O Debt, Where is Thy Sting?

At the outset of his lifelong adventure in earning and spending, every young man should rid himself of the outmoded idea that there is something shameful about going into debt, or remaining there. Increasingly these days you are greeted by invitations to enjoy all manner of goods and services right now and pay for them eventually. Succumb freely, without feelings of guilt, to these enticements: it is, in a very real sense, your duty to yourself and your country to get in there and owe your bit.

The prosperity of our nation depends on a widespread recourse to charge accounts, mortgages, bank loans, credit cards and other means of securing material things before the consumer can fully afford them. When you resist incurring debts of this sort, you manifest an attitude which, if it spread, would afflict the country with joblessness and economic paralysis. And, for a young man on the way up, there is no greater stimulus to good work and fiscal advancement than a solid backlog of obligations for a new car, tasteful furnishings, fine dining and drinking, good clothes, books, stereo equipment, travel, favors for the ladies, and other necessities to the daily enjoyment of life.

To make sure you are contributing your share toward bolstering the national economy and are getting the maximum personal benefit from the spur of debt, you should incur new obligations as if you were now earning about as much as you hope to be earning next year. By dressing and living like a man in an income bracket slightly above your own, your ambition and self-confidence will gain; you will convince your employer, and yourself, that you are worth that much more, and pretty soon you will be getting it. Such a mode of conduct is often censoriously, and inaccurately, called "living beyond your income." Correctly, it should be regarded as living in front of your income, an energizing and praiseworthy course, as we have seen. Only much later in life, when you can be fairly sure that no substantial boosts in increment lie ahead, will you need to consider living in back of, or alongside, your income.

Meanwhile, do not let your progress be blocked by the fear that, somewhere along the way, there will come a Day of Reckoning, when you will suddenly find (continued overleaf) yourself confronted with a large number of overdue debs that must be paid off at once. This contingency can be guarded against by building the foundations of your indebtedness carefully and with forethought.

1. Create a spectacular first impression. If you have committed no gross financial indiscretions that are on public record, and have been paying your bills promptly and in cash, you will encounter at once one of the strange facts of living in debt: having no credit references or credit rating, you will be regarded with suspicion and as a poor credit risk. To surmount this initial barrier it is wise, by whatever exertions are required, to gain the confidence of a leading store in your community. Buy something on the installment plan, make the first two monthly payments on the very same days that you receive the notices, and in the third month pay the outstanding balance in full. The news of this unheard-of behavior will spread like a grass fire to the credit departments of the other stores in town, and soon you will receive from all quarters letters beginning: "As you have been most favorably recommended to us, we invite you to open a charge account."

This will enable you to broaden your credit base with almost no direct effort, and you should accept these invitations from a far greater number of firms than you plan to patronize, to more than a nominal extent, in the near future. Open an account with every department and specialty store that stocks any merchandise you might one day want to acquire. Do not use these accounts at all for the first few months, and for several months thereafter use them so sparingly that you can pay the bills within a few days of receiving them. Follow the same procedure with installment purchases, limiting them to inexpensive items that you could just as easily buy for cash.

By exercising restraint during your first year of using credit you establish a rating that will stand up staunchly under later strains. Each of the many firms you carry accounts with will come to regard you as an old and trustworthy customer, though your file shows only minimal transactions or even none at all. (An inactive account seldom attracts the unfavorable attention of credit men.) Your established creditors will provide glowing testimonials to your probity when you give them as references in making applications for accounts else-where. When, later, you run up bills that are a trifle beyond your immediate ability to pay, they will treat you to the most respectful collection letters in their battery and will be most reluctant to deny you continued credit. If one or two should do so, you will still – despite what credit men or bill collectors may tell you – be able to use all those other accounts that you have not yet overtaxed.

2. Now lay the groundwork for a certain individuality and unpredictability in your payment procedure. First month, in several of your most active accounts, be two weeks late; next month, prompt. Third month, six weeks late. When you answer their "friendly reminder," pay only half of what is due. Three days later, before they can protest, pay the balance. In this fashion, and with whatever variations occur to you, you will establish a reputation as an original and irregular payer, but a sound man nevertheless, and one whose failure to meet the due date should not be viewed with alarm. This will give you many times the financial mobility that you had before.

3. The best firms make the best creditors. The successful debtor cannot afford to be, and seldom has the temperament of, a bargain-hunter. Not for him the jostling crowds, the rude sales persons, the inaccessible low-rents areas, the shoddy or "distressed" goods of the cut-rate cash-and-carry shops. He knows that quality merchandise is worth what it costs – or will cost, when he gets around to paying for it. He knows, too, that the better class of tradesmen are accustomed to dealing with wealthy and discriminating patrons, who would take umbrage at any unseemly pressure for the settlement of their bills. You need not, of course, be very prosperous in order to carry accounts in the posh shops; you will look it and feel it, thanks to the habiliments and provisions you secure from them, and you will benefit from their kid-glove treatment of charge customers – who are often, indeed, the only ones they will deign to wait on.

