Billy Alvaro's 7 Easy Steps FROM Debt, Taxes and Worry

“Only in America do people save to go bankrupt”
Elizabeth Warren - Professor, Harvard University Law School

Most middle class Americans are in a financial prison, trapped by their debt like the bars of a jail cell, and held prisoner by the banks and credit card companies. These institutions have bought enough politicians to twist the laws in such a way as to be able to literally suck the money out of your pockets, and the sad truth is... it's all LEGAL!

You need to get these 800 pound gorillas off your back now, and begin moving toward financial freedom, which means you don't owe any debt AND you have built real wealth in the form of savings, investments, and owning your home free & clear.

But, the banks, mortgage brokers, and credit card companies don't want you to know this. They make BILLIONS each year from middle class America's debt. Billions.

And what's more, they have a number of Tricks they use to keep you Trapped in debt. Trapped in a financial prison, so I'm providing these checklists so you know how to protect yourself.

It doesn't seem to make sense, why would someone with a huge credit card debt get more offers? Until you realize that they want you making interest payments, late fees, and cash advance charges.

Listen, the people who pay off their credit cards are not the ones they make money on, so they prey on those who are having trouble paying their bills. Why? Because they want you to pay high un-regulated interest rates to fatten their profits.

It's like you are drowning, and instead of handing you a life vest, they toss you the anchor. Make no mistake, these guys want you to be in debt for the rest of your life so they will have a never ending stream of profits from the sky-high interest rates you'll pay.

How to protect yourself: Put those new card offers in the shredder. Pay off your current balances.Get rid of all but the 1 or 2 essential credit cards, and cancel the rest. If you are a card-aholic, cut up your cards, or freeze them in a bowl of ice until you pay them off.

Don't be fooled... this is a now legal version of the old bait-and-switch racket.

The Credit Card Companies want to sucker you in by making you think you can move your balance over and be saved from you other high interest rate cards. Then one day... POW! Your zero-rate is gone and stuck paying an even higher rate than before!

Be very skeptical of any offer that has zero interest rates. Read the fine print and you'll find that after a short 'introductory' period, that zero rate suddenly can go as high as 28%. The balance transfer they want you to make will have a big fat fee attached, and there may also be penalties for a payment that is even 1-day late.

Make no mistake, the zero rate is to make it irresistible to you. Especially if you are in debt up to your eyeballs. And they know you won't bother to read the details. Once you sign the dotted line... they've gotcha.

How to protect yourself: Read the agreement with a fine-toothed comb to find out what the real story is. Call the issuing bank and ask for a list of all the hidden charges, maximum interest rates, and what triggers them.

The Credit Card Companies want you to feel safe by just paying the minimum payment each month. The more you do that, the longer they get to have their hooks in you and make obscene profits each year. It's like they have a Hoover Vacuum attached directly to your wallet.

Here's the reality of minimum payments, if you only make the minimum payment each month, it's almost impossible to pay your balance off. Even worse, if you continue to use the card and add to the balance, they know you'll be paying it off well into your retirement years.

Even a $1000.00 one time charge with no additional charges can take 13 years (153 months) to pay off when the minimum payment is 2.5% of the balance. And you will have paid $1,115.85 in INTEREST alone. Meaning you paid more than double the original purchase.

There is a reason the minimum payments are so small, and it's not to make your life easier by having small payments. It's their way of putting financial handcuffs on you. By paying only the minimum, you end up wearing those handcuffs for years and years.

Fact is, unlike a mortgage there is no term limit or end date on credit cards, and bluntly they don't give a damn if you ever pay it off, as long as you keep sending them money.

How to protect yourself: Pay off your card as quickly as possible. Stop using it until you can pay the full balance each month. Always pay more than the minimum. Do what ever it takes to pay off credit card debt. Now!

Nothing gets a credit card company more excited than you transferring a balance to their card from another card. And they may offer a low rate on balance transfers, or even a zero rate, because they want your money.

But there will be a hefty fee for the transfer (gotcha #1), and often there are requirements that you must use the card each month or the low rate vanishes and you pay the full rate (gotcha #2). And if you are late or miss a payment, there will be a penalty and your special low transfer rate will be over (gotcha #3).

How to protect yourself: Be very suspicious of any balance transfer offers. Read the agreement and look for all the hidden gotchas. Call the company up and ask for a list of anything that would cause the rate to change to a higher one and have them explain exactly how they work.

#5. Universal Default - you pay max rates for being late on ANY payment to ANY company

Most people aren't aware of this rather nasty rule. Universal Default means that if you are late on any payment whether it's a cable bill or to the Book of the Month club, the Credit Card Companies can force you to pay the highest interest rates allowed by law.

