Principle #5: Paying a High Price for Not Knowing the Rules

Financial Games of Choice As we have pointed out, every game has rules. The games we play in the financial world should not be games of chance; they should be games of choice. If you know that money is emotional and not mathematical, you will be less likely to take your money for granted and will give it the respect it deserves. If you know the rules about tracking your spending, you will begin to use your money more efficiently. If you know the rules behind properly “spending” into appropriate savings categories, you will not be blindsided by emergency and emotional events that are sure to occur in your life. If you know the rules about compound interest, you will become empowered to eliminate debt as quickly as possible and learn how to make interest work in your favor. Knowing the rules has all kinds of valuable consequences, especially in today’s complex world. It wasn’t too long ago that the world of personal finance was much simpler. Prices were similar between competing goods and services, taxes were easier to figure, mortgages and loans were structured with less complexity, and there were less consumer products from which to choose and fewer methods by which to buy them. But today we live in a very complicated and dynamic world economy. We have so many choices! There are thousands of vendors and literally millions of products we can choose to buy. What was once purchased at the corner drugstore is now available on the Inter- net. Not only can we evaluate products and services right in our backyard, but we can choose from those being produced on the other side of the world. All of this complexity makes understanding the following especially important: It’s no longer possible to simply assume the vendor or the lender have fully disclosed everything that we may need to know to make a wise financial decision. Today, more than ever, we must become fully informed about how our spending, borrowing, and tax-paying choices will impact our life over the long term. Historically, sellers of goods and services had the advantage over the consumer because these sellers knew more than the buyer. But today, the tables have turned. With all this available information, we are now in a position to structure financial decisions to best meet our needs, but only if we get informed. Learning the rules can help you become more efficient with the money you already make and shifts the focus away from trying to earn more money to learning how to use more wisely that which we already have. Unfortunately, we have found that the vast majority of people we deal with are more concerned with making money than with understanding how to be more efficient with the money they already have. Without seeing the value of efficiency and how that efficiency is tied to understanding the rules of the financial games they play, many people are losing those games. This is perfectly illustrated in an article entitled “What We Need to Know about Money” by Lynn Brenner. Brenner notes that a recent test sponsored by the National Council on Economic Education found that many adults and teens in the United States today don’t under- stand the most basic concepts about money. “The economy affects every- thing in our lives: how we earn a living, how much we earn, the availability, cost and quality of what we buy, and how we invest for our future,” says Brenner. “Unfortunately, its importance is the only thing many of us know about the economy.” The article further notes that 1,010 adults and 1,085 high school students took the National Council’s 1998-99 test of their knowledge of basic economic principles. “Both groups flunked resoundingly,” says Brenner. “Almost two-thirds of those tested did not know that in times of inflation money does not hold its value. Only 58 percent of the high school students understood that when the demand for a product goes up but the supply doesn’t, its price is likely to increase. Half of the adults and about two-thirds of the students did not know that the stock market brings people who want to buy stocks together with those who want to sell them.” Hard to believe isn’t it? Those findings are alarming, especially in the face of what we have already noted as a time of complexity and opportunity. Working the Game to Your Advantage Now, with that said, you may be thinking, “Well, the amount of information that is thrown at me on a daily basis is overwhelming. With everything else I have to do, I can’t afford the time to stay on top of all this, too!” When we hear such complaints, we like to point out to our clients that they cannot possibly afford not to become informed. In today’s world of easy credit and consumable goods, many people feel they are entitled to play a very complex economic game, like owning a credit card or mortgaging a house, with- out paying the price to learn the rules of that game. As they old saying goes: “If you want to play, you have to pay.” What we are required to pay is a little bit of our time and effort so that we will go into the game fully informed and on the same level as all the other players. Those who will not take the time to do this should not be surprised when they are unable to work the game to their advantage. It simply follows that without knowing what you’re doing when you enter the playing field, especially where there is a lot of risk involved, that you will probably be trampled by those who do. Following are some of the typical objections to Principle 5 and how we counsel our clients to overcome them. Too Much Information It goes without saying that we live in an era of information overload. There is so much coming at us each day that it’s impossible to take it all in. We are forced