Are you a Slave? I was a slave to the American Dream. Learn how I escaped.

in life •  last year

I went to college and earned a degree. I acquired the symbols of success, the items that signify that I had made it. The proverbial ‘American Dream’ was attained. However, after working for a decade or so, I began to realize the American Dream is really the American Nightmare. It is promoted as a state of happiness, however, it is a marketing ploy to enslave as many people as possible via debt and consumerism.

If you don't believe me, let's take a look back at the Financial Crisis of 2008. The economy and the financial system itself was very unstable. The Stock Market plunged and the housing market was about enter a prolonged downtrend. These events led to corporate closures, reduced credit, and a rapid increase in unemployment. During this time, my house and 401(k) dropped 25% and 30% in value, respectively.

The news media reported constantly on the events as they unfolded. I remember reporters mentioning ‘systemic and counterparty risk’, repeatedly. I didn’t know what either of these terms meant. However, I read a great deal to educate myself to try an understand what was happening.


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Previously, I had grown to believe the financial system was built on absolutes. When things are working well, there are a great deal of assumptions that are taken for granted. People tend not to question why things are or how they work, because they are working so well. However, during a crisis we start to see the intricate inner workings of the system. We discover the flaws and limits of the system when some force causes it to break and the reverberations are felt throughout.

Counterparty Risk

Earlier, I mentioned counterparty risk. Let me explain what counterparty risk is with an example. Say Alice loans
Bob $10 in turn Bob loans Charlie $7 and then Charlie loans Dan $5. Dan’s business has been struggling in recent months and he is on the verge default. After seeking credit lines and trying to get his existing creditors to give him more time, Dan is forced to close his business. He is unable to pay back the loan to Charlie.

This puts a financial strain on Charlie because his business is experiencing a seasonal slowdown as well. Charlie is unable to make full interest payments to Bob. This is how counterparty risk works. Alice and Bob did not loan funds to Dan but their businesses can be affected by Dan’s actions.


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Systemic Risk

When the chain of money becomes unstable, as in the example above, trust is shaken. Bob’s faith or trust in Charlie is decreased because of his inability to pay back the loan. When the ‘entire’ system becomes fragile, this is referred to as systemic risk.

Lehman Brothers closed their doors and many financial institutions were affected. Layoffs in the financial sector ensued thus putting more strain on the system because the unemployed cannot meet their credit obligations. Financial institutions began to cancel or reduce credit limits as means of reducing their financial exposure to greater losses. Lending almost came to a halt. Not just in retail lending, but commercial lending slowed to a virtual crawl as well. No one in the financial sector trusted anyone else.

Now, I understand why the financial system is built on trust.

Financial preservation became the new normal. There was so much panic and uncertainty that the system almost froze. Meaning the currency was not flowing as usual. The US Government took drastic measures to help jumpstart the situation by loaning money (tax payer’s money) to financial institutions in an effort to restore confidence (trust) in the system.


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How did we get here? The housing industry was seeing annual increases of 10% - 15% just a few years earlier. The S&P 500 had rebounded nicely off the lows of 2003.

In the fall of 2008, it all changed very quickly. People who had purchased homes during the peak cycle a few years ago, were now living in overpriced assets. Others, who were now unemployed, couldn’t pay the mortgage on their homes.


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Seeing the rapid appreciation and sudden depreciation of assets made me feel that all of this is artificial and fake. I had to do something about my situation. But, what could I do? Most of these problems were systemic. Surely if Lehman Brothers can’t stay in business, there was nothing I could do as an individual. I could have let those feeling paralyze me and do nothing. No, that wasn’t an option!

Stop Playing Their Game

I declared I would not continue to play this game of debt the way I had in the past. After thinking about what I could do, I devised a plan. I would pay down my debt and become debt free. Well almost, I still have a mortgage on my house. However, everything else could be paid off. Additionally, I would not incur any new debt. This was a plan that was well within my power.

I had to change my mindset. I’m a giver by nature. Typically, when I’m asked to help family and friends financially, I usually do. Sometimes I’ve even gone into debt to do so. I decided that I can’t do this any longer, no matter what. I would help if I have it in savings, but I will not incur debt for someone else. This was hard to do, but I had to remember the lessons the Financial Crisis of 2008 taught me.


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Debt’s goal is to enslave anyone who borrows without an ability to management it. Do not let debt enslave you.

Don’t play that game. Debt is not designed for your advantage; unless you are the lender. Free yourself from the American Dream, well at least the debt part of it. I did.

Thanks for reading,

@pairmike


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Very good article. Thanks for sharing :-)

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Thanks for reading.

