This excellent essay by Steve Rhode originally appeared on the Personal Finance Syndication Network, PFSyncom. Mr. Rhode also maintains a web site titled Get Out of Debt Guy that contains a variety of good advice and information about all manner of consumer debt problems, including student loans. You can learn more about Steve Rodes here.
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Debt and Introspection Are More Related
Than You Think
by Steve Rhode
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| Steve Rhode |
Why are people victims? Why are some people always the brunt of
pranks, jokes, gaffes and catastrophes and others are not? Over the
years of helping people with financial problems I’ve observed that many
people experience not only a financial disaster event but also
difficulties in other areas of their life. Is this a coincidence or are
there underlying issues that cause us to sabotage our ability to achieve
happiness and financial success? Are some people just victims of
affairs that involve credit, debt and money? They answer is yes, but
why?
There has been little study of victim profiling and when we think of
someone as a victim the first thoughts that are present are those of
people who have suffered a terrible misfortune beyond their control at
the hands of some external event. There are people who are victims of
events and situations beyond their control.
For example, people who are randomly murdered, raped, abused, injured
or harmed, physically or emotionally. Take disorganized killers for
example, their victims are selected because of the opportunity to
carryout their act rather than because of anything unusual about the
victim themselves. A disorganized killer, as categorized by a serial
killer profile, may simply walk up to the next door they come to, ring
the bell and kill whoever answers the door. If your time is up, it’s up.
A rape victim may just have simply been the next target of
opportunity. Sometimes there is no greater explanation or rationale for
their misfortune other than “wrong place, wrong time.” And while we
search for a deeper or greater meaning why their life was altered in
such a fundamental way by grotesque violence, sometimes life is simply
random and chaotic.
Victims of financial problems present similar rationales, Sometimes they were truly disadvantaged by people who duped them.
Recently, a furniture store went out of business, there was no
indication that it was in trouble. Every outward sign indicated that the
company was stable. Suddenly they go out of business and furniture that
previous customers ordered will not be delivered and the status of the
deposits left for those orders is undetermined. These folks are truly
victim of the transaction. There is no doubt that sometimes events are
random and can leave you in financially deficient position. Here is an
example that almost everyone has experienced where we lose 100% of our
money, vending machines. Sometime they just take your money and don’t
deliver the goods. Some people attempt to deliver a couple of well
placed smacks and move on. We just accept that it happens sometimes
because it does.
In my work helping people with financial problems I’ve observed that while some people suffer from random financial misfortune,
there
truly is a pattern of financial victims who are often found to repeat
the same or similar financial mistakes over and over again.
Rather than learn from the situation, they can be seen waving the flag
of entitlement and summoning up an army of excuses for this weeks
episode of financial misfortune. Can’t you picture the commercial for
next weeks show? Stay tuned for up scenes from next weeks show when Bob
will lose his job and not have any savings to fall back on because he
blew it all on day trading last week. What will Mary say when she finds
out? Tune in Tuesday at 8 PM Eastern Time.
What is striking is the number and severity of poor financial
decisions some people make. It’s too frequent to just be a random
happenstance.
To what degree do we hold people accountable for their individual
actions? Is the recipient of misfortune ever to be responsible for their
misfortune? Early victim theory in the 1940s actually labeled the
person to whom misfortune befouled as a hapless person who brought it
on. Since then victim theory has swung to the opposite direction and
essentially anyone who is the recipient of anything negative or
unexpected is to be cuddled and cajoled and not accept any
responsibility for their actions. But it that realistic or healthy?
Whatever happened to personal responsibility?
I’ll be honest with you. I hate personal responsibility. I don’t mind
accepting responsibility for my actions and the way things turn out.
Certainly, life is not always rosy and we don’t always make the best
decisions but cut me some slack.
Modern American life not only does not encourage you to be personally
responsible, it makes you run from it. We live in such a litigious
society that I’m wondering when toilet paper manufactures are going to
get sued for excessive chafing. I’m sure they have been already. Maybe
toilet paper made out of sawdust wasn’t such a good idea after all
gentlemen. Not that I’m bitter about it but ouch, that’s all I’ve got to
say on the subject.
My office overlooks the 18th hole on a golf course. I’ve seen all
sorts of unusual things on that course. I’ve seen guys playing golf in
the dark, near typhoon weather, wearing shorts in sub zero weather and
there is even this woman who walks down the center of the fairway from
the green to the tee during lunch. For some unexplained reason she has a
golf ball, throws it up in the air and smacks it with her hand. She
walks to where it lands, picks it up and continues towards the tee. I
keep waiting for her to get hit with an oncoming golf ball one day. In
my past life, when I was in ophthalmology, I had a patient who was stuck
in the eye with a tee shot. It ruptured the eye and she was blind. This
is why I never look back on the golf course or in life. I’d much rather
get hit in the back with a ball than lose my sight.
