Episode-193- Debt Elimination is Survivalism 101 — 20 Comments

  1. I started to develop a survival twitch about two years ago. I was a peak-oil junky. My wife finally got tired of my ranting and said “fine, I believe you already, now what?”.

    We started paying of the mortgage by throwing all our bonuses at it and eating at only one restaurant per two weeks. Last month we finished off the mortgage and I can’t really explain the feeling. Yes I can; FREEDOM!

    My wife is going to ask for an extra half day off from her work schedule, from now on, so we can play tennis with the kids (in the middle of the week!). That may sound like a big deal, but trust me, for our hard working family, it is.

    Everybody’s income is different, but I can tell you this. When you don’t have a mortgage, the equivalent of one months payment is free to buy almost any survival equipment you can think of.

    Keep up the good work, Jack.

  2. I am almost 50 and only two years ago began paying off substantial debt. Am half way to home. So glad I did it even though it’s tight now, it’ll pay off later…

  3. Jack

    Best podcast I heard yet. You forgot to mention to keep some cash at the house. You may have addressed this before.

    I became a survialist in 2000, and it was exactly what you are talking about. I was sitting at work one day, having a bad day. It suddenly dawnwed on me that I was working for mastercard (Remember when it was mastercharge, Visa and Ford motor company, not counting the government.

    Once that realization hit me it became clear, what I was doing to myself. Survivalsm saved my life. Please people for own sake your the dignity of your person, become a survivalist. Start with the debt as Jack says, then the rest all starts to fall in place. I would say I have zero debt, but insurance, property taxes and other government taxes are debt. Now I am on my last part of survivalism, marshal arts. To be free is what a human was meant to be.

  4. Jack, keep up the awesome work man!

    Debt elimination is key to survivalism and even more importantly, debt elimination is key to happiness and lower stress throughout life. I was over $30,000 in credit card debt two years ago not counting my car payments, my mortgage payments, and everything else. Now I have paid off almost all my credit card debt and next I will be working on the car and then next on the mortgage.

    I hope that people listen to this podcast and realize that debt is EVIL and to stay away from it and if they were suckered into it, like I was, to start working on paying it off ASAP. Your show offered great motivation for me to keep going in the direction I am even if some months it seems like I haven’t made any progress at all.

    As always, thanks for the great shows and the motivating words.

    P.S. For anyone that is not yet a supporting member, THIS ONE PODCAST has so much value in it that it could save you thousands of dollars over the next few years if you listen and act on the message. Not to mention all the other awesome shows he does almost every day! I urge you to support Jack by becoming a member of the Members Support Brigade – the extra content is great too!

  5. Manditory economics class for the homeschooled boys tomorrow featuring the podcast! Excellent.

  6. Jack, With today’s credit ratings a large factor in your score is percentage of credit usage. So by canceling your accounts your credit score may actually take a hit. For example you have 2 CC with $10k limits each and you have $5k racked up on each. Your percentage is %50. Say you pay 5k off on one card which leaves you with total 5k of debt and credit limits @20k. Thats 25% debt ratio. If you closed that zero balanced card you are back to 10k limit and 5k debt. Thats back to 50%. Now for some people, it might be best to close that card out and not be tempted.In my opinion those people who still plan on purchasing a house, car, or some other loan, it might be wise to keep those accounts open and keep your credit usage down. Maybe do the old cut the card up. Also lenders like to see people to have a history of making payments. I would say a lot of people out there is still going to need a home and/or car loan and having a higher score gives you a better rate. Again in my opinion the individual needs to do whats best for them and do a little research. There is a little bit of game playing you can do to have a higher credit score and still be debt free.

  7. Jack,

    I’m listening to your podcast and I’m having an epiphany … right now. I’ve never really been too committed to getting rid of debt.. but I understand it now, because I can relate to it.

    So many times I’ve been in a crappy job or in a crappy place, but not sticking my head out.. because of debt or because of what I owe. Now, while I owe probably $10,000 less than I did 2 years ago(substantial for a 21 year old student) I still owe money and now I can see it for what it is. It didn’t click at first, why debt is slavery. But I understand it now, debt forces you to do things you wouldn’t do orginally or would never want to do. Debt.. forces you to sacrifice for somebody else. Being “forced” to sacrifice for somebody else is slavery. I understand it now.

    So many times, my father has told me not to talk about the corruption or mishandling of my work place.. because I owe so much too so many people.. and to just continue my way through a crappy job. But no more.. I will have money set aside and I will have no debt so that I can do as “I” want.. and not what somebody else wants me to do. Especially, when it’s morally or ethically abhorrent.

