|Katherine:||Hello everyone. Thank you so much for joining us for This Needs To Be Said TV. We’re joined again by our friend, attorney Christine Kingston. And last time we were talking about student debt was scarier than shit, but that idleness but either way we’re talking about the attachment we have to our stuff. And today’s stuff is debt. So welcome back, Christine. How are you?|
|Christine K.:||Doing great, Katherine. Thanks again for having me. Always good to chat with you and your people.|
|Katherine:||So I know that’s not the new title. So tell everyone again the new title of the book.|
|Christine K.:||Well, you know I’m drafting the book and of course they are scarier than shit, but you know, and it’s a monster. It’s $1.6 trillion in student loan debt. So the new title, the latest iteration is How to Tame the Student Loan Dragon. So I’m bringing a little in a fantastical Imagineering, into it myself, in this book. So, it’s a fire breathing dragon. So, we’re just wanting to tame it. And that’s because I’m breathing hope into America at this point because we still believe in the future of the American dream. It’s just costing everybody a lot more money, and there are a lot more landmines out there, if you will, than there were back when… I hate to say that, but back in our day-|
|Katherine:||Yeah, you’re right.|
|Christine K.:||Back in my day, you know, finances, everything was a lot simpler back then.|
|Christine K.:||Right? Oprah told me how to do my hair.|
|Katherine:||That’s right. That’s right. So you cover it up. Yeah. So you were talking about last time that we’re so attached to our debt, and I say this in many situations, but we’re speaking specifically of an upcoming recession that people probably will not see coming again. Even though we’re talking about it, but let’s talk about it.|
|Christine K.:||Right? It’s happening. You know, whether it happens now or in the next 18 months, it’s coming. We have to have a financial reset in order to… It’s like pulling weeds out of your garden. If you don’t pull the weeds out of the garden, it’s just going to turn into a jungle because that’s what it does. It just continues to perpetuate and grow. So and then the economy cannot continue to have an up cycle without a down. What goes up must come down. That’s the law. It’s not just a good idea. So business cycles way back when, I don’t know why I feel like I’m getting historical on you Katherine, but I feel historical right now. Because, you know it used to be before credit cards, by the way, there was a time without credit cards. That’s before our time, just so you know.|
|Katherine:||No, no, there’s not ever.|
|Christine K.:||That’s a long time ago. Yeah, before we grew up. So they’re used it up be any credit cards at all. And what happened was the business cycle would hit a recession every five years. When credit cards came on the scene, it actually allowed the business cycle to be longer because people could move their problems onto a credit card and create some debt.
Then, what happened is they brought in these toxic mortgages. We all know the story about the economic crisis in 2008 the great recession. What that did with those toxic mortgages was then we just threw it all into our houses and now we took that cycle out over 10 years. We’ve been in this present cycle for 10 years. This is the longest up cycle before, you know, since the recession, it’s been the longest up cycle. So it’s bound to happen. And here’s the problem, we don’t have a backup plan right now.
You see what happens when we hit a recession is they lower interest rates. Where’re interest rates right now? Close to zero, Katherine, we can’t go any lower. So there is no remedy if the economy softens and we’re a consumer driven economy, so thanks America for supporting us. The more you spend, the more America does well. But what happens when your Amex maxes out? What happens when your MasterCard and Visa won’t increase your line of credit, and you cannot afford to pay that debt back? then what? Then what do we do?
The government has no resources for you. If you don’t have any money in reserve, like a Murphy account, you know Murphy’s Law, anything that can go wrong will go wrong. If you’ve got nothing to pay Murphy when he comes to town, you don’t have a backup plan either. And so then this next recession is going to hurt more because we don’t have any bail-out remedies available and it’s going to be the consumers this time that are the ones left holding the bag.