In fact, they can put you in default if they believe for any reason you 'might' not be able to pay on time. See for yourself, the below segment is taken from a typical credit card agreement from a Credit Union.

If you default on a payment with anyone who has extended you credit, your credit cards can change their interest rate to what is known as the default rate. This rate is usually the highest rate charged by the card, an average of 24% but can be as high as 38%.

"The average APR is 16 percent and this rate can soar as high as 30 percent to 40 percent should you make a late payment."
- ABCNews.com

This means your payments will take a huge jump. This also means the greedy Credit Card Companies make more obscene profits, because the increase is ALL INTEREST.

How to protect yourself: Pay all payments EARLY so there is no possible way you can be accused of missing a payment. Use automatic bill paying when possible to make sure you don't forget to send in your payment.

#6. There is NO Federal Law that limits the interest rate credit cards can charge you!

This will likely shock you to learn this, but it's true. The only thing limiting credit card interest rates is state laws, and most credit card companies are in states with very WEAK usury laws. Read your agreement and you'll see the laws applied are state laws from one of these six states, Delaware, New Hampshire, Virginia, South Dakota, Utah, or Arizona.

8 of the Top 10 credit card company headquarters are located in states with
no interest rate cap. The other two are in a state capped at 36% interest.

How to protect yourself: Get a copy of the agreement for each of your credit cards and find what their maximum rate is so you are aware of what they CAN charge you. Contact your state attorney generals office and find out what your rights are if they try to make you pay the max rate.

If you've been paying a minimum of $100 each month, you're about to get stuck with $200 to $250 payments each month!

What will happen to you if next month your payments suddenly doubled? If you've got a big smoldering pile of credit card debt and are living paycheck-to-paycheck, this could be the straw that breaks your back.

There is a trend in the credit card industry now to double the minimum payment due from the current average 2% of the balance to between 4% and 5% of the balance. If it hasn't happened to you yet, it's just a matter of time because it's yet another way for the Credit Card Companies to squeeze more profits out of you.

Thing is, there is no way to know when it will happen, but you should plan that it is going to happen and act now to be ready for it.

How you can protect yourself: If you can start paying double the minimum payment now, this can only help you pay off your debt faster so it's a good idea anyway. Find ways to get extra money out of your current budget. Also, most creditors would rather have you pay something instead of missing a payment, so give your credit card company a call to see if you can either negotiate a reasonable payment arrangement or reduce your interest rate.

Once upon a time, all interest payments were tax deductible, but your government wanted more of your money so they changed the tax laws so you can't deduct any kind of non-business loan interest including credit cards, car loans, or line of credit loans.

Yes, even your government is keeping you financially stuck, and it's going to get worse before it gets better because families are taking on record amounts of debt just to keep up with their taxes, bills, and every day living expenses.

Listen, there is now only one middle class tax shelter left you can use where interest payments are deductible, and that's your home.

What this means is, the only smart move left for you is to use your home equity to pay off your credit card debt, because you get a double benefit. You get the credit card debt monkey off your back, and you'll get more money from your paycheck by paying LESS TAXES.

How you can protect yourself: Contact an Economic Expert to assess your financial situation. If you own a home, it pays off financially to use it to pay off your credit card debt and gives you a net gain in take home pay by lowering your taxes.

#9. Credit Card companies can CHANGE your agreement at any time... but you CAN'T

This is like living in a dictatorship where you have no control over the rules you live by.

Simply by sending you a notice, usually included with your monthly bill, your credit card company can change the rules you have to follow. By law you have 30 days to act, which means if you don't want to accept the new terms... you have to cancel your card, pay off your balance, and close your account. And if you do nothing, that means you accept the new terms!

Fact is, most people can't do this because they don't have the money to pay the balance. So... you're screwed. They can raise the minimum payment, raise all the fees, raise your interest rate, change how you pay, when you pay, and the penalties if you don't pay.

And they have already been doing this. Maybe your minimum payment has already doubled. Or your 'grace period' has been changed from 30 days to 21 days (in some cases 14 days). If you see an extra piece of white paper with micro sized type on it, you better read it. This is how they change the rules on you.

How to protect yourself: The sad reality is there isn't much you can do since ALL credit card companies can do this. If you pay your balance off each month, you can change companies. Your best bet is to find the most reputable credit card companies and get an account with them. If they have longtime clients, they won't want to piss them off with foolish changes to the agreements.

You can thank your congressman for this one. Due to the credit card companies whining (and lots of money paid to congressional campaigns) bankruptcy laws were re-written in 2005, and it wasn't in your favor. It's now much harder to qualify for bankruptcy, AND your credit card debt stays with you.

