“The bottom line is, the deck is stacked against you from day one. If you’re smart enough to understand that and know that, God bless you; if not, boy are they going to make a lot of money off of you.”—Maxed Out

When we whip out that credit card or sign off on a mortgage, we sometimes forget that the people we’re doing business with—credit card companies and banks—want to make money. You’re paying a price for the convenience  of living a life that includes credit.

Maxed Out, a documentary from 2006, explores in depth how these businesses can and will take advantage of you. For example, consider the following story related by the movie’s director:

My favorite memory, though it’s so disturbing, is visiting a shotgun house belonging to a retarded woman and her severely retarded son (he’s 44 years old and still in 2nd grade). Citifinancial had gotten them to refinance their home, told this severely retarded guy to sign a document in big, block letters he had to copy one by one! So now they can’t pay and Citi is trying to foreclose, put them out on the street. While the mother is telling us her story, the mailman drops off a $5,000 “courtesy” check in the mail from Citibank. Why? Because she’s on their “preferred customer list.” And she laughs and tells us, “this ain’t the first one I got.” It just shows how completely out of control the industry has gotten.

Think about these circumstances and what companies like Citi are willing to do. Keep in mind that even if your circumstances are better than the family described above, you’re still at risk. Then the question becomes, what are you going to do about it?

Do you duck your head in the sand and say, “These companies are evil,” or do you take the steps to understand everything you can about what you’re agreeing to? Part of this understanding is realizing that you’re often set up to fail (e.g., offered a mortgage bigger than you can afford, misleading minimum payments, etc.).

Credit card companies want you to make only the minimum payment and don’t mind if you pay late since lucrative late fees and interest make up a significant portion of a company’s profits. Even banks, which used to show more common sense in lending, recruit employees who can sell the bank’s products versus provide objective financial advice.

You are the first line of defense in your financial life. Yes, you can bring in experts—accountants, financial planners, lawyers—to help you deal with the sticky details, but you still have to start. If you haven’t started, don’t you think it’s time you did?