Hack the Banks – Chapter 2: Start With Nothing

Before I start talking about the strategy itself there’s another important detail about my personal starting point on this journey: in financial terms I had (almost) nothing.That’s the perfect starting point because when you start with nothing, there’s nothing left to lose.

I lived in a rented apartment. I had no savings account. I owned nothing of real value but two aging cars that had both been given to me by friends and family. On the upside, I wasn’t fighting a mortgage and I had no student debt.

This complete lack of assets may seem like a bad thing for somebody in their 30’s but in the bank hacking game it’s actually exactly where I needed to be. If I had owned part of a house or had other assets worth real money then the banks would have had something to take from me. Since debtor’s prison is no longer a reality (Unless you owe money to the IRS. Pro Tip: Don’t owe money to the IRS) the one thing that banks can do to you is take your stuff. Since I had very little stuff their options to take it or put liens on it weren’t plentiful. Nobody puts a lien on an 8-year-old microwave.

Let me get on my soapbox here for a moment: my generation needs to completely ignore the older folks who tell them that rent money is money wasted. What a renter is buying with that extra cash is career options and flexibility. If you rent you can go where the jobs are. If you are a renter then housing market crashes have a lot less impact on your financial well-being. As a bonus, you don’t have to worry about termites, major appliance malfunctions or zoning laws because those are likely your landlord’s problem. Most importantly of all , for our purposes,  the banks can’t come take away your rental.

Having very little of your own stuff can admittedly be a pain. In the twelve years that I’ve been a renter I’ve yet to deal with a landlord that wasn’t a bit weird on some level. Some property managers have been outright crooks and others have been just a bit kooky. Some chicanery from property managers has even lingered on my credit report — that’s the price you pay for future freedom.

If you’re a homeowner or if you own fancy cars or other real assets then these next few chapters may not be much of a help. But for those of you who own nothing like I did then you’re exactly where you need to be.

The next time that one great-uncle gives you a condescending talk about how you’re throwing your money away on renting and you need to be buying a house, remember that he’s completely underwater on his own mortgage and going to have to replace his roof and central air in the next few years. Then feel free to smile quietly to yourself.

Hack The Banks – Chapter 1: The Hole


Every journey has a starting point. My starting point for getting out of debt was the bottom of a very deep and very dark hole that my life circumstances had been digging for a decade.

There were basically two options open to me when I found myself in a hole of my own making.

1. I could can pretend I’m not in a hole and continue digging.

2. I could open my eyes, tell myself the truth about the hole I’m in, and make a plan to get out.

Like a lot of other people, I took option 1 for many, many years and it cost me dearly. Life is too short to spend hours every month working to pay the minimums on credit card balances that never really seem to get any smaller.

Then the crash of 2008 happened I had to take a pay cut as my government contractor employer lost business. The cost of my health insurance started climbing with no end in sight. Suddenly I missed one credit card payment and then another. I scrambled to make them up but with fees stacked on top of a skyrocketing interest rate it was a losing game.

Once I decided to get the truth about the hole I was in, my first step was to get my credit report (you can read more about the free service I used here) and make a realistic assessment of my debt-to-income ratio. It wasn’t pretty.

For starters, there were over $5000 in debts that I didn’t actually owe. A broken lease had led to a landlord claiming that I owed six months in rent when in reality I only owed just under $300. That was an easy win through filing a dispute that was resolved in a few weeks. The rest…were not so easy.

After doing what the banks are hoping you won’t do (some simple math), I realized that unless I won the lottery or found a big bag of money in a parking lot, there was simply no way to pay back the full value of what I owed short of making myself the indentured servant of the banks for the next 20 years.

The usual “financial guru” advice of clipping coupons, brewing my own coffee, or brown bagging my lunch to work wasn’t going to be enough. Neither was working an extra job or three. Something far more drastic was going to be called for.

I took a long, hard look at the hole I was standing in. Then I made a choice.

Hack the Banks – Introduction

Everything in this series of posts is true but that doesn’t mean it’s necessarily helpful.

I’ll say at the outset that I’m not a financial guru, spiritual adviser or sage of any kind. What follows is just the story of some choices that I made and what happened as a result.

Your results can (and probably will) vary.

It was only thirty short years ago that people still worked for themselves. That generation of people went to jobs every day, made money, and then spent that money on things they owned themselves. Financing was reserved for really big stuff like homes, cars, and businesses. Even when I was in elementary school, credit cards were a rare commodity and nobody defined their value as a human being by a single number.

The one-two punch of consumer debt and the modern FICO score came along to change all that, transforming a broad swathe of society into a class of serfs by addicting the masses to the drug of easy credit and then threatening them with shame and disgrace if they failed to maintain usurious payments at ever-climbing interest rates.

This change has spawned a brand new set of anxieties:

Who’s going to respect a guy with a 500 credit score?

Am I going to lose out on that dream job if the employer sees my financial history?

Will I never own a house if I start missing credit card payments?

These used to be my real life worries. After using easy credit to pay for a toxic combination of medical bills and salary cuts, I spent the next decade running on this high-interest treadmill, working myself to exhaustion with nothing to show for it but a steadily growing mountain of debt.

By the end, just paying the minimums took every penny I could find. I was forced to take money from family members and gracious gifts from near-strangers. I even stole money from my kids’ birthday cards to pay for gas and milk all while working 2 and 3 jobs at a time.

During this personal recession I read dozens of books and articles on getting out of debt written by some of the leading experts you’ll hear on the radio or see on bookstore shelves. Their advice was completely useless to me for two reasons:

1. I could not make cash fast enough. Not even when my kids were uninsured and I’d been wearing the same thrift store shoes for two years.

2. All of their advice plays by the rules the banks and corporations have crafted to keep consumers in perpetual debt.

That second point was a great source of motivation in what follows in this story. When the banks themselves made bad choices (and some might say committed outright fraud), the government was there with $700 billion in taxpayer-funded bailout money to make sure that the bank CEOs were in no danger of losing their yearly bonuses. It does make me wonder where the bailout for me and the other deeply indebted citizens might be.

After all, the average household in the United States is in about $15,000 of credit card debt — an amount that guarantees that every week there are thousands and thousands of hours being worked by people across the nation just to pay outrageous interest rates to those same bailed-out bankers. If that’s not the definition of serfdom then I don’t know what is.

Knowing all this, I decided to go a different route. I took my shame and fear of being a deadbeat and I put it in the garbage next to my credit card statements and collections notices. I’m not a financial professional and I can’t make official recommendations about how you should treat your debt. What this book contains are the strategies that are working for me — and ones that may not necessarily work for you.

If you go the route that I took it’s going to take some courage and a thick skin. You’ll be harassed and looked down on. You may have to change your phone number. You may have friends and family question your morals and your sanity. But at the end you may just have something that hasn’t been seen in almost thirty years. You might at last be free.