    Today, I’m quite grateful for your podcasts because.. I get it.


  8. Great podcast. I was totally out of debt for years and have $’s in IRA’s. Just went back into debt with a mortgage for a great bugout location (50acres, house, pond). If SHTF will pay with FDIC backed $’s from IRA’s, but will have to face the penalties and my favorite Uncle’s deep pockets..otherwise will pay off mortgage ASAP. Your podcast lit the fire under my butt to get the ASAP done really fast.

  9. Jack i live in a tourist town we only work from the first week of March until the 2nd week of Dec.We are layed off the rest of the year.Its good pay when you work you make the same as working year round somewhere else.But you can not depend on unemployment there is always a delay or somekind of B.S.The only way i can do this is before i get layed off i put back all my bills for Dec-Jan-Feb-Mar. When i go back to work i pull out of the hole quick.The number one rule for here is dont live in a place you cant pay for in the winter or you will be screwed period.The credit card thing is spot on it caused my parents a divorce and bankruptcy.They were charging everything and went in the hole fast.What gets me is loansharking is illegal but credit cards are not.A good way to get bill collectors to stop calling is buy a boat air horn and blast them to hell over the phone 2-3 times of this and they will stop calling.It worked for me.

  10. Great point Jim3! I take my credit cards out of my wallet when I don’t want to use them or when I am working on paying them off and I leave them there. That way I still get the credit score benefits but am not tempted to use them… I actually pretty much forget about them in there 🙂

    I think there is something to be said for keeping your cards so that your credit score remains strong. Let’s face it. Most people would never be able to buy a home for cash so we need good credit to get loans but for some people that just can’t stay away from credit card debt completely getting rid of it may be the answer.

    I am interested in hearing Jack’s opinion on this as well!

  11. Great episode and I agree, debt is the first thing to tackle in becoming a survivalist. A question about though, I agree credit cards are not great; but in this day and age, with the way things have been jigged by the financial industry and all, it is very hard to get somethings done without a credit card (think car rentals, hotel and airline reservations and credit checking (think Equifax, not a bank cheque)). I would like to just cut the card up and throw it away; but it’s almost impossible to do (or so I have sofar found). Do you have any suggestions on how to get around this issue.
    Also, what are peoples thoughts (and maybe I should join the forum and ask this really) on relocation and using that measure (though it might be extreme) to both wipe out debt and mortgage and to hopefully provide a small emergency fund as well? In part, this is what my family and I are planning when we relocate to Vancouver Island (in BC, Canada, for those who mightn’t know).

  12. The bible says that “the borrower is a slave to the lender” and that is so true whether it be personal debt to a bank or corporations owing the government. Jack said he is a survivalist because he doesn’t want to be a slave. Debt elimination is the first step toward freedom. Then you can grow your own food, store what you eat and eat what you store, buy guns to protect your family and food and move on from there with not being reliant on the grid for power, heat, communication, etc. Priorities!

  13. I trying to get a zero credit rating, and keeping it for the rest of my life. I hope paying electricy and stuff doesn’t count toward your credit rating, because my goal is to get it to zero.

  14. Equus,

    You and I actually finally agree 100% on something. Zero is the way to be, if you have money and need a mortgage for any reason and have verifiable income, you can get a mortgage. Credit scores are for people that don’t have money so they can go into debt.

    For more on that and an answer to the questions about a mortgage listen to the beginning of show 194.

    For those wondering about booking hotels, flights, renting cars, etc. See comment #3 in episode 194.

    Remember the people telling you a credit card is a good way to “build credit” are in the business of selling debt to you.

  15. We paid off our mortgage last fall. There really is a little bit of the slave’s spirit inside that vanishes when that last debt is out of your life. Often you didn’t even know it was there, especially if the last debt was your house. (Mathematically and psychologically it looks a lot like rent.)

    Freedom!! Except for those damn property taxes. Being free of the banker really puts the tax man into perspective again.

    One benefit: Now that the mortgage is gone, even after loosening up on our spending a little, we have a house payment’s worth of extra cash every month. It can be aimed like a fire hose at whatever the current priority is. Right now we’re saving up to pay for a nearly-new car. At the current rate we’ll be there by the end of summer, or sooner if we can sell some stuff.

  16. Another great show, Jack. I had a couple thoughts that I wanted to share, even after listening to your follow up in the next show.

