from a friend or family member, make sure to spell out the expectations, deadlines and interest rate in writing.

Debt settlement is a way of negotiating your debts, especially, your balances so that debts can be settled for less than the original amount owed.

Some debt settlement companies have earned a bad name for taking borrowers' cash, whether or not they could help them. Others have acted fraudulently, collecting money then disappearing. And at times, borrowers were inappropriate candidates for the program and did not have sufficient income for paying off negotiated debts, so they paid the debt settlement company, but could not pay their debts. (As in a chapter 13 bankruptcy, the debtor must have income over and above their basic necessities with which they can settle their debts).

However, the best debt settlement companies have approached an 80% success rate, with borrowers paying significantly less and getting out of debt faster than other methods. Credit ratings do suffer in the short term, but recover much faster than with bankruptcies.

A new, improved version of debt settlement is the Fiscal Fitness™ program, which also combines some of the benefits of other methods. While it is not for everyone, Fiscal Fitness™ can help clients:

Get out of debt faster by reducing what they owe on consumer debt and even past-due utilities.
Find workable solutions with their creditors.
Get training and support to follow a budget and pay off debts.
Establish healthy financial habits to create lasting wealth.
Get quality one-on-one advice from a financial professional.
Protect their income and assets with appropriate insurance.
And, most importantly, get a fresh financial start... without a bankruptcy.

The Fiscal Fitness™ program may not be for you, unless you

have $10,000 or more in unsecured debt (it won't help with student loans, car loans, mortgages, or tax liens),
cannot make reasonable progress on the debt as it now stands,
are willing to compromise their credit history in the short term to become debt-free,
want to improve their financial habits,
have some income (above the bare necessities) to put towards debt, even if they are behind and cannot make minimum payments,
and are motivated to avoid bankruptcy.

You can find out more about Fiscal Fitness™ at FiscalFitnessJourney.com. The company that offers the program is Partners 4 Fiscal Fitness, a subsidiary of Partners for Prosperity, Inc.

Are you or someone you know fighting a losing battle with debt? Do your research and consider which option works best for you. Some people want to eliminate as much debt as quickly as possible, others feel better only if they have paid back every penny.

But too often, people become trapped and cannot pay down their debts at all. They are trapped in revolving debt, borrowing each month as much as they pay off. If you are in that situation, make a decision to make a change and escape the debt trap!

Waiting for a Viral Outbreak of Common Sense

Wed, 16 Sep 2009 08:09:53 -0400

After noting the epidemic of swine flu fear and panic abounding in press and public, my friend Bryan Rust recently concluded an email to me with the words, “Waiting for a Viral Outbreak of Common Sense.”

A Seattle Times article announces the swine flu will hit up to one-third of Washington State residents, it has already hit Washington State University hard, where 2,200 students have reported symptoms, and WHO (World Health Organization) has labelled it a “pandemic.” An expert on Fox News warned people to be sure “not to hug and kiss.”

I’m finding random friends asking me about the swine flu… what do I think? Do I fear my daughter will get it at school? Am I going to get a flu shot? Etc. etc. etc….

In answer to the questions, what I’m doing and what I think about the swine flu is this:

Nothing.

I’m not thinking about the swine flu. I’m not reading about it. I’m not watching newscasts about it. I’m sorry that so many people are sick, and I’m using common sense such as handwashing, but I hardly see how my fretting, talking about and giving energy and attention to the swine flu epidemic helps anyone “get well soon” or improves my or anybody else’s quality of life one iota.

The last time I checked, didn’t stress and worry only add to potential health problems? Didn’t Dr. Bernie Siegal prove that laughter is the best medicine with decades of research? Yes, Siegal’s work confirmed without a doubt that the mind-body connection is a powerful force, and that Faith, Hope and Healing and Love, Medicine and Miracles (titles of two of his books) go together like peanut butter and chocolate.

Like the old newspaper adage says, “If it bleeds it leads.” What would we possibly think and talk about if not something negative, awful, tragic or worrysome?

I’m not clear if it’s the pig-connection or the amount of people ill that made this particular flu headline news and the most-searched topic on Yahoo!, but in case you missed the news, a lot of people have the flu.

