Letters to the Editor
-
Denial
Have your friends over to watch the documentary "Maxed Out." It covers a full range of subjects related to debt, including: how the credit card industry has evolved to where predatory lending is the norm, and how collection agencies operate. It's something every young person....no, just every person, should see.
There's also a "Frontline" documentary, in my Netflix queue, that has a title something like "Can you save for your retirement?" or something similar. The Netflix reviews make it sound pretty thorough and interesting as well. I am sure it would open your friends' eyes with some good, hard facts and insights.
Saving money is like water or energy conservation: It isn't just about what you bring in, it's also about what you spend. My parents were both pretty poor, working-class people, and I was taught early on that value is not in how much something costs, but in how useful it is. Most things you spend a lot of money on aren't really that useful, other than maybe giving you a nice feeling. But you can learn to get a "nice feeling" just as much from getting a good deal, or not investing your sense of happiness in "things."
For $100 I could go buy a really, really nice shirt at Nordstrom's. Or, I could go to some thrift and clothing-resale stores and, for the same amount of money, probably get 10 really cool shirts (assuming I am diligent and have a good eye for unusual fashion, which I don't, but I have friends who do). That's the sort of thing a young person needs to learn, and an old person needs to re-learn. It's a lesson that will keep you out of the poorhouse.
People who are in debt really ought to go into crisis mode. That means eliminating all unnecessary expenses, getting 2nd jobs if possible, or bucking really hard for promotions and bonuses if they do have real careers. Being in debt should send up a huge red flag for any sensible person. It is not an acceptable lifestyle to have to play constant shell games with your money (or lack of it).
Needless to say, it is unfortunately the example that our government sets for us. The national debt ceiling keeps getting raised by Congress to pave the way for Bush to borrow more money from China in order to fund a losing war. The resulting inflation from the shrinking dollar, higher oil prices, higher staples, outsourced economy, lowered interest rates and depleted middle class means that even those of us who save money get less value from it.
One more personal anecdote: I used to have a girlfriend who was badly in debt, and I essentially read her the riot act, telling her I couldn't have a relationship with her if she wasn't busting her ass to get out of debt. (No way would I every consider marrying a woman whose bad money skills were likely to drag down my finances.) She got that 2nd job, worked hard, and paid down almost all of her debt. She was really, really happy, proud of herself, and I felt like even though I had initially made her upset by being a hard-ass with her, it was worth it.
Unfortunately that lesson was short-lived. Her parents were debt-ridden spendthrifts, and their example was much stronger than my own -- especially after we broke up (for other reasons). She proceeded to accrue nearly three times the credit-card debt that she had when I had started dating her. I'm so glad I dodged that bullet.
-
What friends are for
You can watch your friends do a slow dive off the cliff, but you can't stop them from taking it.
They entered into adulthood with all this debt, and it is up to them to get out of it.
You're not their Mommy or Daddy, not the bank, and you're not going to be responsible for their life collapsing.
Let them go through the hell that is waiting for them just around the corner by themselves.
Growth is only done personally-when they hit bottom you can only help them sort it all out.
To do more is to take on responsibility that you don't want.
Be ready, though, with phone numbers of a bankruptcy lawyer, credit card counselors, and debt management people. Sounds like they're going to need those very shortly.
-
if there is one thing you do not discuss amongst friends...
It's money. Your friends are adults and more than capable of making their own decisions, even if they are bad ones. Moreover, money can ruin freindships, and drive wedges between even the most well meaning friends and family. Step into the fray, and sooner or later you will be loaning money to your friends, all with good intentions. They won't pay it back. It always happens that way, and you will start to resent everything you have done for them. Soon, you won't be friends. If your friends ask for your advice, give it, but only to point them in the direction of debt relief, or a bankruptcy attorney.
-
Show rather than tell
No one responds positively to the Concerned Look and the Carefully Measured Tone. It's just annoying - especially if the well-meaning friend is right.
Instead, make a point of getting together with your friends in situations that don't demand conspicuous consumption or the use of expensive toys. Suggest doing things that you genuinely enjoy, such as free concerts or day hikes. Don't get ridiculous and do things you wouldn't normally do. ("Say, let's all go to the diner and order cups of hot water. Then we can add catsup and make tomato soup!") But you might find that it's natural to say something like, "Oh, we started doing these Sunday picnics when we were paying down our credit card debt and swore off restaurants. Now we just enjoy it." If your friends are that young, they may be looking around for models of what a happy life together looks like - especially if they picked up bad money habits from their own parents.
