A lot of people are out of work and under financial stress. Others have gotten sick or behind on payments. Some don’t make enough to pay all of their bills. There are millions of others who choose not to pay. They consider it unimportant, don’t feel obligated or just don’t care. Ignoring the unpaid bills is a colossal Money Fail.
This is the fourth post in a series of Money Fails.
Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort
The Conscience of a Deadbeat
Have you ever gone out to eat or drink with someone who always shows up with no money? Have you ever been hit up for an emergency loan by someone who is short on the rent or needs a car repair? These are classic signs of a serial debtor. Their financial lifestyle is based on using their friends and coworkers as an emergency fund. They value money over friendship and convenience over integrity. Past loans are quickly forgotten and the next emergency brings a search for a new friend who will lend money.
I had someone show up at my apartment on vacation claiming to have lost their wallet. Normally, I take people at their word, but this person owed money to everyone we knew. She cleared customs and got on a plane, so I assume she had some form of ID. When we lent her $150, I considered it a gift, instead of a loan. I knew she wouldn’t pay us back and she didn’t. This is the mindset of someone who shirks their debts. They have no problem lying or taking money from others. They feel entitled to money that doesn’t belong to them.
Borrowing without repaying is a lot like stealing.
The Lifestyle of a Debtor
Being heavily in debt is about as close as a person can get to modern day slavery. Much of their future income goes to service the debt, which leaves little money to enjoy for themselves. Even after the payments are made, the debt often grows under its own interest and new spending. It can seem nearly impossible to shed the burden. Some debt, such as tax liens and student loans, can’t be discharged in bankruptcy. So, they can literally follow someone to the grave.
Here are some of the degrading things debtors face.
- Wage Garnishments
- Subprime Credit Rating
- Harassing Phone Calls
- Lawsuits and Judgments
- Collection Agencies
- Foreclosure and Eviction
- Fines and Repossession
Ignoring debt only makes it worse.
Making Wiser Choices
How do people eliminate their debt?
- File for Bankruptcy
- Refinance with Home Equity
- Transfer Balances
- Debt Management Services
All of these popular options have one bad thing in common; they don’t change the spending habits. Unless someone lost their income, got divorced, experienced an illness or suffered a catastrophe, they probably spent themselves into debt. Unless the spending problem is addressed, debt will always be a problem. Even worse, most of these options don’t eliminate the debt, they only shuffle it around. This is more of a problem than a solution.
Shuffling debt is not the same as paying it off.
Taking Control of Debt
When it comes to paying off debt, the important first step is accepting personal responsibility. Every excuse or denial allows a reason to avoid dealing with the debt. Even if the bank changes their terms and raises the interest rate, they aren’t the ones who borrowed the money. They aren’t the ones who need to pay it back. When Citibank did this to me, it made me so angry I decided to stop doing business with them. So, I cut up their card and paid it off. I realized I had become too comfortable with the debt and allowed them to take advantage of me.
Blame is the opposite of responsibility.
Tasting Sweet Success
Nothing is quite as empowering as paying off a large amount of debt. I have done it and I can say with all honesty, it’s an amazing thing. It’s hard to describe how it feels to make the final payment on a debt that once seemed insurmountable. It’s like climbing a mountain, winning the lottery and unshackling chains, all in one moment. It took a dedicated effort over many years, but it was well worth it. I only wish I had of avoided that debt in the first place.
We hold the power to eliminate our debt.
The Bottom Line
The bottom line is that a debt is a responsibility. Whether someone owes a bank or a friend, their willingness to pay it back is a sign of character. Their care and caution to stay out of debt is a sign of intelligence.
“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt.”
Henrik Ibsen – Norwegian Playwright
This post was featured on the Carnival of Personal Finance over at Beating Broke. If you aren’t familiar with the Carnival of Personal Finance, you need to check it out. This post was selected as the Editor’s Choice.