To Die For

Good evening Sisters and Brothers!  Life's lovely ironies never cease to amaze the Reverend.  Take, for example, the word Amortization.  Amortization is the process of describing or calculating an owed amount of principal and interest over time, typically a debt such as a mortgage.  This would be a mortgage not unlike that which many of our Brethren carry on a family home.  

The word Amortization comes from Latin by way of a few twists and turns of the French over the centuries.  Amorteser comes from the Vulgar Latin, Admortire, "to kill", which has, as its Classic Latin root, Morte, or "death."  Well then, Brethren.  It seems that the very root of the word that accountants use to describe paying down debt exhorts us to bring about the death of our debt.  

Amortization is a way to mathematically plot the progress of debt payment over time, showing the relationship between principal owed and interest owed at a given point in the debt, or loan's, term.  For example, at the beginning of a 30-year mortgage, a home "owner" will be paying almost all interest, the so-called "servicing" of the debt.  As time goes on over the life of the loan, more and more of the money paid will go to paying down the principal, the actual purchase price.  This is standard amortization.

As we all know, Brothers and Sisters, housing debt, the typical mortgage, is not the consumer debt that concerns the Rev.  The real demon is unsecured consumer debt, mostly in the form of credit cards, but also in lines of credit and second mortgages on houses.  The other big player in running up our debt are auto loans.  With very few exceptions, autos, motos, boats, big-screen TVs and family vacations are not investments.  These are not purchases that maintain value over time.  These types of purchases may retain a semblance of resale value, but they are in no way investments that will yield a return of capital.  Thus, when these items are purchased on credit, they become a double drain, one that can do us to death if we don't amortire our debts before they amortire us.

Here are a few examples of how a credit amortization schedule can bring home the cold, hard facts about the cost of consumer debt.  Let us assume that there is a hard-working Sister or Brother, living in a regular town, with a regular job, doing the best they can.  Our Brethren had some unexpected health issues and, with sub-standard insurance, ended up owing $10,000 which they put on the credit card.  This is a real-life scenario that is all too common.  Let's assume an annual percentage rate (APR) of 15% on that ole' credit card, a bit below the average rate one sees on the street.  If our Brother or Sister is still strapped for cash, working hard to keep their head above the water, maybe they can only make the minimum payment.  So it goes.

Here are the brutal facts about that situation:  A $ 10,000 debt, paid out over time by making only the minimum payments, will take approximately 27 years to pay off.  Yes, folks, 27 years.  Over the course of that 27 years, our unfortunate Sister or Brother will pay about $ 11,700 in interest, in addition to the $ 10,000 originally charged.  Yes, Brethren, that's right, a grand total of $ 21,700.

Now, I can hear the cries as I describe this space between the hard place and the rock:  "Rev! What is the Brethren supposed to do when faced with a choice like that?  Do they go without healthcare, or go into debt?"  I agree with you, Sisters and Brothers, its a bargain with the Devil. What I am asking is that all of us, each of our Brethren, be aware of the consequences of our actions as consumers.  For every scenario such as we have described above, there are thousands of purchases where credit is used without dire need, without thought of the repercussions and without awareness.  There is a reason we are a people awash in our own debt.

Yesterday, one of the Brethren reminded me of the quote by Jean-Jacques Rousseau, "Man is born free, and everywhere he is in chains..."  With the ease and cunning of a snare, purchases of consumer goods can trap us in debt.  These are chains that, often as not, we forge ourselves.  It is a hard truth, Brethren, a hard truth indeed.  I have personally held the hammer and tongs and fashioned my own chains of debt.  I have been blinded by the lure of the cargo and have indebted myself in pursuit of it.  But no more, Brothers, not again Sisters!

Everyday, we have to strive to raise our awareness of the many chains, traps and pitfalls that are thrown before us by the Down-Pressor.  The corporations want us to be in debt.  The more indebted we are, the more we support and further the system of linear consumption that the corporations thrive on.  We have to see the chains before we can break them asunder.  I urge you Brethren, see the chains for what they are and strike a blow! 

Remember our mission:  Freedom through Reduction of Personal Debt!