to choose between that which we will absorb and that which we will discard. So how can we possibly learn what we need to know without becoming overwhelmed? What we teach our clients is that they do not have to know everything, but it is important that they get on the road to knowing something. When people realize that there is a limit to that which they personally need to learn, they begin to relax and feel empowered by their new found desire to become informed and continue that process. This requires a commitment to continual learning while not requiring that a person learn about everything. We encourage you to make a commitment to continual learning. Doing so will help you learn a little bit about a lot of things so that you can deter- mine when you need to get extra help. Consumer affairs writer Carma Wadley offers some tips on how to start this learning process: “The important thing is not so much knowing all the answers as knowing where to find them.” She suggests keeping a list of resources handy to which you can refer, including favorite Web sites, government agencies, or a list of people you know who have expertise in particular areas. Another way to get on the road to knowing only that which you need to know is to get in the habit of reading all documents related to the product or service you are evaluating. Sources of information about the rules of that product or service are contained in the documents the vendor or lender provides you. Read all documents. The value of Principle 5 is that it motivates you to study all contracts. In addition to these ideas, we’ll discuss more ways to help you under- stand how to learn what you need to know at the end of this chapter. (Money Mastery also offers coaching services that can help; refer to Appendix A for more information on these services.) One of our clients, Maria*, learned the importance of knowing the rules and reading all documents after her coach helped her better understand tax forms and tax filing. When Maria received her tax forms from her CPA at tax time, she felt “comfortable” with the documents, but because of Principle 5, decided to look them over carefully. In the process, Maria found a $1,700 error in her favor. The CPA then refiled and instead of receiving an $1,800 tax return from the IRS, Maria got back $3,500. Knowing the rules and reading the documents in this case really paid off! Not Enough Time The second objection to Principle 5 is the notion that there’s not enough time to know the rules. What people don’t realize is that most of us are very close to knowing what would save us a lot of grief, but we don’t want to make that little bit of extra effort to find out the last little bit of information that would save us a lot of trouble. The amount of trouble you will save is disproportionate to the amount of time it will take you to avoid it. That’s because we have found that most people are within 30 minutes or $300 from getting all the information they need to make informed financial deci- sions. It usually takes no more than 30 minutes to thoroughly review a legal document. And, if upon examination of those documents you find that fur- ther advice is needed, a $300 fee will usually hire a knowledgeable attorney or specialist to review a financial decision to ensure that it is right. The following is what can happen when people don’t take the time to be responsible for making sure a deal is secured properly. Two very successful businessmen approached an accomplished CPA and asked for her help in accounting and tax planning to set up their new busi- ness. Approaching a professional at this stage of the game was a smart idea. They restructured their business from a sole proprietorship to a Sub-S cor- poration. The CPA said she had prepared everything required by the IRS that would let them operate legally as a Sub-S corporation, allowing them to receive a better tax rate. Four years later, they began working with Money Mastery coaches in order to more efficiently run their business. As they began getting organized by preparing wills and trusts for estate planning, they discovered their Sub-S election was never filed by the CPA, creating an additional tax liability of $47,000. After learning Principle 5, they understood the importance of taking the time and money necessary to unravel the problems created over the previous four years. They hired a tax attorney who was successful in reliev- ing $30,000 of the taxes due, but they still had to pay an extra $17,000. If these two men had just taken the time in the first place to do a simple review of the filing papers with a tax attorney, they would not have lost the $17,000. Trusting Others Instead of Taking Responsibility Another reason people don’t want to get informed is because they think other people should know the rules for them. They often trust their eco- nomic well-being to strangers because they assume that other people will have enough interest to take care of them as well as they would themselves. This is not so. Of course, as we go about making financial decisions, we are required to trust others to some degree. However, trust is composed of two elements: 1. Trust that the person or entity providing the service won’t try to cheat us. 2. Trust in the competency of that person or entity to deliver as promised. Our experience shows that people must be on guard in both areas. Al- though vendors are not generally trying to cheat the consumer, the biggest risk we take when interacting with providers of goods and services is the incompetence of those providers. Humans make mistakes, as in the case of Maria’s CPA. When you know the rules of the transaction in which you are engaging, you protect your dollars and your economic well-being.