“Ninety percent of the families who file for bankruptcy do so following a job loss, a medical problem, or a family torn apart by death or divorce.”
- Newsweek, August 31, 2006

“Current legislation helps lenders at the expense of ordinary Americans”
- Elizabeth Warren - Professor, Harvard University Law School

No more 'Fresh Start' for those who need it. The new law is a 'gift' to credit card companies who stand to receive as much as $1 Billion or more from repayment plans due to the new law.

How you can protect yourself: Avoid bankruptcy at all costs. It was always a last resort, but now it doesn't even give you a clean slate as you still have to pay off your credit card debt. Consult with an Economic Advisor to explore all possible options to pay off your debt way before bankruptcy is ever considered.

“The mortgage industry has no single federal agency monitoring its affairs...Government regulation is splintered, and in some cases - notably mortgage brokers - almost non-existent”
- Milwaukee Journal-Sentinel

#1. Often an inexperienced 'Newbie' is handling the largest financial transaction of your life

Buying a home for most people is the single largest purchase you've ever made, yet most loan officers and mortgage brokers 'guiding' you through this complex process have a few months experience at best. Mortgage lending is a game of experience. Every experienced loan officer remembers their dumbest newbie mistake. Thing is, you don't want that mistake to happen to you.

“You can be driving a truck or selling cars today and, tomorrow, be a mortgage broker dealing with large sums of money”
- William Matthews, Vice President of Mortgage Asset Research Institute Inc.

How to protect yourself: Demand proof of experience, training programs, and certifications by independent industry agencies. Focus on experience, not the promise of low rates.

You see an ad for an amazing low rate. You call an 800-number, and you get a fast talking loan broker working in a mortgage chop-shop who smells blood and is going in for the kill. All this guy wants is to close you now and collect his fees. Success is measured in the amount of fees collected, not in happy customers.

"I'm shocked by how many reports there are every day around the country about fraud convictions or indictments."
- Tim Doyle - Mortgage Bankers Association

How to protect yourself: Never do a mortgage or loan over the phone. Request a meeting at their office. If you are dealing with an office outside your city... be sure to do your research before agreeing to anything. Call the Better Business Bureau in their town. Ask for credentials and verify them. Remember to Protect Your ASSets.

These people mean well, but are more like a child with ADD who just drank a super-sized soft drink. They can't keep focused on the one thing most important to you... your mortgage transaction.

While working on your mortgage they'll try to sell you insurance, Internet service, and even lawn maintenance.

Even if they have good intentions, they don't have experience and training. They are just a notch above the inexperienced newbie and not someone you want handling your mortgage. And, they will likely not be around when you have a question six months from now.

There are no minimum requirements to be a mortgage broker or loan officer. This means that yesterday he could have been the guy at McDonalds asking if you wanted fries with your burger.

How to protect yourself: Ask if this is their full time profession. Run if they answer anything but yes. Again ask about years of experience, training, and certifications. Double check everything.

Most inexperienced newbies (see #1 above) start at large national banks. When they get good enough at mortgages - loans etc., they leave in search of more money.

Even when you do find a competent experienced bank employee to work with, it doesn't mean good service. Banks are notorious for focusing on their wealthy clients to keep their business in house. To them, you are just a drop in the bucket of their billion dollar earnings. You'll be lucky if they remember your name and you get the same agent each time.

And remember, the large name banks are also the major players in the credit card industry that thrives on high interest rates, fees, and large amounts of consumer debt. They are not lending you money because they are your friend.

How to protect yourself: Don't make any agreements right away. If you insist on a large bank, go back multiple times. Notice the service and how they treat you. Then see if you feel confident you'll get the attention you need to be lead step-by-step through the transaction.

This is one of the most common tricks to get you trapped into a high rate adjustable mortgage. You'll see it in your local newspaper, on TV, and on the Internet. Unscrupulous brokers will do it to get you to call or come in, and then tell you it's no longer available but they've got this other one that's almost as good.

“Sub-prime mortgage companies routinely use bait-and-switch tactics to lure in potential borrowers and maximize the amount of money loaned out. At closing, borrowers are often presented with terms that do not match those previously offered by the company, and then pressured into signing documents which they have not had time to review.”
- Al Hofeld Jr. - South Side Community Federal Credit Union in Chicago

Here's a cold hard fact, no mortgage rate can be quoted and guaranteed without looking at your complete financial situation. And even then, rates change daily so to lock it in you would need to pay a small fee or risk it changing before you did the final closing.

How to protect yourself: Ask for a written guarantee. You'll see them scurry away like roaches when the light comes on. An honest broker will tell you he first has to run your numbers, then and only then can he tell you a rate.

These are known as Super Producers and make up to seven figures a year churning out loan deals. They have a small army of assistants that shield them from you any time you want to talk about your mortgage, which means you'll be lucky to get 2 minutes with them before the deal closes.

