You Owe What You Owe
December 18, 2009 by: Dave Ozment
Our society is given more and more to laziness and victim mentality, or so it seems. I’ve conducted no scientific research but the prevailing winds of conversation, and print stories, and news ‘events’ seem to prevent as much. Perhaps this is just the vocal minority – I so hope – or perhaps we’re on a horrible downward trend.
A pair of illustrations resonated, or more accurately collided, with me. These are recent events but they mimic a theme that has does resonate with me. In fact, it’s a theme I’ve written on before. I hope today I add to the discussion rather than simply echo the same rant.
The first item was a recent caller on a Dave Ramsey program. I disagreed with both the caller and the advice he received. The caller was about 6 months behind on a $11k credit card bill and was trying to settle the account for about 25% of the balance due ~ or about $2750. Ramsey agreed that the creditors would not settle for such a low amount so quickly and advised the caller to continue to save up his settlement funds while continuing to negotiate a settlement.
The advice was directionally sound, however, that it reeked of a failure in personal accountability caused me to bristle. Rather, I believe a more genuine approach would be to negotiate down some of the usurious fees, make a huge payment against the remaining balance (say 20%), negotiate a moratorium on interest and pay the freaking bill each month as you previously committed to doing.
I don’t necessarily fault Ramsey here because many of his callers have circumstances that limit their ability to pay, and the advice offered fits that bill perfectly. However, this caller had no such circumstances other than wanting a smaller bill. HEY TOO LATE DUDE… should have thought of that when you were running up the tab at the bar, literally or metaphorically.
The second event was the one that really sent me into orbit and solidified my need to string together these words. Several months ago I enjoyed and commented on an article posted on another site. As part of the commenting process I was able to subscribe to subsequent comments so I could continue to engage the conversation. The original article was about preparing a mortgage and frankly I can’t recall my comment though the general idea is one to which I aspire. The other morning I received just such a subsequent comment from some deep thinker who has it all figured out.
The genius – sarcastic speak for moron – did not feel constrained by his mortgage payment obligations simply because the value of his home had declined. It was not a function of his inability to pay but rather that his commitment to pay for an asset that is now – and likely temporarily – underwater was simply inconvenient.
I could, and should do a full treatment on the topic, but ladies and gentlemen, this is a loser mentality.
Consider 3 questions as a measure of this dude’s brain lock:
1. Do folks expect to lower their car payment when they find its value upside down?
2. Do investors expect a refund when stock prices/values contract?
3. Do people expect their mortgage payments to increase when their home values rise?
The answers… NO, NO, and HELL NO!
In fact, the first item is so common that it’s a sad and well repeated punch line – the worst accidents DO happen on the showroom floor.
That this level of infantile thinking exists in a civilized society chaps me to no end and I can’t help but wish ill upon them. It is as if I want to personally witness as their sins catch up with them. But that takes me to a negative place. I place I’d do well to avoid. Instead I’ll do my best to take care of my business while both congregating with like minded responsible adults and sharing my beliefs with those willing to listen.
And so I want to thank you for listening to my rant and ask that you help to grow the like minded community this fledgling site represents. I don’t often ask so overtly, but if you agree with the prevailing thoughts represented here, then take a moment to forward a link or email. I’d love, welcome, and appreciate your help in turning up our volume.
Photo By: Olivander
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he dealer will roll the old loan into the new loan amount. If you have realized that you cannot afford your current car payment, this can add a lot of stress to the situation.cheap women clothing
Yeah, rolling one bad loan into another is an unsustainable model. This plan never ends well because cars simply do not appreciate. You’ll always end up paying the balances at higher rates and still never own a car. It’s a losing approach. Searching for deals from individual sellers and paying cash on the otherhand works and over time will allow you to move up in car. It’s a model that can sustain you through the remainer of your car buying days.
Thanks for sharing.
Dave
I have to agree with you. Nothing drives me more nuts than those who seek advice to avoid their obligations. It matters n not to me if it is settling with their credit cards or someone seeking to file bankruptcy. Do these folks not know that I have to PAY THEIR BILLS! It comes in the form of increased bank chargers and decreased interest rates, the costs of the goods in the stores (the credit card companies charge the stores for use,) and the devaluation of MY home when you get foreclosed on. Just to name a few examples.
In our family we have 2 cars each over 10 years old. We have lived in the same house for 16 years and it has the same flooring and drapes that we bought it with. We eat at home most meals and brown bagging is a way of life for us. Our clothing is bought bargain shopping. We garden and we do not take expensive vacations.
It irritates me to pay for someone who is irresponsible in their lifestyle. I don’t like paying for their new cars, clothes and fancy trips. However we live in a more Socialist Society than we want to admit to, only it is not government imposed so much as by our Business Society.
Karen604´s last blog ..Whole Foods
Hey Karen, I love the ‘rant back’. It is true that we pay for the mis deeds of others. Be it shop lifting or credit defaults, the costs are shouldered by those who play by the rules. It can be very frustrating and I agree with your position.
Thanks for sharing!
Dave
Just yesterday NPR’s Talk of the Nation had a piece on the ethics of walking away from underwater mortgages. One of their experts, an economist at the University of Arizona, pointed out a) that a mortgage contract includes a mechanism exactly for that purpose: the borrower can walk away and in doing so turns over the house and whatever equity he has in it to the lender; and b) only homeowners carry some sort of “moral” onus for walking away from a bad financial deal. Banks and other corporations routinely default on loans that turn out to be bad deals for them. The gist of this guy’s argument was that a home loan is no less a business transaction than any other business loan, and that no moral issue is involved. The idea that homeowners have a moral obligation to stick with a bad business deal (while corporations do not) is, he suggested, a myth promoted by the banking industry itself, by the government, and by the media.
Whether you agree or not, his point of view is something to think about.
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Hmm, that’s an interesting take but personally I’m not buying it. The ‘mechanism’ he’s referring to is simply the default provision in the contract – you don’t pay, the bank can take over the property. That’s simply the property standing good for the loan. Interesting that he advertises it 2 ways – to allow underwater loan holders to walk away AND the bank collects any equity in the home. Hmm, those parts don’t fit.
His second arguement is somehow that personal accountability is some myth promoted by the banking industry. Yikes, I’d hate to be this guys neighbor. If I sign my name to a document in good faith then I feel a personal obligation to stand by my name for the sake of my good name, not some alledged bankers myth.
It might be interesting to hear the interview and I’ll see if I can find it on itunes, but I find the idea a farce at best.
But hey, I appreciate you sharing!
Dave
It’s interesting that you bring this up, I have been listening to the Dave Ramsey show live the last two weeks and I have heard him make that suggestion more than once. And each time I had a similiar reaction (bristle). I agree on the personal accountability….
Funny how that happens… you’ll be thinking something and then see that you’re not alone in those thoughts. Typically Ramsey is good about specifing that the settlements happen if there’s no money or if the credit card debt is being reprioritized to help prevent a foreclosure and never simply because it isn’t convenient… in fact I’ve heard him rail against that approach. That’s why I mostly gave him a pass, but it still struck me wrong.
Hey, I’m glad I’m not alone in thinking that way.
Thanks for reading and commenting.
Dave