I’m not the ethical ruler of this planet, but for that matter, I’m not Maya Angelou either (this really makes no sense, but it provided me a brief chuckle that helps me to continue to write this post). The following words of this post are not the ethical end. However, it is the financial ethical gospel according to Peter chapter 1.
Peter 1:1
1 I get it. You bought something on a whim, in a pinch, or as a means for survival, and you never intended to not pay for it. 2 But WHY you bought something is often substituted for the mere fact that you DID buy something.
3 I think we have to begin with a very simple philosophical question. Do you think the world owes you something? 4 It’s in the answer to this question that we can begin to understand why we put our own perceived financial needs above the those needs, rights, and goals of our fellow man. 5 But it’s our willful misunderstanding of who our fellow man is, that really leads us down the path of unethical debt management.
Okay, okay, okay, I’ll stop with the that style of writing. Although, it was a cute effect. Here’s the deal: people bail on their debts because they can’t or won’t put a face to their creditors. People that file bankruptcy, participate in debt settlement, or simply refuse to pay a debt they incur, often times view their debtors as evil overlord monoliths that are oppressing their ability to maintain an unreasonable lifestyle.
And before we go much further, it’s important that you know that: I speed, I withhold the truth sometimes to protect those that I love, I don’t return some emails when I should, and all sorts of relatively unsavory things. But I will not and cannot make my financial problems someone else’s financial problem. I’m simply asking you to do the same.
Let’s say that you owe a major credit card company $16,000. And let’s assume that this debt, and more importantly the monthly payment to help you payoff this debt, is quite substantial in relation to your monthly household income. Obviously your life would get easier if your payment was reduced or just simply went away. But it’s also easier to not buy your wife an anniversary gift, call your dad on Father’s Day, or step up as a witness of a crime on the street. But it’s your willingness to do the right thing, not the easy thing, that defines your character.
If character building isn’t enough, then imagine if all your debt was owned by a mom and pop shop in your neighborhood. Your unwillingness to keep your money problems to yourself would devastate both mom and pop. Not only that, but you would be forced to visit their store everyday and look them in their (now) financially struggling eyes. Putting a face to your creditors changes everything.
Commit to keeping your financial problems your own. If you do then you too can freely use this Maya Angelou pic to make you chuckle whenever you’d like.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.
Here is a question for you, that presents a different scenario from what you’ve described above. It skews the ethical question a bit, and I want to know what you think. Let’s say you are in your late fifties – you have no credit card debt, have a great credit score, have a great job, have saved lots for retirement, buy a house. Then a year later your job moves you. You move, put the old house on the market, buy a new house. Then the housing bubble bursts, and you can’t sell your old house, even at a loss.
Fast forward to three or four years later. Your retirement funds are disappearing, as you struggle under the weight of two mortgages. You’ve *nearly* sold the old house several times, willing to take a loss, but never been able to push through. You’ve rented it for a few months here, a few months there, but never for a long term. You’d be willing to sell your new house, but it is worth considerably less than you owe, because of the bubble bursting.
And then your great job eliminates your position, with three months notice, and you are in your 60s now, and can’t find another job because nobody in your area of the country wants to hire an “old” guy, and you can’t move, because you are already paying for two houses.
What is the responsible thing to do? Because my parents, who are living this scenario, feel that defaulting on their mortgage is unethical, and they are depleting every single savings vehicle they have in order to pay their monthly mortgages. And they’re going to default anyway, in a few months, unless they magically find some renter or buyer. Only now they have no retirement funds. So we, thirty-somethings with two little kids, now will bear the burden of caring for them.
I have told them that it would be more responsible to default on the mortgage and protect their retirement assets. They find this unethical. And their ethics are completely destroying their ability to take care of themselves in their waning years, putting even greater pressure on me and my siblings to support them, while also trying so help our own fledgling families. It is a difficult ethical question, and believe me when I tell you that I haven’t slept in weeks, since we heard my dad was losing his job. I think they’re being stubborn, and harming my children’s financial futures. They think they’re being ethical. Pete the Planner – what do you think?
This deserves its own post. I will get to work on it. Check back later this week. Thank you so much for sharing this story, and I look forward to tackling this tough question.
RG’s stated situation, seems to me, was what the bankruptcy laws were initiated for…not the get out of debt/jail/discomfort/inconvenience “free” card that our population uses it for now. Two of my neighbors’ daughters have bankrupted their families…and they are around 30 years old. My adopted sister and her husband have bankrupted themselves and left all their creditors hanging twice in their lives, despite their early years when their children were young, of paying for a doing ‘eightballs’ twice a week with a homosexual couple they knew. Somehow I don’t think this was what bankruptcy laws were meant for–to cheat yourself & society!