-
I think I might be the only one...
...who doesn't think this is such a big deal. I mean, financial disaster IS a big deal, but it is treatable and rarely fatal, and in fact can ram home a lesson with a force and power that your words, no matter how well intended, just can't have.
Let me explain. I am in my 40's. All of my life I have worked, and worked, and worked. Often harder than my peers, more hours, and all the rest. I loved work, and I instinctively avoided debt (bad parental example). I had a succession of good jobs, owned my own home, had no debt at all except my mortgage, a decent vehicle that was paid off long ago, and one credit card that had no annual fee and that I paid off every month. Not a great deal in savings, but enough for any short term crisis (3 months worth of living expenses). My clothes are good but old, my furniture was clean but crap handmedowns, and I didn't take vacations or drop money on non-essentials. (It took me two years from the time I first considered buying a food processor to actually get one: that's how much I mulled over non-essential purchases.)
Fast forward, I lost my job 2 years ago this December. A bad job market plus a personal disability kept me from any real employment. I lost my home to foreclosure (did I mention the house fire?), all of my possessions, all of my credit along with my perfect credit score, all my savings, everything except for what I could cram into a small storage locker and into the back of my car to go borrow a bedroom from my mother. I am currently going for Chapter 7 bankruptcy (pro se, because I can't afford a different fool) and my retired fixed-income mother is loaning me the $299 filing fee. Two years ago, I had perfect credit; today I couldn't borrow lunch money.
Because I tried so hard for so long to keep everything together, and *looked* and *looked* and *looked* for a job, when everything fell apart I was just devastated, and am now on state relief for psych meds through a Voc Rehab program where my mother lives so I don't kill myself before I can get back into the job force. This is my life. Oh yeah: that and my mother has digital cable. Yippee.
The point of this sad story (and NO, I don't want your pity) is that I have reflected many, many times over as I was desperately struggling to find work, trying to hold it all together and waiting day after day to be put out of my house, that instead of working, scrimping and saving the last 20 years, I could REALISTICALLY have charged up any damn thing I liked. I coulda had flat screen TVs and Alaskan cruises and debt of all sorts flying out of my ass, smoked a kilo of weed, and achieved the same financial and emotional totals. I would still be homeless, bankrupt, and mentally unstable. This is fact.
In the end, all that my careful planning bought me was an extension of agony: because I kept thinking I would find work and that I could somehow make it until I did, I lasted over a year with no income before the boom fell. If I had been in your young friends' situation, the boom would have fallen much faster and I would have suffered much less. You cannot know what it is to wake up day after day after day, waiting for the knock on the door when the sherriff's deputy comes with the foreclosure notice, or the knock after that where she has the eviction notice in her hand and tells you that you have 48 hours to get out. (Not that you have any money to move with or anything; it's putting plastic bags in cars and sympathetic friends quietly slipping you a $20 or two to help out.) Like I said, you cannot know this unless you've been through it.
There are many people who preach that this scenario could never happen, and two years ago I would have been one of them. But today, I am preaching a different tune, and that is this: live your life. Don't think that you can guarantee anything with money in the bank. Good planning may possibly increase your odds of getting through disaster intact, but it can just as easily add to your difficulties by making you think you can do it all when you can't.
You can never guarantee a thing in this life. Pay your rent. Use credit as responsibly as you, personally, are able to manage. Keep your debt down if you can. ALWAYS pay your taxes. But when someone gives you a candle, burn it; don't save it for a special occasion. When someone gives you a nice dish, use it. Candy? Eat it while it's fresh. If you want to splurge on dinner, go splurge on dinner.
If your debt becomes too much for you to manage, deal with it honestly and openly, and don't waste time hiding from it; that's what makes it all worse. Don't get all guilted up about it either, hyperfocused on either cash or debt: money is a lot but it still isn't everything. Just do your best.
Why do I say this? Because whatever financial mess you get yourself into (provided it isn't criminal or tax related) cannot POSSIBLY much worse than mine. And all I did was lose a job. This, or any equivalent scenario, can happen to anyone, no matter how well protected. Disaster comes in all shapes and sizes.
Given the choice to do it all over again and wind up here at 40? Without a second's hesitation I'd go down the vacation-bling-threads-wheels-megadebt-and-a-kilo-of-weed road instead. No doubt whatsoever.
Best wishes to your friends, LW.