Protactix

In these times, cash is king.  In other words, nobody can be sure that they will be able to borrow money today or tomorrow.

But if you have some cash, and you can borrow, borrow full speed ahead.

Leverage is the way to future gain. 

There is not any way that inflation won’t happen going forward.

What does that mean?  Whatever you owe, the dollar will be worth less in the future than it is now.  As long as you have a job, you will be making more in three years than you are making now…for the same job.

If your debt is fixed, even if your interest rate is not, you will pay your loans off with future dollars that will be worth less than today’s dollars.

To keep it simple, say you make $25 per hour and you owe $100.  Right now, if you work 4 hours, you will pay off your loan in full (forget interest for now).

But since the government is, and will continue to flood (borrowed) money into the economy (the Stimulus), pretty soon you

In this 21st Century world, small business owners, homeowners and consumers are likely to find that even the best financial plan, the best debt management system and the best business model will not prevent a financial crisis. 

If the business or individual seeks to survive and recover financially,  a financial workout, a renegotiation, whatever it may be called, is often the most important step toward financial sanity.  But how to do it?

Protactix sets out the steps to be taken in order for the renegotiation to have the best chance to succeed.

Hopefully whether one is a business or an individual homeowner or consumer, the borrower has a business plan.  If there is no plan, as we will see later, one is required.

First things first

1.  Stay current with the lender.  Contact the lender before default.  (if the default is not yet serious, not too far behind, contact the lender now!)

2.  At no time should the lender be threatened.  Be realistic with the lender, be calm with the lender, but no threats, please.

3.  It’s not a threat, but carefully calculate the cost to the lender if a default occurs.  In the calculations, include, at least, a realistic picture of the liquidation value of the collateral.  Review, for example, Barel Karsan’s thoughts at http://barelkarsan.com/2008/08/amisco-liquidation-value.html or http://www.smallbusinessnotes.com/operating/finmgmt/assetliquidation/value.html

The point is that the lender must be made aware of the reality that its collateral, particularly if the collateral is real estate or construction work in process may well be worth less than the outstanding loan balance. 

This might be a good time for the borrower to mention gently the amount of interest that the borrower has paid in the past, which almost certainly contributed to the the  lender’s past profits

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 Is victim the correct word for those that lost money after “investing” with Madoff Investments Securities LLC?

If they were widows (penniless widows that is) or orphans (penniless orphans), maybe they could  qualify as victims.

But the better description for the Madoff investor is superciliously greedy.

The Madoff investor certainly had the resources to vet Madoff’s investment scheme, but instead of minimal due diligence, they thought they had discovered a way to game the system.  (and because of who they knew they should get more; Right?)

Since they knew the guy or at least knew the guy who knew the guy, they thought their relationships entitled them to unheard of returns—Returns that were not available to outsiders.

Would this have happened to you?

No one beats the market by the  Madoff margins as consistently for as long as he (seemingly) did. 

If someone, especially someone you “know”,  tells you that, if you qualify, (if you’re good enough, if you’re rich enough, if you belong to the right bingo club, etc.) you can “get in on” returns the regular folk can’t get, then hang on to your money and hang up on the caller

…..Unless your ego tells you that you’re so good that you deserve better than real investors ordinary people. 

 If you let your greed and your ego tell you that your connections will let you beat the system, you’re not a victim when you lose your money.