Principle #5: Know the Rules of the Game

Initially, this principle may seem very obvious, but it isn’t. If it was an idea that more people truly understood, there would not be nearly the amount of emotional heartache over finances that most Americans are experiencing. Take a look at the picture below of a die. Notice the four dots on the front side of the die. How many dots are on the opposite side of the four dots? If you’re familiar with dice, you probably know. The answer is three. What is on the opposite side of one? The answer is six. The rule with dice is that opposite sides of a die always add up to seven. Therefore, on the opposite side of the five are two dots. When you know the rules, it is really easy to predict what will be on the back side of the die. How many times do you make a financial decision when you are not able to really examine the decision pick it up, so to speak, turn it around, and look at what is on the “back side”? 

Many financial decisions are very difficult; not being able to see the final result can make us feel very frustrated, even out of control. Has it ever made you feel at the mercy of what others know over your own basis of knowledge? You can see from this little ex- ample with the die that knowing the rules can be very powerful. Here’s another example of why it is so important to know the rules. Sandy and Bart Owen* came to us very upset about refinancing their debts. They found as they went through the process of consolidating some of their debts that a prepayment penalty of $2,200 had been written into the agreement for one of their loans. This stipulation was clearly stated in the agreement the Owens had signed when they obtained the loan. It was easy to read and understand, yet Sandy and Bart had never known it was there because they didn’t take time to read the contract before signing it. Now, when it came time to consolidate they could not do so without paying the $2,200 penalty. Not knowing the rules in this case cost the Owens. Knowing the rules is just like playing the game of tic-tac-toe. If you have played it before, you can pretty much predict who will win within the first few plays of the game.

 If both parties know how to play tic-tac-toe usually there won’t even be a winner; the end result is a tie. In the case of the Owens, the lending institution was adept at the game it was playing, while Bart and Sandy never took the time to learn the rules of the game. If they had learned the rules, even if they couldn’t win, they could have at least had an equal advantage. In this case, they ended up the losing. When you know the rules of the game, you have a much higher chance of winning or at least playing even. Now let’s meet another individual who lost big time because he did not know the rules of the game he was playing.

Principle #4: Plunging Deeper into Debt

Tim and Sherri Collins* should have had everything money could buy. Tim was a dentist who had graduated from a top dental school and had been practicing for seven years in California. Sherri had a master’s degree with a successful career in interior design. They had been married three years when they came to Money Mastery seek- ing help in 1996. Although their gross annual income was close to $600,000, they owned no home, had no savings, and didn’t feel like they could afford to have the child they so desperately wanted. They were burdened with 26 credit card debts totaling more than $59,000 in real debt, which did not include interest. The Collinses were also in arrears three years in income taxes. To make matters worse, they had used eight credit cards attempting to pay for the back taxes they owed. Tim had come from a wealthy family who had paid for his dental school- ing. As a child, he had never been denied anything he wanted and had never been taught any self-discipline when it came to money. To compound matters, Tim had been single for several years before meeting Sherri, so all the money he made as a dentist he felt he could spend entirely on himself. He also admitted that as a medical professional, he labored under the delusion that he would always have an endless supply of money, much like he had as a child growing up. Once he graduated from dental school, his family felt he was equipped to manage his own financial affairs, leaving Tim to manage money without any skills to do so. In addition, as a person with a passive personality, Tim sometimes let urgent matters slide. Spending to Tim was something he did without thinking, because it felt good and be- cause he had been raised to think that he didn’t need to deny himself. Sherri, on the other hand, was a fastidious, detail-oriented person with a proactive personality who had fallen in love with a man that was already thousands of dollars in debt. In 1996, when the Collinses first came to Money Mastery, Sherri was 36 years old and very concerned about bringing a child into such a financial mess. To compound matters, they were renting an apart- ment in a desert region of California and their home was constantly plagued by scorpions.

The Collinses could not imagine bringing a baby into such a situation, yet they had no way of leaving due to their financial burdens. “I felt so completely burdened,” says Tim. “It was unbelievable to me that we could be making $600,000 a year and still be so completely behind. To me the dollar figures said it all. With that kind of money I didn’t feel any urgency to hold back on spending. I kept insisting that the figures should have been enough so I couldn’t understand why we were so far behind. With as much education as I had, I had never been taught to consider the emotional side of money. Instead, I just spent without thinking of the consequences.” Finally, at their wits end, Tim and Sherri began tracking their spending and learned just exactly where all the money was going. They also began working with Money Mastery coaches to prioritize their huge list of 26 credit card debts. Using Principle 4, Tim and Sherri were able to apply Power Down payments to their debt load. Using the “Get Out of Debt” Report, the Collinses projected that they would be debt-free in 2.8 years if they used power down techniques as opposed to 15.5 years if they only used a mini- mum monthly payment plan. With 15 years of debt ahead of them, should they have chosen not to power down, they would never have been able to get their spending and bor- rowing under control to the point that they could start a family. Three years later, in 1999, the Collinses had purchased a house and were expecting their first baby. Today, after the birth of their son, the Collinses are well on their way to total financial freedom, having paid down every single credit card and meeting their IRS tax obligations. They are now saving $21,000 a year. “It was difficult to sort out all our debt issues at first, but we are so thank- ful for the principles we learned through Money Mastery,” says Sherri. “We are so grateful to have been empowered by these principles [which help us make] serious decisions about our financial future. Now we are looking with hope at where we are today, and where we can be tomorrow, and it means so much to us!

