Golden Rule of Debt
We all know that we should treat others like we want to be treated. Should we apply this rule when dealing with greedy credit card companies who hold our debt? Absolutely, however some people try to vilify these companies to justify how the company does not deserve the same respect. I know that most people try to live up to their commitments and this is not an issue for many. However, there are some subconscious things that we do to credit card companies that we would not like done to us. We complain about how high interest rates increase when we miss a payment. We complain about why we are hit with a high late fee when our payments are even late by just one day. We say that we would be flexible if we were in their position, yet have we really thought about treating them exactly how we would want to be treated?
This article is intended to make us to think how we treat our debt by making stark contrasts in how some people treat debt with credit card companies versus how many would want treat a loan between friends. Thus, it may seem a bit harsh in questioning how we treat our debt to credit card companies. It is intended to spur our thinking about the issue and is not intended to be accusatory in nature.
I think the main issue is that some think of a credit card as a short-term loan instead of a tool to avoid carrying around too much cash and a tool to make paying at stores easier (with a little bit more security than a debit card. For this service of a credit card, the terms are to pay it back within 25 days in full, otherwise there are consequences. Thus, the question is do we own up to the consequences for our debts as we would like other to own up to theirs if we loaned them money? For example, to act in the same way that we want to be treated, we should
Have a plan to pay back the money before making the purchase
If someone borrowed money from us and promised to pay it back in 25-days, would we be upset (or annoyed) they did not pay us back especially if they made the promise without thinking through their finances before making the commitment? How would you react if someone borrowed $1,000 with a promise to pay it back, yet they were not in the position to do so and were not honest to own up to it?
I think any promise to repay a loan should be taken only after looking at our finances before hand. However, how many people use a no money down payment plan without really thinking if they can really pay it back, thus taking advantage of their promise to repay? In addition, how many people push there finances to the limit where if one thing goes wrong they that could not be lived up to their promise to repay the loan? Having a plan may not be feasible in all circumstances (a medical emergency), yet it should be more of the exception rather than the rule.
Pay on time and warn credit card company when we can not
If someone promised to pay us back $100 on Friday and we were planning to cover our weekend getaway plans, how would we feel if they were a complete no show with no warning? However, we want a credit card companies to let us slide another 4 to 5 days in addition to 25 days they already give us with no consequences? And, worse yet, we do not call ahead of time to try to work something out instead of waiting until after the facts to get fees waived. Now, calling a credit card company each time that we miss a payment may be overkill. Yet, how many times do we wait until after the fact to address our debt even when we are in dire circumstances? It is easier to work out something with a friend or a company over a loan ahead of time instead of waiting until the last minute (e.g. the final foreclosure notice).
Avoid shifting the blame to others
We have become good as a society of making excuses, usually starting when we blamed our dog when he ate our homework in school. We are ultimately responsible for the situations we get ourselves into. Looking at adjustable mortgages, shouldn’t we take responsibility for knowing that we were taking a risk and gambling that interest rates will remain low? So, why blame mortgage companies for ARMs that have backfired just because we could not afford the payment on a 30-year mortgage for the house we wanted. Did we not have the option of looking for a home that we could more comfortably afford or rent until we had enough money for a bigger down payment? Many consumers do this, yet there are still some who are faulting mortgage companies for lending them money that they could not reasonably afford to pay back.
Make it a priority to pay back the money
How would we feel if someone owed us $500 and then they decided to go get a message or to go to a baseball game instead of paying us you back the money on time, even if all they could afford was $100? We would be mumbling underneath our breath (or out load) about how inconsiderate they are when they are late. However, some people in debt do this to credit card companies without giving it a second thought.
Understand bankruptcy is a safety net and a gift
This doesn’t mean that we relinquish our debts because it is easier for us instead of doing the right thing and paying it back. However, know that if we get over our heads due to situations beyond our control, there is a way to get out of the overwhelming burden. However, if we are helped by bankruptcy (a helping hand), should we pay it back if we are able to rebound after bankruptcy? I do not thing many think about this, however how would you feel if you were in the other shoes?
If someone owes us $1,000, we will want them to pay it back. Yet, we know that sometimes things are beyond the person’s control and we are willing to help them out. However, if they end up winning a million dollar lottery 5 years later, what would we expect? We may see it differently because credit card companies factor in the risk of defaulting (bankruptcy) in their interest rates so they know some will default and declare bankruptcy, thus it all evens out in the end. However, should we at least help others (whether the company or a charity) based on the gift that we got for getting back on our feet from eliminating our debt? It is an interesting question to think about because we think bankruptcy dissolves us from ever repaying the money back. Yet, why not see it as a gift and help others out like we may have been helped out.
We think a credit card company is such a big company that a few days late on a payment or missing a payment of a few $100s will not matter here or there. I find it interesting that many people avoid dealing with credit card companies out of their shame of their debt. However, I know I would prefer someone to call me to work out issues on repaying their debt with me, and I expect many others would expect the same as well. So why would credit card companies be any different? Credit card companies and mortgage companies are more willing to work with people in debt than many expect. There have been many stories lately about how to head off foreclosures by calling the mortgage company early on because the company knows it is in their best interest to keep the mortgage going on a modified basis rather than go through the costs of foreclosing. However, we do not treat a company like a person. We try to vilify them to justify why it is o.k. for us to be late when we would be angry and furious at the company we work at for not paying us our paycheck on time even once let alone months at a time.