So I would have a feeling the bankruptcies are starting to go up already, by the way, and then I think they’re going to hit more than they ever have because there’s no backup problem. And for some reason people seem to think that they need something. They got to have it now. And if MasterCard and Visa are still issuing this stuff like candy and credit cards look really pretty, by the way, they’re shiny, they’re sparkly.
|Katherine:||They even let you personalize them. Yeah,|
|Christine K.:||Right. Yeah. You want to put Bambi on there, you want to put your face on there. That’s how they market. Maybe I should sell bankruptcy with a cute little, your face on a debt relief package. I don’t know.|
|Katherine:||There it is. That’s what we talking about right now. I think you should.|
|Christine K.:||Yeah. Your own personal debt relief plan. And here’s you after bankruptcy with a smile on your face.|
|Katherine:||Exactly. Exactly. Like a happy plate. Make a happy life with bankruptcy. So what are some things that, well, is there a website that that people can go to? Where’s recession proof in life. I’ve seen something for the government, like, emergency, how to stock your house up or how to be prepared in case of an emergency, like a natural emergency or natural disaster. Do you have something like that for recession-proofing? Do you have a kit? Should be in my kit?|
|Christine K.:||You know, that’s, yeah, now that you said it, I’m probably going to have to make one because I really liked that idea. Because, sometimes we plan for emergencies but we spend more time planning the hotel we’re going to stay at for our vacation.|
|Katherine:||Yes, that’s important.|
|Christine K.:||I don’t know about your Katherine, but I’m going to go to the website and I’m going to look at all the pictures. I’m going to check out all the rooms. You know that’s what I do.|
|Katherine:||look at everything. I’m doing it.|
|Christine K.:||Right? And I know you do the same thing.
I’m going to get the virtual tour. I want to know what’s for breakfast. I want to know what the restaurants look like. We spend more time planning for those vacations that we plan for our retirement or our financial health.
|Christine K.:||I love that idea. I like that. I’m going to write that down. So recession kit or you know how to save yourself in an emergency. There really aren’t that many how to books out there for that. I think that’s a great idea. I think the biggest thing people have to do, number one, is stay on a budget. That has got to be the most important thing. “Oh, budget.” So dah, dah, dah, dah. Well, my mom doesn’t live here, so nobody’s telling me what to do. If I want it, I’m going to go get it. Well fine. You go ahead and go get it. Operators are standing by, we’ll be here for bankruptcy when you can’t afford it, and, but you know, here’s the thing that people, this is the one I want to emphasize most, Katherine.
We, as mere mortals, okay? And I’m talking about those of us that are not billionaires. You know, those of us that might be having some money for retirement, but we don’t have enough money for retirement and we’re still trying to make our careers. Guess what? We cannot afford debt. My investments do not grow at the same rate that my credit card interest rate provides me.
|Christine K.:||Let that sink in for a second. That’s right. 24% interest on the average credit card when your investments are not going to grow more than five or 6%. That same toothbrush that I paid cash for. You’re paying three times more for, or more than that, depending upon how long you take to pay that debt off. Okay? It’s math. I’ve never liked math until I became a bankruptcy attorney. I love math now. It doesn’t lie.|
|Katherine:||It looks like you’re repenting. I love math now.|
|Christine K.:||I’m going to be a recovering attorney soon when my book comes out as well. But yeah, and I hated to say that cause my husband’s an engineer, right. So, you know.|
|Katherine:||Oh boy. You really like math.|
|Christine K.:||Yeah, but it’s all in the math. When I show people that making a payment plan in a Chapter 13 bankruptcy case stops the interest from accruing on the credit card debt, keeps you from being sued and gives you a fixed sum, certain to pay over a five year period of time. It makes more sense to consider a payment plan in bankruptcy, rather than to do debt settlement, or debt consolidation outside of bankruptcy because they can’t stop lawsuits, they can’t stop wage garnishments, and they certainly don’t slow the interest rate down. That’s the power behind a bankruptcy, rather than try to struggle out on your own. But you know what? Ironically, people would rather stay out there and struggle longer, which I still don’t get that either. Right?
You’re going to pay 24% interest.
|Katherine:||It’s that emotional.|
|Christine K.:||Well that and they think bankruptcy is the worst thing that ever happened to them.|
|Katherine:||No. It hurts my feelings to do that.|
|Christine K.:||Yeah. It hurts my feelings to do that because I’m here to make a difference in people’s lives, and I know that people that have worked with me are better off now. I get calls from my clients five years later, “Christine, I’m buying a house.”
