|Gary Foreman is a former Certified Financial Planner (CFP) who currently writes
about family finances and edits
The Dollar Stretcher website
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I just finished reading the letter from "Tina", who was
upset that she was being "harassed" by a collection
agency. Could you address the other angle of this? I'm 32 and I
guess I have a big chip on my shoulder about people who run up debts
and are then outraged that they would have to pay it back.
I scrimped and saved in order to
pay off my home mortgage and live debt free currently. In the past,
I've had acquaintances who made me feel cheap because I was driving
a 10 year old car. I've been called cheap, tight and stingy when I
made dryer sheets, opted to eat at home rather than out, and made
Christmas gifts or purchased them on sale throughout the year. It
was some of these same acquaintances that lived penny to paycheck,
asked to borrow money and complained that they couldn't afford a
gallon of milk for their children.
I want to scream when I hear them complain that creditors should
"get off their back". Maybe they shouldn't have gotten
into debt in the first place! Everyone makes mistakes, but I hear
too much of this. Please address this side of the coin as well.
Nancy makes an interesting point.
Living within your means isn't always popular. Sometimes people
imply that you're less of a person for being frugal. And, that makes
it especially hard to listen to their complaints later when the
bills come due.
There's more than just hurt feelings
involved. Approximately 1.5 million bankruptcies occurred in the
past twelve months. According to bankruptcy.org "the average
American family loses about $400 annually to bankruptcy
filings". And that doesn't include the other expenses we all
face when people don't pay their bills
Statistics from The American Banker's
Association show that 2.4% of all outstanding loans and over 5% of
all credit card accounts are delinquent. That means that everyone
who borrows money will pay slightly higher rates to compensate for
the increased risk to the lender.
Nancy's point is valid. People should
be expected to live up to their obligations. When we borrow money,
we agree to pay it back within a certain time and generally with
interest added. We don't have the right to break that promise just
because it becomes inconvenient later. And whining about it isn't
fair to the people around us.
However, that doesn't mean that
creditors are allowed to abuse or harass debtors. Federal law
prevents that. So if a collection agency is truly abusing someone
they can be stopped.
But we would probably also all be
happier if people considered the financial effects of decisions they
make. Divorce is an example. Many people would argue with me, but
studies are pointing to divorce being a major cause of poverty.
Take, for instance, a study done at
the University of Michigan. It showed that household income for a
family with children went from $43,600 before divorce to $25,300
after the split. That's a lot of money to pull out of any family
budget. Pretty hard to avoid financial trouble down the road.
I'm not saying that someone should
stay in an abusive relationship. But in many cases marriage
counseling could be a very good financial investment. In any event,
considering how your finances will be effected would certainly be
One thing that Nancy and all of us
need to remember is that there are different reasons why people are
in financial trouble. Many do get behind because of foolish
spending. But that's not the case for everyone.
People who provide non-profit credit
counseling tell me that about half of all the debtors who come to
them did create their own problems by simply spending more than they
earned. But, they also say that the other half generally were doing
fine until a medical emergency or other unexpected crisis threw them
While we want people to be
accountable for their actions, we also want to make sure that we
don't harden our hearts to everyone who struggles with bills.
There's a temptation to dislike people who complain about situations
that they appear to have caused. But it's bad for us to be without
And, expecting responsibility and
acting compassionately aren't incompatible. In fact, suggesting ways
that people can spend less or make more will probably cut down on
the whining and might help them to solve their problems. Those who
aren't interested in hearing possible solutions are probably chronic
complainers that can safely be ignored.
Should Nancy speak up? Only she can
decide whether a relationship is strong enough to handle that. But
it is tempting to tell someone who complains about bill collectors
that 'cheap' methods could help solve their problem. After all, true
compassion is helping someone out of a bad situation. Nancy could be
holding the key to their freedom.