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Good that you got back on track.
I wish you much success with crypto currencies and espacially on Steemit :-)

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These posts take a good bit of time to create. Thanks again.

a good story, I do not like american :D

Debt isn't all bad. For example, if I have $500k in cash but can secure a loan at low interest for $500k to start a business, rather than risk my cash and tie it all up I'm put some risk on that lender in exchange for the interest I will pay. And my capital is still available should it be needed. I think so long as you could pay cash and set aside that money over the course of the loan, debt isn't such an evil thing

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Read this recent article about debt Americans are in. http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415

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For what its worth, technically speaking I squeezed into the "1%" club of Americans, but I assure you in many ways I still go paycheck to paycheck and I live pretty frugally... it sure as hell doesn't feel like I make much more than right out of college... Most of my worth is tied up in business or otherwise "out of my reach". I couldn't tell you the last time I went on a vacation. I drive a used Prius C (C stands for cheap, or maybe compact), and have a payed of FJ cruiser. It pains me to see friends making a decent living buying a $70k vehicle. I want to slap them in the mouth. It also pains me whenever I see friends get a promotion and immediately buy more house. I live in the same house I bought in 2005 when I made $46k per year and I aim to pay the bitch off and rent it out. I'm trying to build equity, not trade up.

If more people understood what living within their means is, and that doesn't mean buy it if you are able, we as American's wouldn't be in the sorry situation we are in.

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You, my friend, have the right financial mindset. It is very hard to get people to live within their means.

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You are correct. But most people are not fortunate to have 500k. I bet if you have 500k, you are not living paycheck to paycheck. Consumer debt is a bad thing if you don't have an emergency fund, savings, and other investments.

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I just used $500k as an example. Equally valid if you want to get a used car for $10k. if you don't have close to that in savings, then you probably can't afford it, loan or no... (caveat, a car in western society is in many ways a necessity... I acknowledge that).

Some one should bring back lay-away.

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That's funny. Bring back layaway! That will be a good title for a song. Lol

Yes ... dont play there game ... and they cant exsist... everyone should realize and follow your story. The casino cant snake your money if your not playing.

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I totally agree. Most Americans are in debt, even very educated ones.

Your only a slave to your mind. The real revolution is in the head.

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Yes, that is correct. However, there are some who have not learned or been taught this lesson as it relates to finance.

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If you got all the time in the world you got all the money in the world, because time is money right. There is one way out of the mess we are in and that is for people to buy silver and gold with their debt notes. Its that simple and that easy. We will crash the system quicker, and stay on top of the crash while we do it. It will happen at some point because it has to happen. If you look at the chart the debt bubble exploded over the past 100 years and so too did the human population. Bubbles are by nature un sustainable and always pop, so i think when the debt bubble bursts millions of people are going to starve to death unless they have the desirable assets. There won't be any faith in any government debt by that point.

Thank you for sharing.

The crisis occurred because banks were loaning to people even when they new that the majority of it could not be paid back. The banksters did not care since they get nice bonuses for approved loans, so they did everything in their power to loan as much as possible.

The crisis of 2008 was a good indication of everything that is wrong with this system. And what did we do? We saved those banks and the fat CEO's from going broke but did nothing to prevent it in the future.

Big banks manipulate market values every single day, from food prices to gold and silver. One does not have to be a genius to realize that the system is rigged in favor of big interests and the wealthy few.

Mind you this is very simplified but you get the point.

To give you something to think about, every note/bill that you spend your country has to borrow with interest. Even if you earned it slaving away your precious time, you are still creating more debt out of thin air.

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I agree with each of your points. However, people need to know they can do something about it. If not, they are just hopeless without any chance of escaping.

I have seen many cases where people get into debt to fill some void or unhappiness in their life. They buy stuff to feel better without actually addressing the root issue. In turn they end up being in more debt and still unhappy.

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We can only strive towards self-sustainability and move away from consumerism and government. I am debt free myself and still consider myself to be a slave as anyone else. The birth certificate is a bond that the government uses as collateral to acquire more debt. We are all stock to the ruling few. We have privileges in this system, but no rights.

We all get our own corporation at birth (corpse - dead body) and are considered to be lost at see. The Phoenician kind of doing business. Even our souls are legally considered to be in ownership of the Vatican.

I thank you sincerely for informing other people, but as you see its not that simple. Change will come for sure pretty soon as the majority is fed up. I just hope it will be a gradual one without nuclear warfare.

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My hope is save those that what to be saved and willing to make the hard choices.

Indeed, the borrower is slave to the lender, he doesn't even own what he has, and by the time he does own it, he's paid an incredibly foolish amount. I stopped "American Dreaming" when I realized that dream was a nightmare and decided to come up with a dream of my own! Great article!

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Thanks Papa! You are right. Prevention is better than finding a cure. Financial literacy is lacking amongst Americans.

We go to college and study all kinds of subjects, but most are not taught how to manage their money.

Great post! I was in the stock market in September 2008 when it fell like a knife. I also lost my job right then as well. The last recession hit me hard. I'm trying to make the right moves so this next recession doesn't come down on me like a guillotine.

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Sorry to hear about that. I hope you have recovered by now. These cycles come every 6 - 10 years or so.