I’m like, “That’s great,”
“But there’s a little thing over here.”
“Here’s how to fix it.” You know? Because when they work with me, they become part of my family. I’m, they’re calling me years after I’ve done working with them because they know that I’ll take their call and make that difference. Why? Because they’re going to send me people just like themselves that want to get out of debt as well. Yeah. That’s how we do it around here.
|Katherine:||So while we’re talking about math.|
|Christine K.:||Katherine, I just lost audio. I can’t.. I just lost audio. I can hear you now.|
|Katherine:||Okay. What about now?|
|Christine K.:||I can hear you now.|
|Katherine:||Okay. I’ll begin again.|
|Christine K.:||I lost audio for a second. Okay.|
|Katherine:||We’re back. We’re back. I think about the first heartbreak a person ever has, like I have all sons, so their first heartbreak perfectly, because boys don’t have a heartbreak like girls do. Like, girls can get up and do it again. Boys, it’s like that one person hurt me and I’m never ever, ever going to let it happen again. Right? And so I think that treat our debt, we treat our life, not even our debt, every single part of our life. We treated it so highly emotional. It can’t hurt us one time because if it does, if it gives me a misstep, if it makes me look bad, I’m not going to ever go down that path again. So I won’t look bad again. As opposed to, “Hey, I’m going to give love another try. I’m going to give debt another try, I’m going to give life another try and try to do it better this time. What did I learn the last time I was going down this path?
That would be a refreshing way, but a lot of people don’t. We get emotional about things. We get emotional about our achievements and our achievements go along with our assets, what we call assets that are really liabilities. That nice car you have that, 2019, 2020 car you’re going to get. Learning how to buy things at the auction. Housing, cars. Just learning how to not have to pay full price for everything. It just hurts our feelings that…
|Katherine:||Yeah. it hurts from our feelings… And, coupon shopping. Bankruptcy is a big, big, big bitter pill to swallow in the world of emotions. Think about coupon shopping. That’s a little thing and we won’t do it.
I don’t want anybody to see a coupon. I want them to see me with a card, swipe it. I can pay full price. I want to have the ability to pay full price. I don’t want to have to pay full price. Let me tell you a funny story. In Walmart yesterday, my favorite place to go. Anyway, my sweetie, my fiance wanted cheese balls, so they have this big container of cheese balls and right above these big barrels. Well, cheese balls. It says 82 cents. Now, I say, we need to find a scanner because I don’t know if someone is going to lose their job because this is not the right price. And he said, well I want to get more than one, just in case it is. I said, well get more than one. So we got four of these big old things in our buggy, not what we went in the store for at all.
|Christine K.:||You can never have too many cheese balls.|
|Katherine:||He said, “I’m going to freeze some.” I was like, “Stop it.” So we find out, right, they’re there, they’re in the wrong section. There’s like five rolls or five shelves of cheese balls under the price, 82 cents. We didn’t change it. It’s out of our reach. We’re short people. So anyway, which I said, “Take a picture of it just in case somebody thinks that you know, we are making it up and trying to get this big barrel for nothing.” And well they were able to give us one because we caught that mistake.
I think they should have gave us all four of them. But my point to this is we didn’t get over emotional, we didn’t have to have the other three barrels when we found out that only one was going to be at 82 cents. You know what we did? We detached from the other three barrels of cheese balls and we paid 82 cents-
|Christine K.:||Great job.|
|Katherine:||for the one.|
|Katherine:||Right? Because we didn’t go in for cheese balls for one. So getting them 82 cents was going to be a bonus anyway. It’s not a treat to pay for them at $6. That wasn’t a treat, that’s the regular price. So we did get that, but I bring that up. It’s a fun analogy of shopping, if you don’t pay attention, you would miss these things. And, if you didn’t have cheese balls, we wouldn’t have got the 82 cent deal. But my plan was, while we don’t have any school age children with us right now. There are school aged children returning to school and there are snacks priced for those parents, and while I’m not a practicing parent right now, I am going in there to benefit from these sales that they have where their children, because I too like snacks. But the 82 cents was not a plan.