4. Stagger your purchases, and your creditors. Do your best to space your charges so that your bills will fall due, and overdue, in a fairly orderly progression. Establish an easy periodic rhythm: a good pair of shoes from one shop one month, a half-dozen shorts from another the next, a suit at still another a month later, and so on. Don't let your current girl settle on a certain restaurant as "our place": keep her, and your dining tabs, on the move.

Thus you will cut down the likelihood that two or more of your creditors will be pressing for settlement with equal urgency at any one time. You will not be able to eliminate the possibility entirely, however, because of the variations in the behavior patterns of creditors. As you go along, you will find that some bills – large or small, recent or ancient – tend to become much more pressing than others, and will need to be placed in your portfolio of priority obligations.

5. Be courteous to your creditors. Credit managers put a great deal of thought into selecting, from a whole shelf of manuals and "streamlined letters," a certain series to mail to customers as they enter the various phases of delinquency. To be sure, even the best of collection letters is apt to strike the recipient as monotonous in theme; but the courtesy of an answer will bear rich dividends.

Inevitably, such a series begins with a Friendly Reminder, often suggesting that an oversight on your part is the full explanation of your failure to pay. There then follows a letter, firm but not unfriendly, pointing out your obligation to pay. If this is unavailing – as in your case it should be – you will receive expressions of bafflement and sorrow over your continued failure to remit. First comes a sequence of Appeal Letters, in which assaults will be made on your Better Nature. The usual progression is petitions to: a) sympathy with the store's unhappy plight, with not only yours but hundreds of other accounts outstanding; b) your self-respect; c) your sense of fair play; d) your honor; e) your self-interest. You must bear in mind, during this cleverly calculated campaign, that the creditor is not for one instant concerned about your moral welfare or the state of your reputation: he is merely pushing various buttons, in the hope that one of them may cause you to eject some money. You should, of course, remain impervious to these spurious entreaties, paying only when it suits your convenience to do so.

Next comes a series of Demand Letters, in which the tone is minatory and unfriendly: a) a letter signed by the president of the company himself; b) a threat to collect by draft on your bank; c) a letter purporting to come from the local merchants' association, threatening to blacklist you in every store in town – a particularly sneaky maneuver, since in reality such an association may not even exist; d) and finally, notice that the account will be turned over to an attorney or a professional bill collector, who will apply a series of Final Notices and Threats of Legal Prosecution, Attachment of Earnings and Assets, Social Ostracism, etc.

Despite this disingenuous behavior of your creditor's, every letter deserves an answer, which should be suited to the tone of the individual collection notice. The phrase "perhaps you have over-looked," for instance, appears repeatedly in references to unpaid balances. When this occurs, open your reply with the phrase "Kindly excuse my having overlooked." Another frequent plaint is "We cannot understand why we have not [received your payment] [heard from you]." Begin your answer "The reason (continued on page 88) O Debt (continued from page 82) you have not. . . ." Follow with a plausible, but not too specific, explanation: "circumstances beyond my control," "a temporary condition," "a major emergency expenditure." To the common closing, "We shall appreciate your giving this matter your prompt attention," answer, "I shall give the matter my prompt attention." (In the very act of writing, you are already giving the matter your attention.) To "May we expect your check for $... by ...?" a serviceable rejoinder is "You may expect a check in the near future." (Not "You may expect my check" or "payment in the amount of..." or "by...")

Occasionally a collection letter is couched in a jocular "novelty" style, e.g., "Plea$e send us your check for $... so we can erase our slate clean. We miss you at our store." Here you might counter with "can you cents' my chagrin at currently lacking sufficient cash to catch up on my account? I will communicate with you, or come calling, when the condition clears up."

In writing thus, your purpose is to distract the credit manager by talking his language and seeming to answer his questions, while not actually parting with any money or promising to at any specific time. You are stalling for time – but time is the most precious stuff the debtor handles: to no one does the old adage "Time is money" apply so well.

6. Part payment is better than none. Your polite correspondence will be sufficient in itself to cause many creditors to postpone taking any drastic steps for as much as 90 days; and others, if your style is particularly warm and winning, as much as five or six months. They may intimate from time to time that "your account is reaching the stage" where repossession of merchandise, legal action, or referral to a collection agency will be necessary. But no creditors really want to carry out any of these threats, which are disadvantageous to them for both economic and public-relations reasons. Usually, until a definite date for taking such action has been set – and passed – you may buy more time by sending in a partial payment, along with a letter pledging further sums (unspecified) in the future (vague).

