In Debt We Trust

June 26, 2017

When I’m in the car, I listen to CNN, so I get to hear the same ads over and over again. In addition to learning that Tommy John men’s underwear makes a guy’s junk feel all warm and cozy (I wouldn’t know), I also know that Madison Reed hair color will empower you for only $30.00 a month (note to listeners: Amy Eric looks nothing like you think she will), and that ZipRecruiter takes the hassle out of hiring quality employees. Whether it’s the Third Love bra ladies (Heidi Zack and Rayelle Cohen), Scott Tannen of Boll and Branch luxury linens (thank god his annoying wife, Missy, who sounds much like an anxious Chihuahua, no longer appears in the radio spots), or one of the ten thousand mattress companies that deliver right to your door (like, how is that even possible?), I’ve pretty much got clothing, personal care, and household items wrapped up. All because I listen to CNN.

What I’ve also learned from CNN’s sponsors is that if you don’t feel like paying your taxes, or those pesky credit card balances, you don’t actually have to. After you’ve bought your hair color and luxury linens and pee-pee nestling underpants, you can hire some credit agency, or some tax relief company, and with a flick of the wrist, poof! Your liability dissolves, and you can go on with your life of sleeping on really great mattresses in a bra so comfortable you’ll forget you’re wearing it.

Now, if you know anything about me, you are aware that I am a bleeding heart liberal of the most earthy-crunchy variety (excepting that I don’t like granola, or trail mix, or raisins – particularly raisins. I hate raisins.) I do yoga. I meditate. I read the writings of the Dalai Lama and try to live his teachings. I encourage others to look for the best in people and, when confronted with the assholes of the world – the person who cuts you off in traffic, the lady who jumps ahead of you in line, the sales clerk who is rude – I tell myself that maybe they are having their worst day ever, and I try to find something nice to say to put a smile on their face. It doesn’t always work.

I regularly tout the crises we face throughout our lives as marvelous opportunities for personal growth. I exhort others to practice peace, respect and compassion to such a degree that some wonder if one of my children could just hit me over the head with a shovel already. I’m a sunny and optimistic person who believes in universal affordable healthcare and the idea of America as a welcoming place of love and tolerance for all, where our diversity is our strength, and our strength is our shared commonality of love of country.

Bottom line? I’m a pretty forgiving, compassionate sort who is willing to let a lot – A LOT – slide when it comes to how other people act and what they do (unless they are toxic negative horrible narcissistic people, and then all bets are off), so what I’m about to say may come as a shock, and you may want to hold onto your underpants:

Pay your damned bills, people. Pay your damned bills.

At the risk of displaying some serious privilege here (and feel free to call me on it if I am), if there is one thing I cannot tolerate (besides being interrupted – that really gripes my cookies), it’s a lack of personal accountability, particularly when it comes to one’s financial obligations. That makes me tear-out-my (not Madison Reed colored) hair, throw a shoe at the wall crazy.

I’m not talking about people who find themselves in the middle of a crisis they could not have planned for – a sudden layoff, a catastrophic injury or illness, say – and I am a firm believer that personal bankruptcy laws are an important resource for those who have been confronted by unexpected financial hardship. I’m not even talking about people whose credit card balances largely reflect predatory interest rates and penalties, or those who have been out of work so long they are forced to pay for basic necessities with plastic. I’m talking about people who use their credit cards to buy things they don’t need and can’t afford in the first place, people who refuse to live within their means, people who spend every penny they make not on necessities but on things they could do without, and believe it or not, you can, in fact, do without a 56″ screen television or a Michael Kors handbag.

I have compassion for those who are experiencing real financial hardship not entirely of their own making, but let’s face it: The vast majority of consumer debt that is forgiven was not incurred paying for medical bills or diapers; in most cases, it was the result of a simple lack of discipline, and I have some first-hand experience to back that up: As an attorney arbitrator, I have heard many, many credit card cases in which it becomes crystal clear that the debt at issue was incurred on dining out, clothing purchases, vacations…you name it. Some of these same consumer debt defendants show up for their hearings driving late-model luxury cars which they backed out of the garage of their beautifully landscaped single family home. Don’t believe me? Hang out at the Lehigh County Bar Association, where such hearings are held, and see for yourself.

When it comes to not paying taxes, moreover, I am even less tolerant. Remember when you got your first job making $2.50 an hour, and after working 20 hours, you thought your paycheck would be $50.00? That’s when you learned about taxes, and FICA, and all those other withholdings that someone takes out of your paycheck every month, whether you want them to or not. Responsible Americans pay their share – even for things they might not like paying for (Mitch McConnell’s salary, for example), and when the amount they’ve withheld throughout the year turns out not to be enough, they write a check for the balance. Then they drink an entire bottle of vodka. That’s called being a grownup.

Those earners who don’t have withholdings taken out – the self-employed, the independent contractors, etc. – have to be responsible in setting aside enough of their earnings so that when April 15 rolls around, they can pay the taxman, and the vast majority do. Turns out, however, that some people don’t, don’t get around to actually filing a return, or writing the check that entitles them to drink an entire bottle of vodka. They just don’t pay their taxes. And I’m like, that’s a thing? I didn’t think that was a thing.

Apparently, however, you can not pay your taxes, sometimes for quite a while, before there’s any dire consequences. In fact, if you never apply for credit, if you don’t keep large balances in your bank accounts, and if you don’t own anything to which a lien could attach, you could potentially avoid paying taxes pretty much forever. Yes, I know that they eventually got Al Capone, but unless you’re running an organized crime syndicate, you’re probably okay. Which means that those of us suckers who dutifully set aside a portion of our wages or else assure that our withholdings properly reflect our income tax liability are paying not just our share, but those of a bunch of deadbeats as well. Thank rankles me, and I don’t think they should be let off the hook.

