Thursday, December 26, 2013

Dependence on the System

A lot of people would like to live self sufficient, financially independent, or just live a simple life that didn’t require so much money.  The problem is, of course, we are still dependent on “the system.”  So we try to minimize our ties by growing food and looking for alternative energy sources.  This gives us the sense of freedom, but is not the heart of the matter. 

The following list is what I would call the “big three” that really prevents more people from disengagement.

DEBT.  All kinds.  Anything we owe money for, we don’t really own.  They belong to the bank or lending institution that loaned us the money.  I’m allowed to posses the property because the lender makes a profit on the interest I pay, and hopes I will purchase more debt.

Another way of looking at it is, my paycheck really isn’t mine if I am in debt.  The amount of money I owe belongs to the lender.

If I default on my loan, the borrower has the legal and moral right to repossess the property or collect the debt.  Unfortunately, they go beyond that by ruining your credit ratings, increase your interest rates, and impose unrestricted fees and penalties.  Avoiding all of this unpleasantness is what keeps us towing the line.

Of course, if you have no debt, there’s no line to tow.

INSURANCE.  Some people believe that insurance is a necessity and that you can’t survive without it.  Personally, I’ve never had an insurance company do for me what I have paid them for, a least not without a battle, which is usually a losing battle.

I think the deception here is that people believe they are purchasing a service, when in fact, what they get for their money is a sense of security, but with no guarantees.

Auto insurance is mandated by law, which is a guaranteed income for the auto insurance companies and the lawyers you have to hire to get them to pay out on claims.  Health and life insurance is packaged as a “benefit”, but the ones who benefit the most are the insurance companies, their executives, and pharmaceutical companies.  And now with Obama Care, the government will profit from the premiums you pay.  

The fear of “what if” is exactly what keeps us locked-in.  Consequently, many of us are “insurance poor” – paying too much money for too many polices that we don’t really need.

RETIREMENT INVESTMENTS.  Most people feel like retirement investments (assuming you have enough money to invest) are a necessity.  Again, it’s a sense of security that has no guarantee.  The problem here is corruption in the system

People put their money in these accounts, usually with limited investment choices and little control over how the money is used.  A company custodian oversees the money and controls the accounts.  Anytime you put a single person or company in charge of millions/billions/trillions of dollars that belongs to others, the likelihood of corruption is high.  There is a reason why investors call it “dumb money.”  Everyone has heard the horror stories of people losing their entire pension plan because of mismanagement.  Then of course, the government acts as another custodian over your money, limiting when and how much you can withdraw, imposing taxes, penalties, and fees.

The wealth contained in an investment account is actually perceived wealth because it is based on a number system rather than real money.  For example, anytime the stock market goes south, people lose a lot on money “on paper.”

I don’t have all the answers, but I think these three things keep a lot of us from truly disengaging.  If it’s what we really want, and depending on how we view the future, we should at least give consideration to them.  The Amish are a perfect example being self-sufficient, and independent.  They are disengaged from most of the things we are locked-in to and they do more than merely survive. They thrive.

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