Updated: May 20, 2018
I still remember the chills I felt when I heard it for the first time.
I was flipping through the channels and I heard the words “Sub prime borrowers to potentially cause systematic credit crisis”. Huh?
First..whats a sub prime borrower and secondly what is a credit crisis? Noone taught me finance yall..I just knew how to generate cash…and recently how to create a goal strong enough to influence me to save it. However, where I came from, I knew nothing nor was I ever taught anything about the art of investing it. I started to think about everything that had been going right recently.
My stocks were going up (even though I had no real idea how it all worked) and people were lining up ever Saturday and Sunday at my complex’s main office to try and purchase the luxurious units to the right and left of me at higher prices than I had paid. How could this potential systematic whatchamacallit be true?
The first thing I did which removed a major matrix plug from my neck was read “Rich Dad Poor Dad”. I’m lying…back then “I didnt bes readin” like the two niggabots from Transformers 2. I listened to the book on CD. I was bombarded with new concepts of one’s home not being an asset but instead a liability. I found that you can learn just as much from your poor dad as you can from your rich dad. I also learned about society and the proverbial “rat race”.
It was all such an awkward concept but it made me start to think. I actually HAD BEEN taught how to invest ALONG WITH how to spend my money. Society/Consumerism/Marketing/Advertising/Even the “long reaching tentacles of slavery” had been my professors. And I had never even hired them. What was even more compelling was that for the first time, I had started to realize that everything I had been taught was in fact a lie. I then watched a movie that will completely wake your ass up about who profits off of this widespread ignorance, how they do it and most importantly WHY – The Matrix.
It was the end of 2007, the recession had officially begun and I was fed up with consumerism. I was upset at what I voluntarily had been setting myself up to contribute to…the continuation in the poisining of a people. I resigned from the advertising agency and dived head first into all things wealth creation…all things investing. Now at this point, an interesting thing happened. The world was going down the toilet..yet I was making 13k a month from trading. 13k while many of my friends were talking to me about how they were deep in debt and couldnt even find work.
Even though once I dug a little deeper, I found that for many of them, using whatever money they DID have, still spent it on things like iPods, filling up their SUVs with $4 gas to make it to the club every weekend or at Nordstroms on shoes/handbags. Umm…is this what its like looking at the world from outside the matrix? Whatever it was, retail stocks were still going UP based off of America’s addiction to spending. And whatever stock sectors weren't going up, they were sticking in a tight trading range allowing me to keep flipping them as if they were going up. I couldn't be the only one to benefit from this, I had to educate the troops.
November 2008. You may be expecting me to say, the month the market crashed. No no no no no. This was the single best thing that could have ever happened. I had amassed an army of first time and newly awoken investors…all now with the potential to join in the single most powerful creation of wealth in American history.
At the same time, I was understanding my role in rescuing people from the grips I was previously been held in: credit, debt, impatience, reckless spending, living outside of my means and wanting to impress people that I really didn’t care about (read: hoes). Without the elimination of these things, they could never even GET to the POINT to where they could invest . And even if they didn't WANT to invest, they could never GET to the POINT of a stress free existence. And from what I had found, a life with awareness and without stress is the only thing worth fighting for. Everything else we strive for..or stress out for…becoming the next Diddy..or Donald Trump…even Barack Obama…just to justify their perceptions of what “success is” is.. is not the key to happiness. What happens after they reach these tentative goals? Do they keep going? A lot goes on behind closed doors you wouldn’t believe. Are they happy? Are they ever satisfied?
This time, its war.
After someone is unplugged, the hardest thing to come to grips with is the enormous responsibility they now have in utilizing that truth – whether it be for good or for evil… whether it be for the general public, your own life or a combination of both. Needless to say, I honestly toyed with the idea of taking the newfound truth I had stumbled across about how the world really worked and then find ways to manipulate it to my advantage. I was now aware that excessive consumerism and widespread use of credit was something we had been conditioned to accept since birth. But I was even more curious about whether or not I could become slick enough to not be suckered into its traps that claim so many others.
Back towards the beginning of 2008, my score had continued to rise due to the house I had recently “bought”. I soon started getting 0% apr Washington Mutual credit cards in the mail. Up until then, most of the credit cards sent to me were still the ones they send you if you have “bad credit” – those with $200 processing fees, secured cards and those with extremely high APRs. After closely reviewing the Washington Mutual 0% apr card, and telling myself I was now strong enough to game the system, I did what any person who’s one foot in and one foot out of the matrix would do- I opened that bitch up!