Fortunately, the Collinses were able to get out of debt and get their lives under control. But let’s stop and ask why the Collinses found themselves in such a financial bind in the first place. Because most people don’t make $600,000 a year, you might find it hard to believe that they could be in debt to 26 credit card companies. You can probably think of a lot of things you would be able to do with that kind of money. But that’s precisely what Tim and Sherri were thinking, too. They mistakenly thought that because they made that much money, there should always be enough regardless of how they spent or borrowed. As we instruct our clients about Principle 4 and the power it can have in their lives, there are two very important messages we like to emphasize:

 1. The Long-Term Picture: As you get your spending under control and pay off the first debt in your prioritized list, you must choose to think long-term so you can pay off the next debt. Only you can decide if you want to continue to be in debt or out of debt with a lot more money in the bank. You must learn to think about what kind of long-term emotional impact the choices you make today will have on you tomorrow. Remember: Every dollar paid in interest, is one less dollar to invest in your own future.

2. Opportunity Cost: Spending money always comes at a cost. If you choose to spend money on more consumable goods rather than toward paying off a debt, you must understand the consequences of that decision because it eliminates opportunities for the future. Remember the time/value of money and that debt decreases our ability to put money to work for us over time so that it can have more value in the future. As we noted in Chapter 3, it is up to you to make a choice about how your money will be spent. Remember: You can have anything you want, you just can’t have everything. If you choose not to power down, not only will you remain in debt but you will extinguish future opportunities to make money because you will continue to pay interest to someone else. As James Clayton notes, “Traditionally, persistent increases in public debt levels have often been compared to termites in the house. You can ignore these pests for quite a while, but eventually you will have a very big problem.”

 How big is your problem? To find out, ask yourself the following questions:
 1. Do I argue with my spouse over bills?
2. Is an increasing percentage of my income being used to pay off debts? Am I near or at the limit of my lines of credit?
3. Am I extending repayment schedules—paying bills in 60 or 90 days that I once paid in 30?
 4. Am I chronically late paying my bills?
5. Am I borrowing to pay for items I used to buy with cash?
 6. Do I put off medical or dental visits because I can’t afford them?
 7. Do I know my total debt, or am I afraid to add it up? If you are struggling with any of these concerns, now is the time to get your debt load under control. It’s your choice. You can continue spending like crazy while trying to pay down debt for another 30 to 40 years, or you can be empowered to get out of debt now so you can reap the following wonderful rewards:
 • Get completely out of debt within nine years, including your home mortgage.
• Begin saving, on top of eliminating debt, at least 2 to 4 percent of your monthly income.
• Begin to maximize your retirement income by making compound interest work for you instead of against you. All this is possible if you want to make it happen! If you have five or more debt items, it is mathematically predictable that you can be out of debt in nine years or less, even including a 30-year home mortgage. And the best part is that it’s easy and effective, requiring no additional out-of- pocket money. What’s more, it’s literally worth “millions” once you learn how to stop paying someone else so you can begin paying yourself! Decide today that you will no longer be a slave to the power of compound interest! Incorporate the Power Down system today by taking the challenge on page 75. As you begin this challenge to power down your debt, we hope you will find great strength and encouragement from the personal and inspiring story of one of the Money Mastery authors, Peter Jeppson. Peter tells, in his own words of how, through a tragic accident, he learned firsthand the power and peace that comes from eliminating debt. “As a young man just starting college, I was in a serious car accident. I was hit head on by another car and trapped in my Volkswagen Bug almost burning to death, until three drivers in passing automobiles stopped and pulled me from the wreckage.