These guys are all about the money, and don't care one bit about you or your situation. They don't have time. It takes a lot of deals to make the seven figures in commissions. They probably won't even remember your name.

How to protect yourself: Ask for a face-to-face meeting for at least 30 minutes BEFORE you agree to anything. Any person with the clients best interest in mind will welcome such a meeting as a chance to get to know you and learn about your needs.

#7. “You need perfect credit to refinance an existing mortgage or pay off your debts”

This is a load of baloney. It's a sign of a lazy or incompetent broker. Avoid them like the plague and find someone who's willing to do what it takes to help you out.

Here's the deal, if your credit score is too low, there are ways to raise it up in as little as a few months. There can be many reasons for a low credit score. The most important part of your credit history is your payment history. Often there are many mistakes there that can be easily fixed and raise your score.

There are also special loan programs for people with low credit scores, and even some for those with a bankruptcy. The point here is a good mortgage broker or loan officer will know this and offer to help you explore all the options.

“Getting a mortgage with low fico and bankruptcy is possible, but will require you to do several things on your part to show lenders that your are trying to improve your financial and credit situation.” Broker Outpost

How to protect yourself: Ask if damaged credit is a problem. The honest answer is that some credit repair may need to be done first, but it's not a deal breaker. Someone who really knows the business will know how to work with you and get what you need.

#8. Encouraging you to treat your home like a piggy bank instead of a wealth creating asset.

The single fastest way to wealth for the middle class is through equity in the home. With a proper financial plan you can easily retire with over $1 million dollars in savings, investments, and property.

Unsavory mortgage brokers and bank agents will tell you it's fine to raid your home equity like it's a piggy bank, but this only makes them more money. It costs you money and long term wealth.

How to protect yourself: Ask them to show you how any mortgage will add to your wealth 5, 10, and 20 years out. If they look at you like you suddenly were speaking Chinese, it's time to walk.

People will tell you anything to get your money, but you should only believe it if it's in writing. And then only from a company with a real office at a real address who has been in business for years... not weeks or months.

You'll get all kinds of excuses why they can't put what they promise you into writing, but don't you believe it. An honest reputable business knows the importance of keeping the promise they make to you, and will have no problem doing it in writing.

How to protect yourself: Ask for a guarantee in writing BEFORE you agree to sign anything. Make sure it isn't full of legal loopholes and escape routes. When in doubt, have an attorney look it over for you. No written guarantee means you don't do business with them.

“By the end of this decade, 1 of every 7 middle class families with children will file for bankruptcy.”
- Elizabeth Warren, Harvard University

Middle class income is no longer enough to buy a middle class lifestyle. Even two income families are having trouble making ends meet, especially if they have children. The frightening result is middle class America is drowning in a sea of debt.

According to MSN Money, “Middle-class families are borrowing record amounts of money to pay their monthly bills.”

A recent study by the Center for American Progress discovered that in June 2006, families took on debt equivalent to 129% of their disposable incomes, a big increase from the 96% in March 2001.

"Middle class families are not only spending their current income but all their future income."
- Christian Weller, Senior Economist - Center for American Progress

The most important thing to know is... It's not your fault. The system is designed to keep you in debt by unregulated and out of control Credit Card companies. Harvard Gazette refers to the deregulated credit card companies as "a monster that feeds on families in trouble."

Think about it, they don't teach you in school about debt, money, and wealth do they? In fact, if you are like most people, you don't have anyone qualified to coach you. Your neighbors have their own money problems, your parents have to get by on fixed incomes, and your friends an co-workers don't know anymore than you do.

What's more, the most common solutions out there are band-aid approaches at best. It's like the fable of the little dutch boy putting his fingers in the dam to stop the water. It may work for a little while, but the flood can't be stopped without fixing the dam before it breaks.

The average American family now owes $9,569.00 in credit debt, according to Gail Cunningham of the Consumer Credit Counseling Service (CCCS) of Greater Dallas.

Middle class families get trapped in financial prison because they don't have any kind of Financial Plan. No short range plan to get out of debt and on solid financial ground. No long range plan to build wealth. And no plan to build a nest egg for emergencies.

Financial Freedom

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How You Can Stop The Legal-Theft Of Your Hard-Earned Money
By Banks, Mortgage Brokers, & Credit Card Companies

Financial Freedom

Click Here to Get Started NOW

How You Can Stop The Legal-Theft Of Your Hard-Earned Money By Banks, Mortgage Brokers, & Credit Card Companies

How You Can Stop The Legal-Theft Of Your Hard-Earned Money
By Banks, Mortgage Brokers, & Credit Card Companies