Within a matter of weeks, that led to me being sent 0% Juniper cards, Capital one cards, Crate & Barrel cards etc etc etc. I was on a roll and I was feeling like a true Jedi debt warrior who knew how and was about to game the system. I even took on a part time job in a stock broker training program with Wells Fargo to further learn the ins and outs of investing and the ins and outs of the credit/lending industry. It was there I learned and was encouraged to play the spreads each month. This simply means I would charge a few things I figured I would be buying anyways (groceries, gas, maybe an xbox..a new stereo…some furniture..oops) and pay them off before the 22 day grace period expired. Even if I slipped up for a month, since I was paying no interest on many of the cards, I was basically using the banks money for free until I decided to pay them. By doing so, during the grace period, I could put the cash to work in the stock market instead of “wasting it” paying typical monthly bills with it. After all, I believed the purchases i placed on these cards were the typical expenses I would have incurred anyways throughout that month, so why not do it? In addition, the worst case scenario was to pay each card right before the 0% introductory period ended in a few months.
Once the grace period deadlines came around, I never paid them off. I figured that since I was now so smart and could game the system, I’d just swoop in before the teaser rates expired and dead the balances.
I rolled my ass right on past those deadlines as well.
It was all fun and games until the interest rates shot up to 19.99 percent in the beginning of 2009. Also at the time, the stock market had continued to drop further than anyone had expected. But by doing so, it would almost completely take my income with it. I was now officially a typical American citizen again: officially in debt.
When managing both your and other people’s money in a declining market as your primary source of income, you have no choice but to sit around for the majority of each day in deep thought. You begin to realize you really didn’t need any of the crap you bought..especially the electronics and furniture. But hey..it was zero percent apr! And plus, I didn’t even get offered zero percent APR on the cards I got back during the FIRST time I got into debt.
The good news? It was only $8000 worth of credit card debt this time. The bad news? It was $8000 worth of credit card debt while I still had a mortgage, a car lease on an SUV, a paltry side income from a part time Wells Fargo gig and all while the economy had just fallen into a deep hole. In a normal situation I would have just taken it out of savings or sold investments to pay the balances off once the interest rates reset. But that money was the only money standing in between me homeless and me sheltered with food in my mouth.
I seriously needed to catch a break. Unbeknownst to me, I would soon realize I was about catch one and for the first time too.
By March, 2009 the Dow had basically fallen straight from 14,000 down into the 6000s.Everybody was hurting. Everybody was panicking. Everybody wanted to call it quits on their entire portfolios. All I knew were two things – what I should do and what I had to do. But did I do what I knew I should have and sold whatever investments that were still showing gains to pay down bills and beef up my savings in preparation for a world collapse? Nope. Instead, I emptied out my emergency savings, transfered it to my brokerage account and went all in.
Dangerous..stupid..idiotic decision. Never ever would I attempt to try it again.
But it worked.
Blessed/Lucky/whatever you want to call it – it turned out that WAS the market bottom and everyone who had panicked and sold were now chasing the market back up. The Dow was now on a nonstop explosion upwards. The new money I used from emergency savings was added to Apple computers and a few key solar energy names that would explode in value up 10 fold as the next few months would go on. I finally took a portion of each investment off the table and saw it as my opportunity to pay down these credit card debts. $10k in emergency savings had just turned into over $100k overnight and I was NOT about to allow myself to be in the soup kitchens of Los Angeles like so many of the stories that would flash across my news feeds. Even knowing all of this…I still wasn’t sold on the idea that I was holding a dangerous hand that could have turned really ugly if not for finding that one single, lucky streak. Yes, I still atleast partially believed in playing the almighty debt game.
Mind you, all throughout 2009 as I began teaching more and more people about investing, whether it be through Myspace, through Facebook or from meeting with them in person, I would start to get requests from people asking for me to show them how to get out of debt as well. It sounded like something that would help so I agreed. I then started posting heavily on Facebook about the debt elimination methods I was using. Yet the real goal was still to teach people how to INVEST. The idea was if I could help them avoid getting into too much debt, then they would have more money to invest. By teaching minorities how to play a game that was only reserved for wealthy caucasions, they would be able to side step the fates of their parents and make enough money to change both their current situationand their future.
