Tag: debt

11 Jun 2016

When and How to Use Bank Loans or How To Utilize Debt In Your Advantage

Back in 80s and the first half on 90s, people were loaded with money. Younger generations might not recall this, but money was everywhere. Nobody, at least on the northwestern hemisphere, had difficulties surviving through the month, even though many were paying back mortgages for their new 2-story homes in suburban areas.

But then something happened, which will trigger the downtrend in net worth of almost every person in that same area of the world and wider.

The dawn of personal electronic devices and improved communications


Even before the revolutionary 80s of the last millennium, ever more people decided to leave the countryside and go seek for their luck elsewhere, by selling their labor and not the produces. Already in 2006, 51% of the entire human population have permanent residences in urban areas, all seeking for the job, nobody producing anything edible!

It sounds irrelevant, but you have to think about basic human needs. Those are:




Everything else, including shelters, is secondary, tertiary and even a problem as we’ll soon learn.

With the emergence of the new technologies, banks were the first entities who adopted to the situation since they had difficulties spreading all that money they had, to keep the system alive and well fed. They started to increasingly issue “consumer loans”, where you’ll borrow the rather expensive money, just to possess some cool gadget like an advanced smartphone these days. Unlike the old days, where you actually had to go to the bank and ask for the loan, nowadays, there’s a credit card. A fully automated system of plunging into the debt – if you are not careful!

More and more devices got connected to a home electrical grid, which, slowly but surely, kept rising the monthly energy consumption and subsequently – the bills. But all those devices required (and still do) additional monthly investments to be operative. Only a decade ago, the only “communication” bill was a standard landline for the home phone. Nowadays, the average western household has 1 landline and 4 mobile accesses – each costing money!

Add car industry who tagged along and, in alliance with banks, made possible to change personal vehicles every 2-3 years, and you have successfully accumulated an immense pressure on your home budget.

That same home budget mostly depended (unfortunately it still depends) on 1-2 paychecks, received 1-2 times per month.

Even combined, those paychecks were insufficient to answer the challenge – fast growing expenses!

To make things even more worse, young generation fully detached from the past and start thinking CEO rather than being a member of a low level workforce. That meant — and still means — expensive high education, where people, again, borrow money to pay for the kid’s tuition. As kid acquires diploma, parents simply transfer all those loans, they were picking each year, and our young future CEO starts with anywhere between $25K and $100+ key of a direct debt!


But it wasn’t always like that…


Only a few decades or perhaps a century ago, we had a society with extremely low monthly expenses. In some parts of the world, there weren’t even any form of electrification! Sadly, this is still the case.

Those were the people who produced their own food and were selling the surplus to ever growing urban population, who used the bigger part of their monthly income to purchase the same food their ancestors once produced on their own, with minimal costs.


Even today, the best possible way to make money is to settle on the countryside and produce food!


Of course, only a small portion of the entire population is using this ancient business model to make money. The rest are living in the cities, trying to cope with increasing monthly expenses – the expenses they brought to themselves, under their own free will!

By itself, it isn’t the problem. Only…it’s not that simple, right?


The problem is: the bulk of everything we purchase today, is acquired with the BORROWED MONEY!

Credit cards with revolving credits, expensive consumers loans, mortgages – everything is here for you to acquire everything you lay your eyes on, fast!

Of course, this is something you know all too well. It went so far that you’re thinking about the banks as the most corrupted form of institution known to man. Only, you’re deliberately forgetting one thing: nobody forced you to even step into the bank, let alone to borrow money!

So now, you’re despising banks, loans and everything connected, trying to make your way out of that mess with only your paycheck and some bonus money you make by additionally selling your labor for yet another paycheck.

Contrary to yours, or general belief for that matter, bank loans are here for the precise purpose and yes, you are supposed to use them.

Only, you need to know under what circumstances and in what purposes!


Banks were forced to adopt and it’s the people who forced them


Sounds ridiculous, right? But when you understand the nature and the purpose of monetary-market system, you come to realize that the only way for you to possess some high-end electronic device or some hot rod, is that same monetary-market system. Rewind only 150 years back, in times of kings and other autocrats, and you’ll see how technological progress, that allows you to read these lines on your device, is nowhere to be seen.