 I spent more than two years in the hospital, depressed, broken, blind, and burned beyond all recognition. “At first I went in and out of a coma, fighting for my life. The doctors told my mother privately that I had no chance of living. Once I did stabilize, the doctors informed me that I would never walk again, and that there was no chance I would ever see again having lost my eyelids and most of the skin on my face. “As the days came and went, I recovered enough to be out of danger of losing my life. But I became very despondent and discouraged. While in this terrible situation I received help from so many caring people who read to me, bathed me, played chess with me, and gave me pep talks to buoy up my spirit. From this service, I learned some of the most important lessons in life. I learned that self-worth and self-esteem come from within and that beauty is what is on the inside. “Over time my health gradually began improving. Eventually I did walk again and thanks to the many doctors who worked with me, my eye- sight was saved. But as I lay in ICU for months, the medical bills began to pile up. I did not have health insurance and every Friday the hospital accounting office came to my room to review my bill with me. After every Friday’s meeting

I would become so upset about the thousands of dollars of debt I was incurring and knowing there was nothing I could do about it, that I would schedule a morphine shot for pain relief. Just a little calculation and anyone can figure that seven months in ICU times $1,500 (at the time) per day was costing me a literal fortune. Add to this another two years mostly in the hospital and 28 major surgeries, and I began to stagger under the weight of this tremendous financial burden. It was while under this incredible pressure that I learned the lesson that would change my life forever. “While in the hospital, my brother Bil brought me the book The Richest Man in Babylon by George S. Clason. The chapter on the ‘Clay Tablets’ about powering down debt was so impressive to me. At first, the methods described in the book seemed too simple and too good to be true. I couldn’t fathom ever paying off all my debt. But then I found myself asking, “Yes, but what if this system really works? I certainly have nothing to lose! It’s easy to test the math—I can do that in my head.” What I found by doing the math was that if I applied a Power Down system to my debt load, I could completely eliminate it in five years. Then I had different members of my family write down the math when they came to visit. Their numbers checked out what with what I had figured in my head. In time, I was released from the hospital. But even with those debt-reduction methods still fresh on my mind, I was so overwhelmed by what I owed (besides my hospital bill I owed money to seven different doctors), I didn’t know if I could ever get out from underneath it all. However, I once again tested the figures and found that I could indeed, be out of debt in five years if I applied Power Down principles.

“Bankruptcy was mentioned over and over by friends and family members as a way to start a new life financially. My own father, who now had been divorced from my mother for three years, told me he was going to file bankruptcy himself. Because I was still a minor when the accident happened, I could be included in his bankruptcy if I wanted and wipe my slate clean. “His suggestion caused me to review all the work the wonderful doctors and nurses had done to save my life and restore my eyesight, and I realized there was no way that I could bail out on my obligation to them. As I declined my father’s invitation, he told me he thought I was making a stupid decision, but I then thought about how money had ruined his marriage to my mother. I thought of all the arguments he had had with her about money. I thought about how upset it made me feel every time I heard them fight and I was determined to do something different financially with my own life. It was then that I committed myself to applying the systematic Power Down approach to my debt. “Five years later, I paid off my last medical bill. Even though my body was terribly scarred, those scars began to stand as a symbol of victory over my own personal debt and as a sign of triumph at beating impossible odds, both physically and financially. “Although most people do not carry any outward scars, so many individuals today have scarring on the inside caused by a lack of self-esteem due to financial worries and crushing debt.

I have learned, over 30 years of taking every opportunity to teach thousands of people about the Power Down approach, that if you have five or more debts it is mathematically possible to eliminate all of them in nine years or less using this method. I learned it for myself personally all those years ago and I have seen it work over and over again in the lives of countless people. It simply works—no matter how much debt you have, no matter how bad it is, no matter how high the interest rates are, no matter what! It works! If I can do it, you can, too! Gaining the vic- tory over debt is a huge accomplishment that I strongly encourage you to work towards. Begin now! Don’t wait another day to relieve yourself of this terrible burden that scars, destroys, and maims your life.”