When the weather is dangerous, like a big electrical storm, the
course blows a siren to warn golfers to get off the course. Most golfers
do, some don’t. Some just continue to play so let’s take the golfer who
stands with his metal club (lightning rod) pointing skyward during a
tremendous electrical storm. If he is struck by lightning, is he
partially to blame or is the gold course going to get sued also? Other
golfers sought appropriate shelter during the storm by this one places
himself in a position of danger, greatly increasing his chances of
getting struck and does. Can a victim contribute to the outcome and if
so do we serve the victim by simply saying, “don’t worry” or “that’s
OK”?
Wouldn’t we serve the victim more by consoling them in their time of
need and help them to accept responsibility for their actions which
allowed them to be harmed in the first place? Hopefully, they will learn
from the error of their ways and not repeat the same mistake again in
the future. We do this with children, why not adults?
Financial victims often cry foul because of the actions of others. In fact, they frequently contribute to their misfortune by simply not participating in their financial lives.
For many years I worked in an office. One day in the late 1980’s I
decided to pursue my dream and left. I started a real estate company,
The Great Virginia Land Company. I thought it would be really cool to
work outside all day long. Walking through the country, enjoying nature
and making money at the same time. I bought and sold country acreage.
When my real estate company was going full force I wanted to make very
sure that purchasers of property from me clearly understood the contract
they were about to sign which included financing. At first, I would
read the contract with them, explain every detail and be available to
answer any questions they had. They typically glazed over by the third
paragraph. That approach wasn’t working so I made myself available as
they read the contract to answer any questions they had. Nobody asked
questions and just wanted to know where to sign. I even asked them
questions to make sure they had read the contract. Most were put off by
my inquisition. Finally, they trained me to just hand them the contract.
They would look up and before they could say anything I’d say “here”
and point to the signature line. They would look up again and I’d say
“here” and hand them a pen.
I used to get excited when I thought someone was going to ask a
question about the financing, I wanted to explain it all to them but
finally I was beaten into submission by the public’s lack of caring
about the contract or financing. The prevailing question was never what
the total cost would be, but “what will my monthly payment be?” They
didn’t want to be bothered by actually reading or understanding the damn
thing. They just wanted what they perceived to be the benefit once they
signed the contract.
One day I sold fourteen pieces of property at one time. There were so
many people wanting to purchase property from me that I passed out
blank contracts, stood on the trunk of my car and as the purchasers all
gathered around, like a concert in the park, I shouted out instructions
on how to fill in the blanks. “In the first blank, put today’s date.” It
was insane but I could not stop the frenzied action. If I had not done
it this way, it is very possible that I could have been physically
injured. People would get in such a tizzy if they could not sign the
contract as quickly as possible. It was frightening at times. One day
two people wanted to buy the same piece of property. One person decided
to buy it first and the other said they were going to kill me and he had
a gun in the back window of his truck. I decided it would be a good
time to leave so I calmly walked to the car, jumped in and turned the
ignition. Trust me, wrrr-wrrr-wrrr is not the kind of sound you want to
hear at a moment like this, the car would not start, the battery was
dead and I didn’t want to be. The guy in the pickup truck pulled up and
said, “I kill city boys.” To which I could only respond, “Awesome but
can I get a jumpstart first?” He gave me the jumpstart and I drove away.
So what did I learn from my experience. I learned people don’t like
to see snakes in the grass when they are walking through the woods and
they aren’t that interested in understanding consumer transactions.
Inevitably, if a problem ever latter arose from the transaction; the
perception was always that they, the purchaser, were the victim, even
when the exact and specific situation was clearly spelled out in the
contract that they refused to read.
The same is true for almost all consumer credit transactions. People
don’t read the agreements they sign and if they do read them they will
not or do not ask questions and if they even ask a question and
understand the answer, the vast majority of people will sign the
agreement anyway as long as they want what they get when they do sign
it. So, what level of responsibility do we have to adequately prepare
for our financial lives?
Legislators and lawmakers think consumers are too stupid to accept
responsibility for their situation. They feel that people don’t read the
agreements they sign so we need to protect people from themselves. Is
that really how we want to be treated, as stupid lemings?
Recently, I spoke to Richard. I’d had the opportunity to review his
credit report before we spoke so it was clear to me that Richard had
experienced two episodes of financial trouble in his life. The first
about four years ago, the second about two years ago, but why? The debts
were for unsecured credit cards, some utilities and local stores.
Generally, that indicates someone moving into or out of a new area that
is unprepared financially for the event. Clearly Richard’s credit report
reflected an episodic history of financial trauma. After talking with
Richard I learned that about four years ago he had relocated from
Illinois to Iowa. He left behind some unpaid bills and had increased his
debt load through the move to a point where he could not repay his
bills. Once Richard found a job in Iowa he was able to stabilize his
finances and repay most of his debts, he still had some old, very small
debts outstanding. He also had some utility bills that were unpaid from
his stay in Illinois. Richard said he forgot to change his address so
the old bills did not follow him to his new address. In spite of
Richards’s inability to notify his creditors, he feels it is unfair that
they are hounding him and sent him to collections.