And it’s the monetary-market system that made that happen. It allows people like you and me to fund our, more or less, brilliant ideas – something that didn’t exist only a hundred years ago. You were either the part of royal family or you were sentenced to life in misery from the moment you were born!

New system, changed all that!

Yet, people were reluctant to use that money for that purpose. Apparently, only a small number of people had (have) capacities and essential determination to live synced with the system. In other words, only a handful of people were able to think innovative and dare to start the business. The rest were seeking for the employment at those same entrepreneurs.

In no time, one thing became clear – system will dry out. There will be no money left in it. And money is the bloodline of that same system. Lose the money, chaos will spread and autocrats will reign again!


But who supplied folks with that money?

BANKS! As the lower, executive instances of Central Banks.

So, they were forced to adjust their strategy. If you don’t want to use the money for the business, you’ll use it to buy something way above your true buying power. Ergo, the dawn of consumer loans! They knew that people, under the constant pressure of time and distinct self-awareness of mortality, will try to get as much as they can, as fastest as they can.



We want everything and we want it now! So we go to the bank, get the loan, and burden our home budgets beyond acceptable. Only, we don’t like to see it that way!


What if they can’t pay it back? We’ll make some more of it (money)! After all, it’s our invention. We are just exploiting natural resources, that’s all. In the process, we even learned how to recreate those resources, through farming for example. There will always be money in the system because we simply got hooked on that virtual value, invented and managed by us humans!

What made that possible?

As we explained in more details in this blog, our advanced eye for beautiful and astonishing. It triggered something unseen in nature until then. One species managed to remove the primary notion of the Mother Nature – the survival of the fittest!

Yes, we have medicine and wealthcare now. That means, that in difference from, let’s say lions in savannah, we can survive even if there’s no available resources that we can acquire with our own hands, legs and teeth.

All thanks to the brilliant invention of two interconnected things: monetary-market system and debt!

The question is: how can you utilize debt in your advantage?


Two peers, same story, two opposite results


Two guys are walking into the bank. Both in their early 30s. Both with the same intention – to loan money from the bank!

One got his eyes on this beautiful piece of property, not far from the center of the town. The other is funding his startup.

Both are loaning exactly the same amount of money, $100,000, and ending up with same rates and same repayment program.




An hour later, they found themselves sitting at the bar, waiting for the bank staff to finalize the paperwork and release the money.

“Buying house?” Asks the guy who is loaning the money to move his family from a tight condo in the center, to more cosy place, at the quiet suburban area.

“No, funding a business idea that I have for a quite some time now.” Answers the future entrepreneur.

“Dude…that’s risky. Economy sucks these days.”


Now, let’s stop right here.

Can you identify with that response? Do you think, deep inside, that our future entrepreneur is taking too much risk?


Back to the beginning of our story. Two guys, same amount of money, identical repayment program. What exactly guarantees that the guy, who’s buying a real estate, will be able to fulfill his obligation and repay all the money he borrowed, with interests?

The purpose of the borrowed money, in case of our Guy #2, the future entrepreneur, is direct investment into the product or a service with at least some potential (possibility) to generate money. Our house-loving guy, on the other hand, will need to invest more money BEFORE his repayment program comes to an end because stuff will start breaking apart. In his scenario, absolutely NOTHING generates money. On contrary, it spends and demands even more.

Let’s not forget that the entire idea hangs on a highly relative thing we all know as the paycheck! It takes only a small disturbance on the global market for his company to cease to exist!

Yet, for some unknown reason, people are more fond to borrow money and purchase some item that demands more money while not generating any money, than INVESTING that money into something that at least has a chance to generate money. How do you reason that?

The most likely outcome is that the Guy #1 will struggle to repay that mortgage and even be forced to take the additional one to fix the obsolete stuff, while the Guy #2 will not only repay his debt but also acquire property – mortgage free!


