Debt Elimination Success Seminar
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Section 1
A Look at Debt
History of Debt
Credit Card History
Current State of Debt
How You Got Into Debt
Good Debt Bad Debt
Business vs. Personal Debt
Section 2 Dealing With Your Money
The Two Step Plan
Doing The Two-Step
Step One
Step Two
The Paths Out of Debt
1- Create a Debt Payment Plan
2- Neogtiate Better Rates & Terms
a.Consolidation Loans
b.Consumer Credit Counseling Services
3- Negotiate Lump-Sum Settlements
4- Bankruptcy
5- The Easy Way
6- Win $1,000,000
Living Debt-Free
Manage Your Money
Make More Money
Save Money
SameMoney-MoreFun
Stay Debt-Free
You as a Business
Section 3 Dealing With Your Creditors
Alerts/Scams
The Credit Industry
Credit Industry
The Fine Print
The Secondary Debt Market
The Debt Collection Process
Original Creditor
The Charge-Off
Collection Agency
Legal Problems
Dirty Creditor Tricks
Dealing with Debt Collectors
Dealing with Debt Collectors
Statute of Limitations
Cease and Desist Letter
Section 4
The Credit Report
The Credit Report
Credit Score
Credit Repair
Section 5
Dealing With Yourself
The Critical Factor
The Art of Prosperity
The End of Failure
Prosperity Coaching
Section 6
Kids and Money
Kids and Money
How to Pay for College
Section 7
Debt Information
Bookstore
Debt Facts
Radio Show
Resources
About Us
Privacy Policy
Site Map
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Host: Tom Allen
Guest: Steve Smith
Segment 1 - The Underlying Cause of Debt
Tom: I’m Tom Allen and I hate debt! I invite you to make the decision today to join with me in living a debt-free and prosperous life. There wasn’t always debt like there is today. In simpler times people saved up for large purchases and when they bought something it was already paid for. They even planned for their everyday expenses. But now everything’s spinning out of control. With credit cards, debit cards, variable rate loans, direct deposits, automatic withdrawals we’re all losing track of our money. Here to help get us things back under control is Steve Smith from Mvelopes, the computerized version of common sense money management. Steve, the Mvelopes system of money management is very detailed but very, very simple to use. I know I use it and I recommend to others that they use it. Before you started developing Mvelopes you must have seen a big need for something like this. What was your motivation to get this thing going?
Steve: Well, Tom it’s great to be with you first of all.
Tom: Thank you.
Steve: And, you know, obviously the thoughts and concepts behind a system like Mvelopes have their roots in a lot of different things. It started a number of years ago and came primarily as my wife and I started managing money and tried to get our arms around all the issues and really felt like what we call as kind of a cash allocation approach to spending management was the right way to go. And so really, you know, that system has in its roots this common sense cash envelopes approach to spending management. We kind of got our start doing that and it made a lot of sense. My educational background is in finance and I had an opportunity to work with and talk with a number of different people that were all struggling with the same kinds of things. How do you set money aside for future spending? How do you manage day to day spending? And how do you make sure that you live within your means so that you can minimize or eliminate debt completely and save properly for the future? And it just seemed to me as I was utilizing this system in more of a manual form that the way to make this available to a large number of people in the way to help most people be very successful with it was to create an automated system that would do a lot of the work for them but still allow them to utilize all the principles that are associated with this type of spending management.
Tom: I know that in many instances we are making a lot more money than our ancestors. And yet we find ourselves in more and more debt than they ever were. Do you think it’s because of the complex nature of the financial transactions today? We’re just not using money like in the old days and we’re just not paying attention to what we’re doing and with couples especially with multiple credit cards and multiple checking accounts and debit cards and different ways you can spend. It’s just almost impossible to keep track of.
Steve: Yeah, there’s no question that that has been a significant contributor to some of the spending management and increasing debt problems that we face in our society. I think that one of the things that’s happened obviously is we’ve transitioned away from kind of a cash-based society to more of a cashless society as you’ve mentioned here with credit cards, debit cards, checking accounts, online bill payments, you know those kind of things. It’s created a lot of convenience but actually it has increased the level of complexity associated with managing your own personal household business if you will. There’s so much coming in and going out from different places that its much harder today to track all of that than it once was when you had a fairly consistent inflow and the outflow you could manage in terms of spending with cash. I think the other major contributor to this is access to consumer credit. I mean, years ago there wasn’t a lot of credit available for people and so, you know, it kind of forced them into a situation where if they wanted to have money for the holidays they had to set aside money because they couldn’t fall back on a credit card or home equity loan or something like that.
Tom: Ah, the old Christmas savings account.
Steve: Right.
Tom: When I was growing up you set up a special account probably in March for your Christmas Club savings and you put money in there every week and it was there when you needed it.
Steve: That’s exactly right. And it’s the reason that the traditional envelope budgeting made so much sense then because you could take out a stack of envelopes and rather than set up one of those savings accounts you could just do it with an envelope and say you know, we want to go on a family vacation here in seven months and we think its going to cost us this much and we’re going to have to set aside, you know, this much a month in that envelope to make sure the cash is sitting there when we get back. And it was just very simple and straightforward for people to say we need to set aside our money in this way so that we have it available to us because if we don’t do that we won’t take the vacation. We know that because there’s nothing else available. And so we were kind of forced into that mindset. And now you get so much consumer credit available, you know, credit cards coming at us all the time, home equity lines coming at us, you know, 100%, 105% home equity loans, the list goes on and on. And everybody in our society understands all of this because they’re bombarded by it every day. And frankly it’s a little bit hard to turn down. The prospect of having money there when you need it, when you want it, allows you to buy the things that you want. You don’t have to wait. And we’ve kind of gotten into this mode where now the savings rate is, you know, at its lowest rate in a number of years and we’re just not setting aside money. And we’re in this much more complex cashless society. So I really believe that you take those two things combined together and those are the issues that are the most significant contributors to this problem of rising consumer debt, lack of savings, and frankly for the most part most people in our society living beyond their means.
Tom: Now when we come back in our next segment I want to talk very specifically about how the Mvelopes system works. But in the last minute here if you could give me kind of the other side of the coin, what happens to a family once they start keeping track of their money? What kind of a change does that make in their lives?
Steve: Oh, it’s substantial. It’s a significant difference in the way you live your life because you interact much more differently with your resources and you’re able to make much more proactive spending decisions. Having your arms wrapped around the money management side of your life doesn’t restrict you it actually increases the choices that you have. And that’s kind of a misnomer that people have. They hear the “budget” word and they think, “Oh, I don’t want to do that because I won’t be able to buy the things that I want. I’ll be restricted. I’ll always have something hanging over my head.”. And the fact of the matter is it’s just the opposite. If you don’t find a way to manage your money appropriately then you’re going to have this weight hanging over your or on your back all the time. And you’re constantly going to be worried about how to make the next house payment and every time you make a purchase you’re going to worry about how it might impact something else you might need to take care of in the future.
Tom: That was one of the biggest surprises that I found once I started using the system is that the things that I needed were paid for and then I still had money left over for the things that I wanted. So it didn’t take away any of my fun and enjoyment, it really added to it. When we come back we’re going to find out more about how the Mvelopes system works. For more information you can go to www.ihatedebt.com/Mvelopes and get all the information. So stay tuned, Steve Smith from Mvelopes will be right back. For information on getting and staying out of debt visit Ihatedebt.com. I’m Tom Allen and I hate debt!
Read the transcript of Steve's next segment How Mvelopes Works
Steve Smith The Underlying Cause of Debt
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Or you can mail in your contribution.