But when we, when we’re looking at our lives, if we had gotten so emotional, “I love cheese balls, I got to have them. I’m not leaving the store without the other three.” We would’ve paid 18 more dollars for a 82 cent deal we saw because by emotions “I need to have it now. I got to have it this way.” I also realized that when we go through life, we get ourselves in trouble because we need to have our plan go the way we planned it. Even though it still unfolds and get us the end result, like bankruptcy is going to get us the end results of resetting our lives. Being able to begin again to get a head start where we were always playing catch up. While we don’t look at that, but we should look at it that way. We get caught up in-
|Christine K.:||I agree.|
|Katherine:||We get caught up in the emotions of I have to be able, I told my friends, “I have this $50,000 car. I have this $200,000 house.” Whatever it is, I need to make sure I paid for it. I can’t have the shame of me losing it. We want to go quiet as opposed to, “Hey, here’s how you get yourself out of those pickles.” and even educating yourself before you get in trouble. We don’t know what to ask, so stop acting like we knew, and we did it on purpose.
You did not do it on purpose. You made your best decision with the information you had and it did not turn out well. You can reset. You can always start over. I love board games for that reason. I’ll knock the board game over. Christine, I’m a terrible… I’m a sore loser. If I’m losing, I will knock the game over. We’re going to start over. Reset.
|Christine K.:||I love it. Yeah, I’ll quit Candy Crush any day when it’s not working out my way and I’ll come back when it does.|
|Katherine:||Right. I’ll come back later. Right, right. If we….|
|Christine K.:||I agree.|
|Katherine:||… life that way. So you have to put that in the kit. How to sever the ties to our emotions so we can move forward.|
|Christine K.:||Yeah. Well, you know, now you’re going deep on me because you know, it’s interesting how we talk about the emotional attachment, you know, and that’s really where all of our decisions are coming in anyway. You know, we think that we’re really good decision makers. We think that we’re the best. Let’s go buy a car, let’s go buy a car. You know, for an example, we’ll go buy a car and the sales person is now putting bells and whistles on the deal and doing all of these things. And then they present you with a contract. That next thing, you know, right. You know, this happens all the time.
Now you’re spending three times what you were going to spend. Just like you said, I could have got about five things of cheese balls, one for 80 cents and the rest for six bucks a pop. You know, thinking that, you know, I got a deal on one, but no, I can go ahead and pay regular price on the rest of them. No. You would only want one.
|Christine K.:||When we’re talking about debt and credit, it’s a deeper topic. I really believe it’s a matter of the heart and when we don’t have our lives fully together… Here’s the other problem I believe that we have right now… is that people are really not taking good care of themselves, right? We are an obese society. I think our food supply has way too much stuff in it because I remember growing up on whole milk, I won’t drink whole milk anymore because I don’t recall hormones being in my milk when I was a kid, and things like that.
So, there’s so much stuff coming into our environment and we’re not taking care of ourselves and we’re overweight, we’re sick, fat and tired and we’re broke. And we’re getting… We’re using all this credit because we don’t have cash. We don’t use cash anymore. So nobody runs a budget. When was the last time you balanced your checkbook? That doesn’t happen, right? So we’re carrying more and more debt. Why? Because the creditors will give it to us. You know, again, we’re talking about who is at fault here. There’s those, that whole group of people that will be like, if you file bankruptcy, you’re the biggest loser ever.
Well, that’s not true. You know, I think about all the rich people that have filed bankruptcy and then went on to make a ton of money. I will name just a few for you. How about Walt Disney? Does anybody know that name? JC Penney for example, JC Penney might be going broke. So there you go. That’s irony right there.
|Katherine:||Well, it took them a long time though. It took them a long time to go broke.|
|Christine K.:||You think about some of those cuts, right? It took them a long time to build the wealth and it took them a long time to take it down because all of this is changing. We used to be brick and mortar with the malls and now we’ve gone to online and Amazon is taking over. You know, Dave Ramsey filed bankruptcy before he started telling people don’t file bankruptcy and instead use his debt snowball program, which is great, if you’re going to be getting out of debt in less than five years. But if your debt is so enormous that it’s going to take you longer than that, well then bankruptcy starts to become a better option.