I certainly recognize why credit card companies and the IRS are willing to negotiate with debtors – they’d rather recover something rather than nothing, and it’s cheaper to work things out than to pay for attorneys to file suit and then execute on the debtor’s assets – if there are any, that is. It’s a business decision, not a matter of principle for the creditors, and anyway, credit card companies know that those consumers who end up having some or all of their debt written off will be back, sooner rather than later, applying for credit and running up their balances again, thereby generating profits in the form of interest payments that line the pockets of bank CEO’s. Banks are willing to take less now because they know that people rarely change their spending habits and that the American consumer will not be deterred in the never-ending quest for more stuff.

And that’s part of the problem: While I don’t have any statistics on this, I think it’s pretty much a given that in providing “credit relief,” banks are essentially enabling bad habits and a lack of fiscal discipline that will likely be repeated in the future, because the only way anyone ever learns how to use credit cards responsibly is by having to pay them off on their own. Ask someone who’s had their debt paid off by someone else whether or not they currently have any outstanding credit card balances (not that you would do that, because it would be really rude), and I’ll bet you a nickel the answer is yes. Credit card banks profit when consumers are fiscally irresponsible, and so those banks have no interest in rehabilitating them of their belief that it’s possible to acquire things you can’t afford without ever having to pay for them.

My annoyance that so many end up having consumer debt or tax liabilities forgiven is partially rooted in an embarrassing resentment that stems from the fact that it’s taken Michael and I a long time and a lot of hard work to come to a place of fiscal health. Medical and law school loans and a child with special needs whose therapeutic services weren’t covered by insurance created a sword of Damocles that hung over our head for years. Sure, we’re strong earners, and we have always been able to provide for our family. But at the risk of sounding like my Dad, no one bailed us out when things were tough, and the position we are in now reflects sacrifice, hard decisions, and a lot of Kraft Macaroni and Cheese.

As well, at least one former friend expressed surprised at the modesty of our living accommodations based upon her assumptions about our income, having the audacity to say to me about the home we still (and proudly) inhabit, “you guys must have a lot of debt to live where you do.” Michael and I made decisions over the years about what we thought was worth spending our money on (education, therapy services, travel when possible), that’s how we spent it, and not once did we ever ask someone else to foot the bill. Bottom line – you buy it, you pay for it, period. There is no free lunch. Death and taxes. You get the idea.

There’s a larger issue, however, one that’s less mean-spirited and more global: When people don’t pay their credit card debt, it’s bad for everyone. Today, the average household with credit card debt has balances totaling $16,748. https://www.nerdwallet.com/blog/average-credit-card-debt-household/ This debt reflects, at least in part, the fact that, since 2003, the cost of living has outpaced income growth by 2%. https://www.census.gov/content/dam/Census/library/publications/2016/demo/acsbr15-02.pdf For most Americans, this discrepancy has meant not belt-tightening or doing without, but, rather, more credit card debt.

You may say, who am I to sit in judgment of how others spend their money? Perhaps I’m not, until it’s you and me who end up paying for it. At its worst, large-scale unpaid credit impacts the economy even for those who pay their bills: Remember when the housing bubble burst in 2008, and all those banks had to be bailed out? Guess who paid for that? The American public – those who pay their taxes, anyway. We also pay for it in the form of higher interest rates and more stringent credit/lending criteria – anyone who has tried to get a mortgage in the past eight years can tell you that gone are the days of low down-payment adjustable mortgages (which is probably a good thing), and even people with excellent credit, reliable income, and substantial assets are reporting that it’s more difficult than it used to be to get approved for financing of any kind.

I wish I believed that more stringent restrictions on credit would reduce the amount of debt that Americans take on, and would encourage them to be more mindful and responsible in their spending and saving, but they won’t, because we are a society that thrives on immediate gratification – I want it, I have to have it, I get it. While many are aggressive in their retirement planning, few maintain a good, old-fashioned savings account – not one that they feed very often, anyway. According to a Federal Reserve report, nearly half of Americans couldn’t cover a $400 emergency expense without borrowing the money or selling something, and of those who have savings account (roughly one in five do not), almost 30% report having a zero balance, and 62% have less than $1,000 in savings. https://www.fool.com/retirement/general/2016/03/11/the-average-americans-saving-habits-9-scary-statis.aspx. Which is why they rack up credit card debt. And so on, and so on, and so on.

We have to stop living on borrowed money, both as individuals and as a society as a whole. I won’t get into the whole federal deficit and its ramifications, but it’s not good. There are plenty of tips to avoid creating mammoth credit card balances (keep an emergency fund, pay your balance in full each month, etc.) https://www.thebalance.com/avoid-credit-card-debt-960043, but what it really comes down to is this: If you can’t pay for it with cash and it’s not an emergency, you don’t need it and can’t afford it, so don’t buy it and stick the rest of us with the bill – we all have enough of our own. I’ll happily contribute to universal healthcare for all by means of my tax bill; I’ll fork over money to fund the arts, pay for schools, and underwrite scientific research, and if a few extra dollars to Uncle Sam would ensure that no child went hungry, ever, you could sign me up for that, too, but I’m not paying for your trip to Disney, your Home Shopping Network addiction, or your Franklin Mint State Bird spoon collection. Pay your bills, pay your taxes, and stop buying into the notion that more things will make you happier – they almost never do.

I’m going to retreat into my Grumpy Troll Cave now and scarf down some Milanos, which will no doubt return me to my normal bleeding-heart Mother Wendy self in no time, and then I’ll go out for a walk in a new pair of Target socks that nestle my toes and make them feel all warm and cozy. Milanos – $2.49. Six-pack of athletic socks – $8.99. Fiscal responsibility – priceless.

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