Ep 74Money Expert Brilliantly Exposes The American Finance Trap
The $750 credit card bonus that cost a client $9,000
Igor Meystelman
Money Expert Brilliantly Exposes The American Finance Trap
with Igor Meystelman
It's poison wrapped in honey.
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Quotes
“The card created this invisible gap between accountability, responsibility and idea of living within our means.”
“The interest rate that's accruing is outpacing so badly your minimum payment that you're literally going to default even while making monthly payments.”
“Nobody tells you start building Titanic now. They tell you start building credit history now.”
“Most people... are obsessed with keeping their score above 700 rather than obsessed with living a responsible behavior life.”
“You are attaching plasma to somebody's arm who's bleeding while they're bleeding out in another spot.”
“It's very hard to save somebody in an emergency room, but much earlier in the process, it is possible.”
Takeaways
- 1 Credit card debt, student loans and car loans each top $1 trillion in the US, and Meystelman expects credit cards to become the largest.
- 2 Many families act as if they have two incomes, their pay and their card. Earning $100 and spending $120 lasts about 2-5 years before the card is declined.
- 3 His typical clients are 35-55 with $50,000-200,000 in card debt. On $100,000, about $30,000 is often interest. Lately most of it comes from necessities, not luxuries.
- 4 Minimum payments are a 'slow death': 20%+ interest outpaces them, so people can default even while paying every month.
- 5 Cards remove the pain of paying. A 75,000-point ($750) offer that requires $6,000 of spending can quickly turn into $9,000 of debt.
- 6 He prefers settlement (often 40-60 cents on the dollar over 6-12 months) to bankruptcy, because saving up for it builds ownership. Bankruptcy requires passing a means test, and repeat filings are common.
- 7 Owing money is a civil matter, not a crime. Creditors can sue, garnish up to about 10% of wages or freeze accounts, but a home loan default can mean foreclosure.
- 8 A listener told the host he let a contractor cousin charge $100,000-300,000 a month on his cards and was left with $500,000 of debt that took three years to resolve. Others have 'sold their credit' at 18 and carried the damage for years.
- 9 A home-equity-backed credit card with a $250,000 limit is, in his words, 'exhibit one on steroids,' because it puts the home at risk.
- 10 Money is one of the top three stressors in marriage. After years of divorce and foreclosure work, he retrained as a marriage and family therapist to help couples earlier.
- 11 A turning point for leaving New York: his third-grade daughter asked if they were going to Florida for winter vacation because 'everyone' in her class was. He turned to his wife and said, 'We're moving.' He now lives in Phoenix, Arizona.