    Regarding the idea of keeping one credit card open after all your debts are paid off, I did meet someone who gave a great example of why some folks should keep one card. I was flying back from vacation in Mexico a few years back and struck up a conversation with the couple in the seat next to me. They had gone to Mazatlan with their parents and on the third day of their trip their father started to have some chest pain. It persisted and became worse and after a couple hours, the wife insisted they go to the hospital. Upon arriving, the hospital did some preliminary tests and confirmed that he was in fact having a heart attack. Here’s where it gets scary. They refused to treat him unless they could pay up front. The four of them had to get cash advances on their credit cards to raise the estimated $7000 it would cost to stabilize him enough to fly out of country.

    The story ended happy enough, with him getting the angioplasty he needed to save his life, but what if they didn’t have the credit cards? From that story I think that it’s reasonable to keep a card for travel over seas. I travel out of the country about once every other year and I sleep a little better at night knowing that I have my credit card available if something were to happen when I’m in Mexico, Italy or even the UK.

    On JP Morgan Chase, you mentioned their desire to pay back the government and how the government didn’t want the money back. It’s my understanding that they didn’t really want the money in the first place. Of all the banks out there, they’ve probably been the most responsible going into this crisis and some of their moves lately make me think they’re ahead of the curve. First off, they were one of the banks that invented Credit Default Swaps (CDS), but when things started going bad in the CDS market, they had the least exposure. Why? Because they understood them and understood the risks that they could present and were much more prudent in their issuance than companies like AIG and Citigroup. Secondly, I’ve had a Chase credit card for about 10 years. It stays in my saddle bag on my road bicycle just in case I need a taxi during a rain storm or want to stop for a burger on a long ride. I use it, at most, once or twice a year, sometimes never. I carry zero balance on it. Well this year they revoked my card. I was surprised, but they told me I hadn’t used my card in two years so they revoked the card and closed my account. That was odd, but then my girlfriend had something similar happen to her. She had about $1000 on her card and was making progress on paying it off, but they revoked her card, too. In her case they told her that her debt ratio was not within their parameters anymore and closed her account.

    So Chase clearly sees the risk in unsecured credit card debt now and is actively working to reduce their exposure. They were one step ahead of the game on getting out of the CDS market, they were one step ahead by only buying mortgages that had verifiable incomes and a proper debt ratio and I think they’re one step ahead on the credit card game. Other companies will either follow their lead or face more defaulted debt, once again, and send the dominoes tumbling. If all the card companies followed Chase, they would create their own crisis by drying up credit overnight (even if overnight is over the course of a year or two). If none do, expect that as unemployment continues to climb over 9%, more credit card holders will default and more banks will be pushed toward bankruptcy or bail outs.

    This is just another example of why you’re spot on, Jack, when it comes to getting out of debt. If you hold $10k in credit card debt and depend on having another $2-4k revolving through your cards every month, if they turn off the tap you’re in financial disaster.

    Keep up the great shows!

  17. Many hospitals in other countries won’t treat foreign visitors without cash up front. Even in “first world” countries. Example that I saw recently: At a convention in Japan, another attendee got very sick and didn’t have much money. They passed the hat at the convention to pay for the hospital visit. (If I remember right, the hospital might not have been set up to take credit cards!)

    This is why an emergency fund is a good idea. At least 3 to 6 months expenses in the bank. If you have a $7k heart attack on vacation and have $15-20k in the bank earmarked for emergencies, you could probably work something out.

    Travel insurance might be worth looking into too…

  18. After a couple years of being married, buying a house we could afford, never had credit card debt (depression era parents), two cars paid in full, we could get by on one of our two salaries, (we didn\’t have kids yet), it dawned on me – I was at work because I wanted to be. I started to really enjoy being at work because I was there by choice. And I knew that if I didn\’t like being there, I had a choice. I could quit or find a new job. I was at this job on MY terms. FREEDOM.

    I did have a boss who said \"I like employees that have mortgages\". He meant that he had control over them.

    It\’s 10 years later. I stayed home with the kids cause I had that option as we could get by on the one salary. And we have 4 years left on the mortgage.

  19. Christine,

    That’s a great point about the freedom that a debt free lifestyle provides “And I knew that if I didn’t like being there, I had a choice. I could quit or find a new job. I was at this job on my terms.”

    I have hesitated many times about leaving a job or taking a risk because of the debt I have and the bills that have to be paid… I do think it has held me back in life. Being debt free is now my biggest goal so that I can work doing something I love (or can at least be happy with) rather than working jobs that will just pay the bills.

    I also love this little nugget of informaiton that you shared with us “I did have a boss who said,I” like employees that have mortgages” He meant that he had control over them.” That is something we should all keep in mind because being debt free we don’t have to do things we think are wrong or are something that we don’t want to do for fear that we might lose our jobs.

    Thanks for sharing!