DEBT

ACT YOUR OWN WAGE

THE MOST IMMEDIATE financial problem facing Allen and Jean was pressure from their creditors.

And creditors they had! They had two loans from a bank, bills from three department stores and an outstanding balance on an assortment of credit cards. And then there was the home mortgage. The Hitchcocks’ indebtedness started soon after they had married when they applied for their first loan. Jean, who grew up in a wealthy family, said, “Our friends had new cars, and we felt deprived. We had to have a new car too.” Later, when they were transferred to Orlando, they bought a house in the suburbs, borrowing for the down payment. The debts continued to pile up.

“Finally,” Jean said, “the man from the bank told us he was going to take our house and garnish [take from] Allen’s salary.” “Most of our debts were accumulated so slowly through the years,” Allen said, “that we didn’t realise what was happening until it was too late.” Any government, like any family, can for a year spend a little more than it earns. But you and I know that a continuance of that habit means the poorhouse. FRANKLIN D. ROOSEVELT, 1932 Each year millions of people find themselves in the Hitchcocks’ predicament. A credit expert says the major reason is “damage to the borrower’s ability to pay.” People take out loans on the assumption they will have a steady flow of income; then, the unexpected happens. Someone gets sick.

A new baby is on the way. An employer closes shop. Debt Increasing Government, business and personal debt is exploding in our nation. If you converted the total debt to one-dollar bills, placed them endto- end and pointed them out to space, they would extend more than a billion miles . . . beyond the sun! The economy is riding on a growing mountain of debt. “With so much credit around you’re bound to have casualties,” Vern Countryman, a Harvard professor, explains. “It’s just like car accidents. If you’re going to have all those cars, you’re going to have accidents.” In a recent year more than 850,000 individuals filed bankruptcy—more bankruptcies than during the Great Depression.

Consumers now spend approximately one out of every five dollars in take-home pay on personal debts, not including the home mortgage. More sobering is a Gallup Poll that found 56 percent of all divorces are a result of financial tension in the home. For many, the more accurate marriage vow would have been “till debt do us part.” Such financial tension exists largely because consumers believe the “gospel according to Madison Avenue,” which says, “Buy now and pay later with easy monthly payments.” We all know that nothing about those monthly payments is easy. WHAT IS DEBT? Lenders and advertisers use attractive definitions of debt that mask its harsh reality.