For a debtor, it often feels as if the bills are never going to come due. This is what I mean when I say there’s a sense of denial to the act of debting, a sense of unreality. In the moment of debting, you don’t think you’re ever really going to have to pay the bill one day. You certainly don’t think about the fact that, according to the Federal Reserve, “the average interest rates across all existing credit card accounts (i)s 13.46 percent,”[i] and that, regardless of which card you’re using, the money you’re borrowing doesn’t come cheap.
Joseph Goldstein, a meditation teacher and therapist, talks about “the profound influence(s) our consumer society has on our minds.”[ii] One of these influences is that, when you’re debting, you forget that every action has a consequence. You forget that, when you use a credit card, you’re borrowing money, and when you borrow money, you have to pay it back, plus interest.
When you’re debting, you can’t be bothered with this fact. You’re too busy getting your “hit,” the little burst of endorphins provided by what I like to call “the Pleasure of Purchase” (or “POP,” for short). Studies have shown that the “hit” you get from buying something releases endorphins in the brain, in a way similar to taking a sip of alcohol, or taking a hit of drugs. In the same way, the POP distracts you from the pain or discomfort you don’t want to feel at any given moment in time. And, for that moment at least, it works.
If the thought of repayment does cross your mind when you’re using the POP, you repress it so fast that you barely even notice it was there. And that’s why you go ahead with the purchase, never mind the fact that if you owed $9,659 in credit card debt (the amount the average U.S. household owes), “and made 2% monthly payments, it would take you more than six years to pay it off – and you’d pay $4,922 in interest,”[iii] nearly half the amount you originally borrowed.
To put it another way, if you have an average amount of debt, and are making minimum payments like I am, over time you will end up paying almost $1.50 to the credit card companies for every dollar you originally borrowed. In other words, on average, over time you’ll spend half the purchase price, on top of the purchase price itself, in order to buy something on credit, as opposed to paying cash. If you think about it, that’s really, really scary.
And it gets even scarier. Not only are most debtors spending half the purchase price of whatever we buy just to finance our expenditures, some of us are paying half of our total income on debt repayment. For example, “according to an online survey by LendingTree, a mortgage company…fifty-five percent of women ages 25 to 34 spend at least half of every dollar they make paying off debt.”[iv] Think about that. Half of every dollar earned going to debt repayment. Were those purchases really worth it for all these women? I’m guessing not, but now they’re trapped, and it’s very hard to find a way out of the trap.
The POP is alluring, to be sure, but there’s no question that, when we debt, we’re setting ourselves up for future suffering. In the heat of the moment, of course, the debtor’s not thinking about any of this. I’m not saying that, when the bills do come due, it isn’t stressful; quite the opposite. It’s actually so stressful that it generates more denial, more stress, and, ultimately, more debting. But at the time these purchases are made, none of this is considered, because the debtor just wants her POP.
Of course, this kind of denial is exactly what the credit card companies want, too. They want us to spend more, so they can collect their average over-limit fee of $31 – which is up 131% from ten years ago, by the way.[v] They also want us to pay late, so they can collect their average late fee of $34 (up a shocking 161% from ten years ago).[vi] They’re making a killing on these fees. They also want to hurt our credit scores, so they can charge us more interest. The more late payments we make, and the worse our credit scores, the higher the APR (Annual Percentage Rate) the credit card companies can charge us.
And let’s not forget, they want us to float a balance, so that their interest and late fees can keep racking up. Did you know that, “inside the credit card industry, customers…who pay off their credit card bills in full every month…are known as ‘30 day wonders’ or ‘deadbeats’”?[vii] Deadbeats. Not “responsible consumers.” Not “shining examples of financial responsibility.” Deadbeats.
The ugly truth is that the credit card companies don’t actually want us to pay off our balances. They don’t want us to be responsible in how we use their products. They don’t want us to be financially successful. When things go well for us, it’s bad for them, and when things go badly for us, it’s great for them. They want us to fail, because our failure is how they make their money.
Obviously, the credit card companies don’t have any sympathy for their victims. They’re always looking to prey on us even more than they already have. How else to you explain the fact that, despite all my financial struggles, I’m still receiving an average of 1-2 credit card applications per week? The answer is simple: I’m an easy mark. I’m a credit card addict, and they know that. They know that, if they can get me to start using their products again, I’ll run up big debts. I’m a risk worth taking; even though I might default, I also might run up a large balance, make minimum payments in perpetuity, and help them get fat and happy off my interest and fees.
Unfortunately, most debtors are pretty much powerless in getting past this vicious cycle. For one thing, it can take days, weeks, or even months for a debtor’s bills to even get opened. The bills get misplaced, discarded, or inadvertently thrown away. Sometimes it takes a few harassing phone calls from the creditor before the debtor even knows what she owes. Then, when she finds out, she’ll do everything she can to avoid dealing with the debt.
We debtors are so out of control with money, so overwhelmed as we attempt to function in the financial world, that we just can’t handle the truth. In my case, the fact that I owe $16,000 to American Express is completely unmanageable to my “debtor brain.” In my mind, the fact that I’ve been a stand-up guy, owning up to the fact that I couldn’t pay my bill, should have been enough. It should have gotten me off the hook. “Heck,” a part of me thought, “I’m such a good guy, I shouldn’t have to pay anything, let alone $8,000, and they won’t even take that. Don’t they know I’m a good person? How can they do this to me?”
But, despite my protests and justifications, they did it. They’re suing me.
The phone call was to inform me of a pending judgment, which sounds to me like a lawsuit, and it’s going to go through in 30 days, unless I can still settle with them. But, so far, American Express refuses to talk to me, and I don’t even know if the lawyer I spoke with on the phone has the authority to settle with me. So I don’t know what to do. I’m going to a conference day after tomorrow, and can’t do much from up there. The person I have to talk to hasn’t been in the office the last few days anyway, and won’t be for the rest of the week. So I have to sit and wait, for now.
I used to think I was a bad person because of my debt. I don’t think that any more. I think I’m a good person with an addiction who made some bad choices, and now I am paying for them. As the writer Debbie Ford puts it, “We may fool ourselves into thinking that our actions do not matter, particularly if we think no one will know or that no one is watching,” which is very common with debtors. However, “all our choices impact our futures.”[viii] Regardless of how good or bad a person I am, I’m stuck with the reality that my past actions created this debt, and I’m stuck with the fact I’m now being sued.
I don’t know what’s going to happen, or how I’m going to pay this debt. I don’t know if I’m going to go to jail, if my pay will be docked, or if my car will be repossessed. I don’t know if my marriage will survive the stress of all this, or if I can avoid bankruptcy, at this point. I wonder if there’s a point to any of this, and I wonder if it can ever get any better.
And I’m scared.[i] Cited on creditcards.com: http://www.creditcards.com/statistics/credit-card-industry-facts-and-personal-debt-statistics/html.
[ii] Goldstein, Joseph. Desire, Delusion, and DVDs. In Kaza, op. cit., p. 18.
[iii] Gilson, op. cit.
[iv] Reported in Glamour, January 2008, p. 104.
[v] Gilson, op. cit.
[vi] Ibid.
[vii] Ibid.
[viii] Ford, Debbie (2003). The Right Questions (p.9). New York: HarperCollins.
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