More accurately, a lot of people have a mild case of the flu. As one Associate Press article observed, “Compared with other types of influenza, the swine flu or H1N1 strain is relatively mild... most students suffer three to five days of discomfort, such as fever, congestion, sore throat and fatigue.” (emphasis mine) It’s not even as ferocious as classic influenza, which will commonly keep people in bed for up to two weeks. (In bed or in the bathroom, as you ponder how your body can possibly have anything more to purge.)

The good news (or bad news, depending on how you look at it) is that your chances of dying in a car accident today are much better than the odds you will contract a fatal case of swine flu.

I am reminded of a quote attributed to Mark Twain:

“I’ve had thousands of problems in my life, most of which never actually happened.”

Remember the “bird flu” that had people paralyzed with fear? At least we can worry about a real problem now instead of fretting about a threat that never arrives! But what Twain was pointing out was that most of our problems do not exist in the real world, they exist between our ears. Worry, fear, distraction, these actually are the real problems! A mild flu? More of an inconvenience than a genuine “problem.”

The real problem is how many of us are conditioned to think of the “worst case scenario” first, rather than dwell on possibilities. I believe the simplest and most profound change that anyone can make in their mindset is to focus on what you want vs. what you fear or don’t want.

This awareness might or might not save you from a round with the flu, but I’ll bet it’ll help at least as much as a flu shot. If you are expecting to get sick and fearing getting sick, you actually raise your chances of getting sick. If you expect to recover and believe that you are getting better, your body will rally to support that belief.

And I’m not just talking “positive thinking” or “Law of Attraction,” I’m talking about documented science as to the connection and integration between mind and body. No doubt you’re familiar with something called “the Placebo Effect.” The Skeptic’s Dictionary defines “placebo” as “the measurable, observable or felt improvement in health and or behavior not attributable to a medication or invasive treatment….”

In a nutshell, the placebo effect demonstrates that the patient’s belief in a treatment can be more important than the efficacy of the treatment itself, to the point where an inert sugar pill has been proven to be more powerful, in many instances, than actual medication. In 1955, placebo effect pioneer H.K. Beecher studied over 1,000 patients and discovered that a placebo was all that was needed for the patient to get well in 35% of cases!

Even more shocking has been experiments done with “fake surgery”, for instance, one small experiment found that 8 of 8 patients who believed they had knee surgery (an incision was made and stitches left behind) made complete recoveries! In other instances, such as when dealing with pain or gastric upset, placebos have been found to be helpful in 50 -60% of cases. (See Skeptic’s Dictionary for details.)

Perhaps more relevant and critical to the swine flu discussion is that of the “Nocebo Effect.” While placebo can be translated, “I will please,” nocebo means “I will harm.” From deadly voodoo “bone-pointing ceremonies” to those who go into shock and die from bites from non-poisonous snakes (believing them poisonous), the belief system about what might is harmful as well as helpful is likewise a powerful predictor of experience. The ultimate in self-fulfilling prophecies, a Washington Post article called the nocebo the “evil twin” of the placebo, citing research that women who believed they were high risk for heart disease were four times more likely to die than women with comparable risk factors who lacked fatalistic expectations.

As Deepak Chopra has asserted in interviews and books, the nocebo effect’s power lies not simply in the negativity of the suggestion, but the perceived authority of the person making the negative pronouncment (or placing the voodoo hex.) He believes that physicians (the perceived “authority”) actually perpetuate low recovery rates when they, for instance, tell a patient that they only have a 10% chance of recovery from their cancer or illness. It’s a case of chicken and the egg - which came first, the negative prognosis or the low chance of recovery?

I suggest that, if the mind is as powerful as it’s been proven to be (and I believe this is but the tip of the iceberg), that we’d be better off with supportive beliefs of our impending health and wealth than listening to the media’s monotonous, hypnotizing predictions of illness, povery and doom.

No matter what you choose to call it - the Law of Attraction, the Placebo Effect, Positive Thinking… the fact remains that the way we think has a real and measurable effect on the events of our lives and how we experience those events. Life doesn't just happen to us, we also get to co-create our experience and participate in the moment-to-moment birthing process known as “life.”

