Debt and Murder
I recall hearing once that the concentration camps during the holocaust had a very low rate of escape attempts. The reason for this is because they would separate the men from the women and they were each told that if they tried to escape, their loved one would be killed.
Many a book and movie has made use of this effective tactic with their characters. How often has the scene played out for you where a heroic character with a cavalier attitude about his potential torture is brought to heel with the threat of violence against someone he cares about? It is a powerful and effective form of leverage and so it was with very little surprise when I realized that banks make use of this same tactic to prevent would-be defaulters from failing to pay their debts.
Right now there are millions of people struggling with student loan debt that was co-signed by their parents. Intelligent, capable people with college degrees suffer every day through mediocre jobs (or no jobs) because they know that if they default on their student debt, the bank will take it out on their loved ones. It’s not enough that this particular debt is impeachable via bankruptcy.
This is not just a societal nuisance. Student loan debt far exceeds the credit card debt now. The same credit card debt that was touted in the 90’s as a serious problem. Many economists point out that if the student debt ‘bubble’ burst it could be as catastrophic as the 2008 recession.
If you’ve read my previous posts, you’ll know I’ve seriously considered bankruptcy. I’ve worked hard to maintain good credit my entire life, and it was not lightly that I considered bankruptcy to be necessary. But if I defaulted on my credit card debt, my ex-wife would become a target. If she runs into financial difficulty with the house, they will come after me. If I defaulted on my student loan debt, my parents would be harassed until they paid it for me.
As we have been approaching the New Year, I have been preparing a budget to aggressively pay off my debt. I won’t have it all paid this year, but I should be able to knock out the majority of it.
Still, the experience has shown me the insidiousness of the policy of co-signing. Any loan represents a financial risk. Risk by definition contains the possibility of failure. If I choose to take a financial risk, I do not want my loved ones to be in the crosshairs of that possibility. I will never ask another person to co-sign a loan for me again.I understand why I did it. As a naive, young adult with my role models encouraging me to take on the debt while chanting the importance of a college education, I went for it. As an ambitious, young engineer with thoughts of starting a family, I took the ‘long view’ and decided to get a house I couldn’t afford. Now that I am older, I understand the full ramifications of taking on debt and the threat it poses to my life and of those I love. I think there are many, many people in my generation undergoing this realization with me.
We are hard-wired to accumulate. Marketers play on this desire to accumulate and banks enable it with debt. Choosing to live simply and small is a serious rejection of societal norms. Fighting against the temptation to accumulate, acknowledging this predisposition in ourselves, and identifying how our culture exploits it is a powerful step in taking control of ones life. I plan to take more control of my life this year and I encourage you to do the same.