Run to the Danger

I read it in the news again last week: a policeman heard gunshots and ran toward the building from which they were fired—a public servant running TO the danger and not away from it.  These stories always cause me to wonder if in similar circumstances I would respond the same way, braving the hazard and thinking less of personal safety than of eliminating the danger.

 

Courage comes in many forms.  While a policeman may confront physical peril a politician, for example, may be called upon to exhibit moral courage to vote according to his conscience rather than the way that is most likely to get him reelected.

 

What would financial courage look like?  Your first impulse might be to say “investing”, and indeed, buying stocks and bonds with the hope they will grow in value and not diminish does take some bravery.  But you have plenty of company in the stock market, and it’s that fellowship, the element of “others are doing it, so it must be reasonably safe”, or perhaps “well if I go down so does everyone else” that makes investing something other than courage.  No, courage is personal and solitary.  It involves confronting the risk of losing something only you possess.  It means being the responsible party, the one whose action will make the difference.  For someone deep in debt and maybe in peril of bankruptcy, financial courage would mean running toward his creditors.

 

What do I mean by “running toward one’s creditors”?  Consider the stereotypical picture of someone being hounded by bill collectors: he won’t answer his phone or return voicemail messages.  He doesn’t open his mail and might even move or otherwise change his address—all in an effort to avoid his creditors.  Even someone who acknowledges his debts and is not trying to shirk the responsibility of paying his overdue bills will engage in this behavior because it is painful, embarrassing, to be reminded of his situation and how he got there (personal irresponsibility, an untoward life event, etc.).  But it is in just this situation that he should summon financial courage, braving the pain and embarrassment, and not only stop avoiding the creditors but seek them out, ideally before they come seeking him.

 

If you ever find yourself in that situation, as soon as you realize you will not be able to pay a bill on time or will miss a payment on a loan, contact the entity to which the money is owed.  Truthfully acknowledge the obligation but just as truthfully lay out your current budget challenges, explaining why you cannot meet the payment schedule, and then offer an alternative (e.g. “I can resume regular payments in two months”; or, “I don’t anticipate being able to make the payment of X dollars per month but I can pay Y dollars”).  Always try to go in with an alternative plan.  You can ask for a reduction in the interest rate, a waiver of penalty fees…whatever you think will get you through the immediate crisis.

 

This approach sets you apart from the crowd.  Creditors and debt collectors are accustomed to people avoiding them and trying to evade financial responsibility, and they usually welcome the client who owns the problem and doesn’t make them chase him.  It should make for a less antagonistic encounter.  This enhanced status means you are more favorably situated to negotiate.  You have probably saved the creditor many man-hours or the expense of hiring a debt collector (and consequently getting just pennies on each dollar of the debt) by coming to him first, so you have created a more trusting relationship.  Plus, you are grabbing the initiative by offering a payment plan that you carefully considered and know that you can handle.  It makes you look more responsible.

 

There’s no guarantee that some adjustments made to your debt won’t be reflected in a lower credit score.  But you have tackled your problem head-on, hopefully negotiated a more manageable payment plan (and stuck to it…very important!), and are now headed for better times.  You are one of the few who showed financial courage.

 

Until next time,

 

Roger

 

“Before you are dragged into court, make friends with the person who has accused you of doing wrong.  If you don’t you will be handed over to the judge and then to the officer who will put you in jail.  I promise you that you will not get out until you have paid the last cent you owe.”  Matthew 5: 25, 26 CEV