Let’s move to a smaller scale, more common these days


Recently, I myself, has purchased the brand new smartphone. To be more exact, I got it from my GSM provider on account of extended 2-year contract I signed with them. At the end, it cost me $20 (retail price is around $520).

I friend of mine bought even more expensive piece, blasting his credit card for a total of — and watch this — $1,200! The phone is cool, no question about it. And, both of us, have around the same monthly expense on our mobile phones.

It’s clear that we both borrowed money. He ironed his card, borrowing money from the bank. I signed the contract that is very clear about what will happen if I don’t honor the agreement and fail to pay my bill every month – it will cost me 3x more!

But here’s the difference…


My phone is making money. His phone is spending money.


How’s that possible? Why can’t your smartphone make money?


According to whom? Who says that it cannot make money? Smartphones are brilliant devices. Other than just enabling you to communicate both vocally and visually, they provide you with yet another perk, depending on how you’re using the device.

My friend is using it to communicate over the GSM network, play games and buzz around on social networks. Guy’s phone is filled with gazillion apps; some of which cost money.

Unlike him, I have only 4: FXCM, Bloomberg, Investing, DailyFX Pro – all free! That’s it. Not even an FB app. Oh yes, I have Skype also, so that’s 5. No Viber, no Whatsapp, no games.

This is the type of app you want on your smartphone, if you want to make money with it!


Now, you can call me boring, or a weirdo, or whatever you like, but while you’re checking your FB notifications, I’m making money. The time it takes you to scroll down and scan several dozens of different statuses, it’s quite enough for me to catch the trend and ride on it until I make couple of grands.

It’s just the matter of choice.

But that’s not the point here. The point is to demonstrate two very different mindsets.

One, who borrows the money in order to live way above his true buying power, not even trying to increase his buying power. On contrary, he is deliberately undermining every possibility for that to happen.

And the other, who borrows the money to increase his buying power – indefinitely!

Which one thinks more clearly?


If you want to learn what’s stopping you from investing your money – and there is, in fact, something that’s been blocking youfind out how to fix it HERE. It’s a concise explanation of something that’s been happening in your own brain, wreaking havoc on your financial plans.


22 Feb 2016

Debt is our biggest advantage

Throughout our history, we were struggling to sustain on this harsh planet. During all that time, with the body count in billions, we managed to adjust our cognitive behavior to allow us not only to survive but to thrive like no other species this planet has ever created.

That small adjustment will give birth to our greatest survival hack. We’ll trick the nature itself, cancelling the principle notion known as: survival of the fittest. Whether you believe it or not, that trick is known as the DEBT!

The foundations of the hack


Our brains were developing with every new generation. Neocortical regions allowed us to successfully block our limbic parts and take full control over our behavior.

Place the buckets with fresh water and dishes filled with meat in front of a hungry lion and the hungry human. Lion will drink and eat. Human can — if wants — refrain from both eating and drinking.

If we can override these primary impulses, what else we can do to improve our odds?

The very next step in our evolution is considered to be critical: we started to collaborate, forming trusts of advanced brains.

I know something, you know something, she knows something. We merge our knowledge and our skills and form a closed group. That simple trust of brains increased our survival odds.


The kick-starter


And then, one day, one of our ancient ancestors stumbled upon a shiny, yellow piece of something he hasn’t been noticing so far. It looked attractive so he brought it to his shelter. As time went by, man became aware of one peculiar fact: everything around him was changing, but that shiny, yellow piece of something stood there, on that same shelf, unchanged. He lost his parents; his friends; he witnessed the changes in the nature around him; everything was dying and reviving again. Everything except that small piece of gold.

During the time, man managed to find more of it. And on one of his expeditions, he ran into something even more fascinating. While he was digging a hole to build the trap, he noticed a small fragment of stone that was not similar to anything he saw to that moment.

Driven by his instincts, man tried to crush the stone with his teeth and almost broke one. He then tried to crush it with the piece of rock. That didn’t work either. It appeared that this, almost transparent piece of shiny rock wouldn’t break no matter what.