Principle #4: Power Down Your Debt

It goes without saying that today, both nationally and personally, we are tangled in a trap of debt. As a nation our collective credit-card bill, which was $240 billion in 1990, has now climbed to a whopping $677 billion.1 And total U.S. household debt now stands at $5.4 trillion.2 Debt in this country has risen as a percentage of disposable income from 35 percent in 1952 to 100 percent in 1998.3 That means that as a nation, every penny of our in- come is going towards debt, leaving nothing to save for the future. Our product-oriented society most assuredly contributes to all this debt entrapment. Americans have become so accustomed to spending and borrowing that they never question whether a purchase should be made, but only if they can cover the minimum monthly payment, falling victim to what debt counselors call the “minimum-payment” syndrome. 

This reckless spending has infected the majority of Americans. James Clayton, a history professor and U.S. economics researcher confirms this point in his best- selling book, The Global Debt Bomb: Along with the lowest savings rate in the industrial world, the United States has the highest consumption rate. To illustrate, in 1965 the rate of personal consumption as a percentage of net national prod- uct was 68 percent; by 1991 that figure had risen to 77 percent. This substantial increase comes at the expense of everything else...As Peter Peterson, who was secretary of commerce during the 1970s has long argued, this strong desire to consume is part of our policy of growth maximization and entitlement mentality....Our rapidly expanding en- titlements are a derivative of this larger desire to consume [and] debt is the vehicle by which greater consumption is made possible.4 If it weren’t for easy credit and the widespread acceptance of debt (once broadly shunned as an immoral and shameful method of acquiring goods), Americans would not be infected so seriously with the disease of consumer- ism. Debt helps makes the entitlement and material acquisition possible on a scale in the United States that has never before been seen in any country or at any other time in the history of the world. Savvy media moguls know how easily available credit has become, counting on it as a means to further seduce Americans into purchasing more goods and services through emotional advertising messages. Not only do those who are sick with the disease of consumerism listen to these messages and make purchases they cannot afford, but they further compound the problem by going into debt for them, adding an interest payment on top of the expense. 

This triples the amount of money they should actually be paying for an item. Is it any wonder that the majority of Americans cannot keep most of the money they make? In the United States, consumer spending has risen twice as fast as income, and individuals have been withdrawing more money than they put into savings for the first time since the 1930s.5 In addition to consumerism, a prosperous and seemingly strong economy during the 1990s added to the notion that high levels of personal debt are acceptable. A somewhat artificial euphoria has floated over the United States for years because of a 10-year economic boom, a boom that dampened the stigma of borrowing on credit and contributed to a sense of “entitlement” that many people possessed during that decade. Most Americans didn’t worry about getting into debt, believing that it wouldn’t really hurt them because they could not imagine an economic downturn. But history proves otherwise: Where there is a boom, there will always be a bust that will follow it. James Clayton notes that the euphoria surround- ing Americans has given them a false sense of well-being and he warns that being in debt without fear of economic risk is a very dangerous place to be: 

The message conveyed. . .by Congress is that Americans no longer need to worry about rising public indebtedness—that a growing economy and a continually rising stock market will solve the debt problem that has plagued the nation for several generations. This euphoric outlook is even more evident regarding the rising private- sector debt. Private-sector debt in the United States in 1999 was about 130 percent of the gross domestic product (GDP), the highest level on record. Equity prices, which have risen faster in the U.S. than in any other major nation since 1990, are often used to justify this level of private indebtedness and unprecedented optimism. A rapidly ris- ing stock market is thought to have increased the net worth of corpo- rations and households, thus justifying historically high levels of debt. This stock-inflated net worth is also used to justify a zero household savings rate.6

Without fear and respect for money, our current generation is sinking itself into greater debt enslavement by its “gotta-have-it-now” attitude. In 1998, consumer credit as a ratio to after-tax income reached 21 percent in the U.S., the highest on record.7 The average American now has 11 credit cards, up from seven in 1989. And the number of credit cards in circulation increased 34 percent between 1988 and 1994, the number of transactions increased 55 percent, and the overall value of credit card transactions in- creased 98 percent.8 James Clayton, again, makes a very stark observation about this level of debt: “Americans, who invented the shopping mall and the credit card, believe they deserve more than they have. So why shouldn’t they continue to prosper even if they do not earn it.”9 Debt penetrates every part of our lives, with the potential of ruining far more than just our credit ratings; it can break up marriages and destroy future financial happiness. This indebtedness, naturally, is counter to the principles we have already taught about getting spending under control so that you can save for the future. And it eliminates any possibility of prepar- ing for the emotional, emergency, and retirement events we mentioned in the last chapter.