Client From The Future

I met a future client the other day. The reason I call him a future client is, like too many people, he has less than ideal credit. Like many people, it was not his fault.

You see, this young man served his county by completing two tours in Iraq. He came home to his young wife, only to find out that she was sick and unfortunately passed away.

He took care of her, and stayed by her side until the end. His work suffered, and he was on the list when layoffs happen. The medical bills piled up, house payments piled up, and he lost his home.

He couldn’t find a place to rent, or buy, because of his bad credit, and the fact that he didn’t have a job, so he bought a van and lived out of it. He made that van his library, and his office. He worked, went to school and got a degree, but he still had bad credit.

That’s when we met. He knows a friend of mine, and my friend thought I could help. I bought him dinner. He wouldn’t let me pay for it, until I made him understand that it was a business meeting and not charity.

I started off by telling him to write a letter, explaining why he has bad credit, and send it to the credit bureau. I told him to have the credit bureau include the letter within his credit report. Then I told him to request a free annual credit report.

I suggested he look the report over very carefully and dispute anything that does not look right, such as debts that he doesn’t recognize. He should dispute these debts by writing a dispute letter. I told him this report would not show a credit score, but it would show the information that is used to calculate his credit scores, from all three credit bureaus, TransUnion, Equifax, and Experian.

I told him a Fair Isaac Corporation (FICO) score ranges from 300 to 850. Then I wanted him to know a credit score starts to become questionable when it falls below 650. A credit score breaks down into the following areas:

Payment history 35%
Outstanding debt 30%
Length of your credit history 15%
Types of credit 10%
Employment history & Identity
Inquires made on credit within fourteen days
How long it took to pay off debts in the past
Late payments
Bankruptcies, Foreclosure and liens

The following are some things I told him to do, in order to start repairing his credit:

Pay rent and other bills In advance
Do not take out additional credit cards
Pay two months rent as a security deposit, instead of one month
Get a roommate
Pay with direct deposit
Obtain recommendations from employers, and other business you have purchased from
Use a credit repair company to validate debt, stop vendors from reporting past bad debt and questionable accounts. Some credit repair companies are Lexingtonlaw.com, Skyblue, creditrepair.com and Ovation
Find a good mortgage broker

Lastly, it usually takes about two years of doing the things listed above before your credit is repaired. When someone that has less than ideal credit is ready to buy a home, they should try to purchase the home through a company, such as American Rent To Own. This way they could lease, and then purchase the home. American Rent To Own allows some of the rent to go towards the purchase of the home.

Ownership Economics and Collateralizing Future Earnings

In order to stand a snowball’s chance in this brave, new, globalized, Trumped-up economy, here’s something that millennials need to know and understand. For all practical purposes, ALL THE DISCRETIONARY WEALTH IS BEING GENERATED ON THE OWNERSHIP SIDE OF THE ECONOMY!

That’s right. There are two ways in which to generate income. You can work for it in order to earn a wage or a salary. Or you can own wealth producing capital assets such as stocks, bonds, real estate, machinery, copyrights, or patents, etc. Owners of such wealth producing capital assets collect dividends (i.e. generate an income) strictly by virtue of their ownership.

That’s why best-selling author and motivational speaker Robert Kiyosaki says “A job is a short term solution to a long term problem.” The long term solution to the long term problem of course is capital ownership because for all practical purposes ALL THE DISCRETIONARY WEALTH IS BEING GENERATED ON THE OWNERSHIP SIDE OF THE ECONOMY – NOT ON THE JOBS/LABOR SIDE. The jobs/labor side of the economy has stagnated for over three decades now, while the ownership side has expanded exponentially during the same time period.

So What Can Millennials Do?
So what can millennials do with this insightful piece of knowledge? For starters, in the wake of graduation, as they make their way into the brave, new, 21st century economy, they can look for companies that are owned by employees (including worker owned co-ops and ESOPS) and submit their resumes and applications.