It wasn’t until the initial group of people I was helping, started telling other people that they knew to give me a call, that I would sit down with one troubled girl in August of 2009. She was a recent CSUN graduate who it turns out had recently been 2 seconds away from successfully taking her own life due to her HUGE $72k debt problem she had gotten herself into. She flat out, in my own home, told me that the three weeks before she was referred to me that she had unsuccessfully attempted to kill herself.
At that very point, I would begin to realize the truth about risk/reward. I would see the big picture and realize that she was infact me, without the break I had just caught in the stock market. She did all the same things that I had done until that point – play around with 0% interest rate credit cards, purchase a house (only hers was zero down), take on years of student loans etc. She did everything except for jumping on the few winning market trades I had recently made (by the grace of God) which would get me out of debt. I began to see my future in her very eyes. I also saw the potential futures of a lot of other people I had recently consulted with in the black and latino communities. I asked myself what on earth is really worth it to ever end up in anywhere close to a position like this? Even if it doesn’t get to where you attempt to take your own life and you do somehow get lucky enough to balance out a long life of debt, is the stress really worth it? To have new cars to show off around L.A.? Designer clothes to impress people you don’t like? To buy houses that come with extremely high payments you’ll end up scrambling each month to make over the next irreplaceable 30 years of your short life?
She wouldn’t know it at the time but the anger I felt from her situation and my newfound realization of the bigger picture, would completely fuel my decision to publish a set of 5 articles under the title: “‘War on Credit’ “. These articles would also provide the basis of the book I would begin to write.
Over the days/weeks/months that followed, I would do a tremendous amount of statistical research on how debt affects various races differently in America and watch tons of documentaries on credit and debt in America as a whole (including Zeitgeist, Money as Debt and Maxed Out). With an already existing anti-consumerism stance and a now completely anti-credit stance, I was compelled to devise a plan to reduce the amount of everything materially that I owned down by 85%. Afterall I would have to fully live out what I would preach to others in the community. The hard part? One thing within that great 85% material item purge would be “my” condo I had recently purchased.
Now why get rid of “my” condo you may ask? Well because first of all, I had finally learned how to do math. The $550k mortgage I was paying on calculated to be a total of $1.3 million dollars in payments over 30 years! Even if the condo appreciated in value by double, I would still take a loss after all of those years. THEN I would be responsible for a now 30 year old house with 30 year old maintenance, increase property taxes and insurance. But most importantly, I plugged the $3,300 I was paying on mortgage/real estate expenses each month, into a stock market compound interest calculator and saw that I could have a total of $7,856,355.96 instead, at the end of that same 30 year span.
And what could I do with just the interest alone being earned on $7,856,355.96? Even if I earned a paltry 5% annually in a safe CD or government bond, that means I could live on an annual income of $392,817.79 per year. (pre-tax)
So then what could I do with $392,817.79 a year? I could live anywhere on the globe! I could rent a condo in Costa Rica for the month, then stay 6 weeks right off the water in Greece. I could buy a house a year or start 4 businesses. I could even put a large portion back into my nest egg and watch that amount grow. My options are nearly unlimited.
After months of working closely with hundreds of minorities within the L.A. area, I had all of the motivation I needed to live up to my promise and carry out my great purge. Then by July, 2010,10s of thousands of dollars worth of designer furniture, Xboxes, Harman Kardon receivers, subwoofers, designer clothes, a small amount of jewelry, credit cards, a 3 bedroom condo and a new Mazda CX-7 SUV had been either sold or turned back in to the bank.
The few things I still owned: (1) 2007 Nissan Sentra (1)16gb iPhone 4, (1) 32gb iPad, (1) 17″ Sony Vaio Laptop computer, (1) electric razor, (2) suitcases full of select clothes, (2) small boxes full of important files and one budding portfolio of stocks held online. This was every material thing I owned on earth. I was just shy of turning 30 years old. With this new beginning, however, I assured myself that the next 30 years of my life would be NOTHING like my first 30.
The few items I left that condo with.
Yes, it turned out that my credit score was completely shot from getting rid of the house and closing all the credit cards. Yet none of that mattered to me in the least. I had never felt so free in my effin life. I had never really felt as if i had the ability to do anything before that point. I also had never seen so much wealth in my own bank accounts and brokerage accounts either. Regardless, I knew that was simply paper wealth. The true wealth would come from the feeling I would get from not keeping this new found knowledge only to myself but instead by using it to end the cycle of povery first, within my own community, and then the world.
After all, this time, its war.