Richard said that he learned his lesson from that move and said he
believed he would prepare better next time he relocated. Guess what,
Richard did the exact same thing two years latter. He up and moves to
California without prior planning. He leaves behind a wake of unpaid
obligations and is again unable to find suitable employment in the area
he has relocated to. Richard moves back to Iowa. Now, the first time
Richard made the mistake of impulsively up and moving, you might say he
was young, a few years out of college, and inexperienced in the ways of
the world. How can we rationalize making the exact same financial
mistakes again? Richard clearly knew what the results of his actions
would be. He had lived through them once but yet he did not learn from
his mistake and repeated it.
When I spoke to Richard he was clearly angry at his
creditors for not being more reasonable when he fell behind on his
bills. He was angry and belligerent and felt they should be more
understanding.
When Richard moved from Iowa to California, he did not make any prior
effort to find employment before he left. He just moved. When Richard
arrives in California he is unable to find jobs that pay him even half
of what was making before in Iowa. Big surprise. Bet you didn’t see that
one coming did you? Now, not only does Richard have to pay for the cost
of his move and getting started in a new area, he also has previous
obligations he had not yet satisfied.
Soon Richard becomes dissatisfied with California, gives up and
decides to move back to Iowa. During the course of his move out and back
Richard accumulates approximately 25 thousand dollars of debt on credit
cards. He financed his move with credit since he did not have any
available cash. He stated “I had to use the cards to live on.” Again,
Richard leaves and does not notify his creditors where he is going.
Again, Richard ends up on the other end of a collection telephone calls
and is sought after for unpaid bills. Is Richard really a victim of his
creditors?
Richard has a responsible job but yet cannot exhibit responsible
behavior in other parts of his life. Sadly, Richard will probably live
through another couple of similar events until his financial situation
becomes so fucked up that he files bankruptcy (aka financial cleansing)
and possibly begins his cycle of debt over again.
I’ve even had one client who had 78 unsecured credit card accounts
totaling a million dollars of outstanding credit card debt. This does
not include his other outstanding indebtedness. Is he a financial victim
or a credit predator? At what point does a reasonable person stop
applying for additional credit?
Consider the following story from Carla who contacted me recently.
“My car was repossessed on the 31st of January, on Monday I spoke with
the bill collector from the car lender, I informed him of my job, the
location, everything down to what I did. He demanded that I Western
Union him $126 to him within the hour, even though I told him I get paid
on the 1st of Feb. (which was only 5 days from that point) he told me
this before just as I have twice promised a payment by Western Union and
did not comply. I understand that the bank must repossess the car and
I’ve heard horror stories of individuals losing personal items kept in
the car at the time of repossession. To the repo man himself or whomever
else may like that “pink sweater” for their neighbor. I had piles of
clothes in my backseat, a satchel, a stethoscope, a sweater of the
utmost sentimental value, a gun, college books, and a CD player that I’m
sure they plan on selling to make the money while the factory stereo is
in the trunk. (also a gift from a friend.) I will be 21 years old this
month and am already in a bad situation, forced to live with a man twice
my age, which in the beginning was and I suppose still is by my choice.
I recently got a job and had thought things were beginning to look up
for me, now I don’t even know where my car is, which impound lot or
where I mail payments to? My makeup bag was also in there with around
$200.00 worth of makeup not to mention documentation and things of that
nature I had in a backpack.”
As an impartial third party, you’ve have to marvel at the dysfunction
in this persons financial life. I think the most startling statement is
the admission of previous failed promises to pay. Can you really be
surprised that the collector ordered the repossession of the vehicle
after Carla clearly had make promises to pay and then did not honor
them. Several other facts in her email are telling also.
Broken promises are going to come back to bite you in this situation.
Did she not understand that when she made payment arrangements with the
creditor and failed to meet them that it had a higher probability of
not turning out well?
She kept personal items in the car in spite of knowing that a number
of payments had been missed and repossession was a definite possibility
and imminent.
She keeps a gun in the car. Is she feeling vulnerable and unprotected?
Carla mentions living with a man twice her age and that in the
beginning it was her choice. Is she a victim of her relationship? It
truly sounds like a relationship of convenience. Carla seems to indicate
that she is a victim of the relationship since she is “forced” to live
with him. She has created a situation where she has no other place to go
so she lives with someone she does not care for simply because he took
her in. She admits it was and is her choice to be there, so is she
forced?
She got a job and thought things were beginning to look up. This is
irrational optimism when it comes to the vehicle situation. Things will
only look up when either the missed payments are brought current or an
agreed repayment plan is in place. Just because she secures employment
she feels the lender should back off. A good example of fantasy
thinking.
Carla appears to be helpless in the situation. Does not know where to
send payments and has not thought to contact the lender to ask.
She has also been damaged by the loss of stuff in the car. How about the
damage caused to the lender by the loss of payments not received? This
is not a consideration or point of view of Carla’s.
People commonly refer to “being forced” to do things in their
financial lives. Certainly “being forced” is an example of victim
thinking. “I was forced to hand him the money.” Generally, people who
are forced are not operating under their free will and are under duress.