Collateralizing Future Earnings
You see, companies that are employee owned (ESOPs which is short for Employee Stock Ownership Plans) are organized in such a way that employees who qualify are rewarded with opportunities to buy stock (become semi-partners) in the company they work for using FUTURE EARNINGS OF THE COMPANY (as opposed to their own savings or equity, which minimizes personal risk) AS COLLATERAL. In investment circles this strategy would be called a Leveraged Buy Out (an LBO).

THIS UNIQUE FORM OF CAPITAL CREDIT FINANCING IS ACCESSIBLE ONLY TO EMPLOYEES WORKING FOR COMPANIES OFFERING AN ESOP OPTION. More specifically, it’s not available in employee owned co-ops, which is the next best option. And it has NOTHING TO DO with a company offering employee stock options which is not only highly speculative, but 100% dependent on conventionally collateralized financing possibilities.

Two Income Streams
So, without dipping into savings or jeopardizing the family home, ESOP employees develop TWO STREAMS OF INCOME. One from their wage or salary, and the other from their stock based dividends. The first is actively generated through the employee’s own time and effort. The second is passive or residual income that’s generated by virtue of their ownership.

Suddenly you see employees/workers who are benefitting from both the job/labor and the ownership side of the economy – which, as we’ve said before, is where ALL THE DISCRETIONARY WEALTH IS BEING GENERATED in the 21st century economy.

What Else Can Millennials Do?
So what else can millennials do in this regard? They can support political candidates who advocate employee ownership as a business model. For example, Senator Bernie Sanders of Vermont has sponsored two bills in the US Senate that are specifically designed to encourage employee ownership practices. The first (S.2909) “Provides programs designed to encourage employee ownership and participation in business decision making throughout the US.” The second (S.2914) “Creates a US Employee Ownership Bank” which is designed to be friendly to the idea of using future earnings as collateral in the stock ownership transaction.

The more millennials know about the power of ownership, the better their odds become of participating on the ownership side of the economy, where as we’ve said before, all the discretionary wealth is being generated. In the process the malignant wealth gap that’s so threatening to American democracy can be reversed. Corporate plantations that are built on hierarchy and on the backs of modern wage slaves can be democratized. And the odds of millennials surviving, even thriving in the 21st century economy will be maximized.

The Right Choice With Credit Cards – A Deep Thought

The credit card has become the most convenient and common instrument through which you can make all your payments. These cards have topped the list of modern short-term credit facilities and are proven to be the cheapest form of credit and are easily accessible at any POS point. Keeping all the benefits rendered by the cards, a majority of the population who are in need of short-term credit would like to go for a credit card over the other modes. However, not everyone can choose a card which would optimize the returns from it as very little information about it is available and known.

These cards are generally issued by banks, financial institutions and by some stores. The cards bear a certain credit limit and this limit is set by the issuing companies considering your income, previous credits, and the payment track records. Once you apply for a credit card considering all these circumstances your credit limit will be fixed and each time you make a purchase by using this card the amount will be added to your credit card. You will be given with an interest-free period during which you don’t need to pay any interest on the amount of credit you used on the card. Generally, the interest-free period lies between 20-55 days and it varies depending on the issuer company.

The information that we specify here will give you an idea on the basics which would enable you to choose a card with the higher interest-free period so, that you can get more interest-free credit limit and also more repayment time. However, along with the basic information on these cards let’s look at the few more tips or tricks on choosing the best.

- Get your credit scores: Assess your credit scores based on which you will be issued a card with higher benefits. The credit scores will make your card choices much brighter if the score is good and vice versa if they are not.

- Identify your type – There are numerous types of cards available in the market. Choose or identify the card of your type. While choosing your type, make sure you will choose a card which can improve your credit card limit and also save money. There are cards on which you will earn reward points on each purchase which you can redeem at a later date.

- Make your credit Choices- Make a list of objectives for choosing a credit card. It is not advisable to swipe a credit card every time just because you hold one. So, make sure of the primary objectives behind taking a card and limit yourself to use the card only for that purchase.