When we look at it from the numbers, it saves people time and money, which are the two most valuable things that we possess besides, you know, the physical bodies we get to roam around the planet in. Time and money can be saved by considering bankruptcy as a tool.
It’s a tool. It gets you from being buried right up to ground level. Why? Instead of taking the money and paying the debt off, okay. You know, I propose a financial chart. I did one time. where someone at $35,000 in debt at 15% interest, which you don’t get. It would take them nine years at $500 a month to pay that debt back. They would be paying over $20,000 in interest. Okay? So then by the time they’re done, they’re going to pay over $50,000 to pay off that $35,000 in debt. But say, for example, they filed bankruptcy under Chapter 13 of the Bankruptcy Code and paid that back at 100% over five years. Now, first of all, I’m saving four years of time, and they’re saving that 20,000 plus an interest, because remember we said Chapter 13 has no interest accruing while you’re paying the debt back in a payment plan under a court controlled environment.
So a Chapter 13 debtor would have saved four years and over $20,000 by filing bankruptcy and a payment plan. The person that didn’t have as much money and couldn’t afford to pay that debt back, could file Chapter 7 and save over $53,000 by eliminating their debt in a bankruptcy case, rather than trying to spend the nine years at $500 a month at 15% interest, which is the old-fashioned way of paying that that back. That’s the difference. I mean, who wants to save $20,000? Everybody would raise their hand. Who wants to file bankruptcy?
|Christine K.:||No one would raise their hand.|
|Katherine:||Have them, but no one wants to die. Listen, I’m going to have to cut in. Christine, thank you for coming back again with us are going to have to talk about debt and credit matters of the heart. We’re going to have to do that. We’re going to have to dig deep on that because that’s really what it boils down to because you’re doing the math, you’re explaining it. It makes sense. If I could do this, then I can move ahead forward, faster. But no, I want to spend nine years building my character. Just so you know. I mean that would be the only reason I wouldn’t file bankruptcy and save $20,000 because I want to make sure my character, which is invisible, that you know, nobody really is going to know, but me and my creditors. They’re not going to know I’m a good person, but I guess I could have bragging rights. It took me nine years and I did blah, blah, blah. And it sounds like the stupidest thing now that I know.|
|Christine K.:||Right. And you know, in Buddha we talk about pain is, pain is mandatory, but suffering is optional, right? Life is painful. We’re going to, we’re going to trip and hurt ourselves. We’re going to make bad decisions one day and great decisions tomorrow. But there’s no reason to make a bad decision and then add another bad decision on top of that. Right?|
|Christine K.:||We know that it costs you a certain amount of money to get into debt. Why should you pay any more than that to get out of it? Why? It’s okay for the president to do it, but not you. You know? Why are we there? Why are we even thinking it’s okay for them but not for me?|
|Katherine:||So people think you’re bad.|
|Christine K.:||I mean, all the people that filed bankruptcy got rich.|
|Katherine:||Well we think they’re bad. We think the rich people are bad and they’re getting away with something. And if I would do it, it makes me no better than them. I can give you a list of reasons why, that what we’re talking about doesn’t make sense to people in general. We may steal grapes in the grocery store while we’re shopping, not paying for them, but we do not want to file bankruptcy.
Anyway, we got to wrap up here Christine.
|Christine K.:||I love that one.|
|Katherine:||Tell people how to get in touch with you outside of This Needs To Be Said TV.|
|Christine K.:||Well, thank you, Katherine. I am a licensed attorney here in the state of California. My office is in the city of Huntington Beach. I operate Surf City Lawyers. You can find us on the web at www.surfcitylawyers.com or give us a call here at the office (714) 533-9210. Thanks again, Katherine.|
|Katherine:||Thank you, Christine. Until next time, have a wonderfully super day. Thank you.|
|Christine K.:||You too. Bye.|