Today, we know that diamonds have the strongest structure known to man. We use this mineral to cut through hard obstacles but also to wear it around our necks or on our fingers.

This was the turning point of our species.

Our eye for beautiful, attractive and astonishing developed beyond any expectation.

Every animal on this planet has the eye for beautiful, but that is reserved for mating purposes and food. We went further and started valuing the objects that have no real nutritive or direct propagation value.

Rarer the object of astonishing appearance, more value it carries.

Gold, platinum, diamonds, silver, bronze, rubies, emeralds, paintings, wardrobe, housing estate, weapon – everything is now distinguished on account of a certain virtual value only we understand.

That “virtual value” led to very first unusual trade. We began trading precious stones and metals for supplies on an unprecedented scale. No other species on this planet was behaving like this. Exchanging something dead and seemingly non-useful for something that you could eat, drink, sleep at, or have sex with, was not seen until then.


But, what if you haven’t gotten any goods to trade with and your wife demands the golden necklace?


You borrow something, exploiting the trust you’ve established with your group. They simply trust that you are “good for it.”

And it’s this simple ability, we as a species have, that provided us with the hack. You “were good for it” meant what it means today: you don’t have to own anything at that point of time to be able to trade, in order to provide and protect with increased efficiency – two predominant requests put in front of every human being on this planet from the dawn of our species.

But unlike you, a wolf or a lion can’t afford something like this. They can manage only what they physically own. Nobody is giving them anything.

The following diagram explains it best.


Debt - our greatest hack
click to enlarge


It may come as a shock to you, but the fact is that today, through institutes of fractional banking and debt, a human being gains the instant advantage. By trading physical labor and/or intellectual capabilities for monetary compensation, we are able to build shelters and provide for our families. And the most of us start from the point of DEBT.

As you already know, it is possible to live a lifetime without exiting the debt. That ability is unknown in the wildlife. No other species can start below zero line. We can.

If you take a look at the yellow line, you’ll notice more or less common situation. Loss of job, loss of money due to gambling, or sudden physical inability caused by injury, leading to over debt situation and bringing an individual close to starvation point.

Every other life form would cease to exist in similar situation. But not the human being. Again, using the fractional banking and debt, the group (society) will make sure that an individual, who found him/herself in such a situation, survive at least on bare minimum.

In many cases, a man or a woman will reach the so called “breaking point.” What will happen in the aftermath depends solely on that individual. But with a guidance, the outcome is always positive – for both an individual in a dire situation and, subsequently, for the global population.


The Choice is simple:


A) Either survive on provided minimum that comes in a form of a social welfare if you system collapses, or

B) Snap out of it and kick-start your life, once again.


The green line represents those 2% or 150,000,000 people that are perfectly synced with the system. While it takes centuries for the novelty, such as our current setup known as the monetary-market system, to become accepted, there are always those capable of recognizing the advantages quicker than the others.

The number of synced individual is increasing on daily bases. More and more people are finally moving away from false prophecies of those who are wandering, desperately trying to find the way out of their misery. In a desperate attempt to justify their fails, they start to blame. Corrupted government, conspiracy theories, system, neighbor’s dog, everything is a fair game when it comes to pointing the fingers and blaming game. They are all suffering from what is known as the victim mentality.

Not once do they take some time and really make an effort to understand how system works. It’s their way to hide from the reality.

And that reality is brutal. Either you thrive or you suffer. There’s nothing in between.


Which leads us to other green line. If you take a closer look, you’ll see a significant difference between wildlife and human society. We have one more extra level of comfort.

What that means?

It means that a lion for example, regardless of the abundance he enjoys, has to hunt for food and has to provide physical protection for the group.

We, on the other hand, can spend months and even years without moving from a room and still be able to eat, sleep, have sex and stay protected. If you have money, you can order everything. Lion can’t do such thing.

And that’s our ultimate advantage. All made possible by the institute of debt.
Now, the problem is more or less obvious.

How to establish such a micro-system that allows you to live on level 6? What has to be done to join the club of those 150,000,000 people?

The answers and necessary guidance are under your fingertips:


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