The world is now a construct of debt in nearly every facet of the global financial system. Governments cannot stay within their budgets and must borrow more just to stay solvent even as their people’s are relegated to austerity and capital controls. Corporations borrow money to buy back their own stock when they cannot make a profit from selling goods or services, and banks of course need zero percent interest rates just to keep their ponzi schemes going.
And for the average person, especially in the U.S., debt is no longer simply an emergency measure in case one’s car breaks down, or if they have to take an unforeseen trip because of a death in the family. No, for the average American, debt is a way of life and it can be seen in no greater example then the new phenomenon where military veterans are now having to sell off their pensions just to get enough money now to pay on their outstanding debts.
Moore soon found himself two months behind on rent and at least 10 days from payday. In bed that night, he saw a TV ad for Future Income Payments, a company based in Irvine, Calif., that buys pensions in exchange for a lump sum. The company said it had worked with military personnel and government workers. Ten minutes later, he got up and made the call.
The next day, a company representative called Moore back and explained that he would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years — a total of $30,600.
If it were a typical loan, that would amount to $25,600 in interest — a rate of 512 percent.
Most of the companies advertise nationally on news sites and in military magazines, consumer advocates say. One ad highlighted in the recent congressional hearing on pension advances featured two smiling people in uniform below the words “This is our America.”
The effective interest rates charged by pension advance companies can be abusive, Cartwright said. But it is particularly “egregious” that the companies go after military retirees, targeting income streams that are backed by the federal government, he added. – Washington Post
Yet besides this new scheme of using one’s military pension as collateral for a quick buck, other programs have sprung up in the last 15 years that use one’s misfortune to take away the majority of their wealth. Reverse mortgages, annuity and lottery purchases are among many other short-sighted schemes created to siphon wealth from those who have either worked hard over a lifetime to accumulate important assets, or who discovered that a windfall of money rarely changes the mindset of someone who has lived their lives without any fiscal responsibility.
40 years ago, being in debt was considered a shame to one or one’s family. Today, debt is no longer an emergency financial tool but a daily way of life. And without taking the proper financial planning, along with a mindset of fiscal responsibility, life long rewards like a pension can be dissolved for as little as a few hundred or thousand dollar debt obligation.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.