That all being said, a lot of people have the flu right now. Sometimes, in spite of the best attitudes, good habits and supportive beliefs, stuff happens. If you have the swine flu, you probably already know what to do. Stay home, rest, and drink lots of fluids. Don’t go kissing and hugging everyone. And imagine that any moment now, you’re going to start feeling better. Before you know it, you will.

Oh, and one more critical piece of advice - if you have influenza, swine flu, food poisoning or anything of that nature, remember that you should have access at all times to a toilet plus a large bowl or sick-bag. If fluids need to exit your body from more than one opening at the same time, it’s a bitch to have to choose which end gets the toilet.

Why the Law of Attraction Might Not Be Working for You

Thu, 10 Sep 2009 02:09:27 -0400

A few years ago, the DVD phenomonon “The Secret” (and subsequent books and cd’s) produced by Rhonda Byrne popularized the Law of Attraction. Not a new concept, the Law of Attraction (LOA) says that we attract what we think about. Our thoughts and (especially) our feelings are, literally, “magnetic” and will attract more of the same.

“The Secret” was applauded for savvy production and marketing, bringing the LOA concept into the mainstream. Meanwhile, others criticized it for being overly simplistic, too focused on materialism, or simply too “woo-woo.”

Whether you loved it or hated it, “The Secret” raised awareness of how our thoughts and feelings might have a real impact on our lives, and even play a role in creating the events that appear to be “happening” to us. It questioned our role as “victim” and took seriously our role as “creator” of our lives (or “co-creator”, if you prefer).

Many people started noticing what they were attracting, and perhaps even started saying affirmations, posting their intentions on their bathroom mirrors, or collaging a “vision board.” Those that took proactive action probably observed their circumstances beginning to shift. However, they also generally noticed this frustrating pattern:

Sometimes the Law of Attraction seems to work. (At times rather miraculously.) And sometimes… it doesn’t.

Is it mere coincidence? Is the concept flawed? Are we “doing it wrong”? (To which I answer, “no,” “no,” and, “well, maybe.”)

First off, let me say that the Law of Attraction appears to be a genuine force. But it’s not the only thing that determines our results. Not by a long-shot.

You see, the Law of Attraction deals (at least initially) with our conscious thoughts - the “tip of the iceberg” - while what’s under the surface is much more likely to be running us. Even more powerful than the Law of Attraction is the Law of Alignment.

The Voices in Our Head

Since I work with people on their relationship with money, I observe this problem all the time. It looks like this:

While someone gazes at pictures of what they desire and recites a mantra like, “I am money magnet” or, ”Abundance flows effortlessly to and through me,” their subconscious conversation is quite different. (Or maybe they are praying for what they want, the principle is the same - focusing on what we desire.)

If you could record their innermost dialogue, beneath the surface of the obvious and even their conscious conversation, you might hear this:

“No matter how many vision boards I make, the economy still sucks and I don’t really believe that I can overcome that with my thoughts.”

“I want abundance to flow freely to and through me, but I fear that I am not really worthy of it.”

“I wish that I was a magnet for money, but if I was, I wouldn’t need to be chanting this stupid mantra!”

You see, our own thoughts are not in alignment with themselves! Like a quarelsome internal family, the bickering continues in our subconscious minds. Maybe our goal is to 1) earn a high income 2) in our own business, 3) invest wisely, and 4) retire young, then 5) pursue travel and volunteer work. Sounds like a great goal, right? But the problem is a myriad of misalignments buried beneath the surface:

1) Earn a high income? Perhaps our friends or even our church taught us that people who make a lot of money are likely unethical and not to be trusted (and we are ethical and trustworthy, so we have an internal dissonance with the idea of making a lot of money).

2) In our own business? We’re self-employed, but our parents always told us we needed a “good job” to be successful (so we question our ability to succeed in our own business and sabotage ourselves).

3) Invest Wisely? A close friend we look up to lost his shirt in the market, and others watched their rental homes go into foreclosure, in spite of their knowledge and savvy (so we have no confidence in our ability to do better and fear we’ll never grow our nest egg fast enough for financial freedom, so why bother trying?)

4) Retire young? Nice idea, but our parents are still working and we’d secretly feel funny or even guilty retiring before them (so we’re conflicted about the goal).

5) Travel and volunteer work? Again, this sounds great on the surface, but perhaps we procrastinate on taking action because that lifestyle - however desirable - is simply outside our comfort zone (so it may actually feel more comforting and “safe” to stay where we are and never actually do the thing we say we want to do).

Do you see how this works? A more reliable indicator of our true thoughts, beliefs, desires and values might be our actual results.

Another accurate indicator of what we really think or believe is our actions, which of course produce our results. Our thoughts and feelings determine the actions that we take or don’t take. When we are not taking action towards a goal (but have little problem taking actions in other areas) the problem is more likely a lack of alignment than a lack of discipline.

If we are repeatedly and constently stuck at the same frustrating place, there is a reason. Our experiences, beliefs, and emotions are likely mis-aligned in some way. I’ve heard it put this way:

If you want to know what your true intentions are, look at your results.

So, even while trying our best to practice the Law of Attraction, we might be completely out of alignment! And not only don’t our words and beliefs match, but our beliefs and our emotions are irreconcilable as well. Maybe we’re saying what we wish to attract, but all the while we’re feeling what it is that we don’t have.

Our affirmations take on a desperate tone because our focus is really on our lack. If we’re attracting anything, it’s more frustration, more scarcity, more discomfort, anger or shame that we are still broke, single, unemployed, overweight (fill in the blank). The fact is, we are not “attracting” anything, we are stuck in resistance, which is not a powerful place from which to create.

Testing Your Alignment

While working with a coach several years ago (back when I was a real estate agent) - I had a career-shifting ”Aha!” moment. I had been attending real estate training seminars and increasing my marketing efforts to work towards the goal of growing and expanding my business. This was something that virtually all realtor seminars taught - “How to grow your business bigger and better!” After all, wasn’t that the goal? To have a big business by gaining more clients, hiring more assistants, and concentrating our own efforts on high-revenue activities?

My Aha was this: I realized that

1) I didn’t enjoy managing other people.

2) I did enjoy managing most of the details of the transaction, which also made me a more effective trouble-shooter.

3) I loved providing personalized service to my clients.

4) My clients hired me because I gave them top-quality, personalized service. (They wanted me, not an assistant.)

5) I didn’t want a bigger business! In actuality, growing a “bigger, better business” felt like a “should” and not a “want to.”

Immediately, I stopped all marketing and advertising, working only with repeat and referral customers. I outsourced a couple hours a week of administrative work, and did everything else myself. I decided I would have a “boutique business” in which I provided excellent personal service to a limited number of clients. I saved time not having to advertise or take calls from those responding. And as another a side-effect of limiting my business, my referral income grew, because I referred customers who were not my ideal customers to other agents.

To make progress towards anything, we’ve got to know where we’re going, and then make sure our “ducks” - our thoughts, feelings, beliefs and desires - are in a row.

To see if you are fully aligned with the things you say you want, ask yourself these questions:

If I got what I say I want, what might the downside of it be?
What is the “payoff” or comfort in remaining stuck where I am?
What beliefs, emotions or experiences run counter to the new thing I’m trying to create or attract?
When I think about reaching my goals, does that feel completely positive, or do I have conflicting feelings or thoughts about reaching them?
Do I surround myself with people who are supportive of my goals and desires? (And if not, why not?)
What price am I willing to pay (and not pay) to attract or create what I want?
Is there something even more desirable than my current goal that I would rather create or attract?
Does my self-identity align with my desires? (I.e., do I see myself as a person creating or attracting what I say I want?)

Be honest with yourself, and you will likely uncover your hidden resistance to the thing you think you want (that keeps eluding you). Bring what's underneath the surface to the light, and do the internal work necessary to align your thoughts, beliefs and emotions.

Using the Law of Alignment is “the secret” to the Law of Attraction!