The creditor will accept your offering as encouraging evidence that it is not altogether impossible to get money out of you. He will shift your account to one of his more hopeful categories and belabor you with a new series of form letters, probably recommending a regular schedule of partial payments of the balance. Give this proposal your most serious consideration: it may well present a golden opportunity to convert a burdensome charge debit into a deferredpayment plan on the easiest terms possible – your own; and in any event you will have succeeded in setting up an interest-free loan involving no service charges.

Despite your best efforts to remain on cordial terms with your creditors via correspondence and token payments, it may sometimes happen that one of them will fail to go the whole way with you in the stately formalities just outlined, and will hand your account over to a collection agency. This is always a regrettable happening, but the debtor should learn to meet it with equanimity, never with panic. You have nothing to fear from the bill collector but fear of the bill collector itself.

Once he has entered the picture, you may find it helpful to take the attitude that your creditor has abrogated that compact of mutual trust and regard which, as credit people are so fond of reminding debtors, is the basis of all credit relations. You have trusted your creditor to follow the traditional progression from Friendly Reminder to Final Notice. Instead, he has violated your confidence by precipitantly turning your account over to a third party whom you do not know, or want to know, have never made any sort of agreement with, and do not owe one single dime to.

There are several basic facts about the collector's function that he and the creditor would prefer you did not know. Learn them, and draw fortitude from your knowledge:

1. The collector stands to keep for himself at least one quarter, and more often one half, of whatever payment he can squeeze out of you. If your original creditor is willing to settle for half of what you owe him, you will be tempted to ask, why isn't he man enough to put the proposition to you directly? By this line of reasoning, though it is not flawless, you can work up a fine disdain (avoid feelings of outright antagonism) for both your creditor and the collector.

2. Manuals on collection technique betray a heart-rending preoccupation with "keeping the account" – i.e., retaining your good will so that you will come back and owe more. Your creditor has made his shortsighted and costly transfer of responsibility because, with this thought in mind, he is reluctant to be as importunate, bullying and vituperative as the dunning specialist will be. He believes that by employing a proxy Bad Guy to harass, menace and defame you, he himself can somehow manage to remain a Good Guy in your mind. Waste no time deploring the pathos of this fantasy; but do appreciate the irony of the situation, as an aid to maintaining the correct air of detachment toward it.

3. There is not a single collection measure the collector can employ that the original creditor could not have employed as effectively – except bluster, rudeness and concerted attempts to rile you; and these lose their effectiveness once you appreciate their essential emptiness. Collectors are particularly prone to pretending that they are able to unleash the power of the law against you where your creditor was not. Actually, the converse is true. Collectors have to be reminded repeatedly of that fact, in their home-study courses, manuals and trade journals, in such terms as, "Be very careful never to tell the debtor you are going to do something which you cannot legally do. In most states you cannot legally sue – only your client can." (From an article in The Collector, a trade publication.) Collectors have devised a shifty system of semantics by which they imply that they are going to do something that they cannot legally do, while avoiding "the possibility of being charged with unlawful practice of the law by the bar association" (ibid.).

4. Do not let the collector's Final (i.e., first) Notices panic you into scraping up and remitting the full balance due, but await, with the calm certitude that it will come, his easy-payment proposal. Study with a dispassionate eye the printed communications he will send you almost daily, on garish paper and in inks of jarring red, purple and yellow, in coarse prose and ugly fonts of type. Fend off his attempts to get equally tasteless messages to you by means of collect telegrams and phone calls, by declining to accept the charges. If he succeeds in getting through to you at his own expense, tell him in chilly, wellmodulated tones that you have received his communications and noted their contents. If he begins to shout – or, as is more likely, continues shouting – ask him to excuse you, and hang up. If you can't get a word in edgewise, quietly replace the receiver on its cradle. Do not, under any circumstances, lose your composure or shout back at a bill collector. If you let him know that you find certain of his tactics abhorrent, he will not these in your dossier on a "Does Not Like" card, and double his employment of them. Your aim should be simply to inform him that his message has reached you, that you are taking its import calmly, and that it holds no terrors for you.

A great deal more could be said about the methods and psychology of the collector, but we have already considered all that the successful debtor will need, or want, to know of these squalid matters. The successful debtor is one who could not conceivably allow himself to be forced into becoming a deadbeat, a bankrupt or a "skip," in the trade designation, by the harassment of such a person. All he ever wants is a little more time in which to narrow the breach between income and pledged outgo – though not, of course, to close it completely. Once the faithless creditor, through the bill collector, has granted him the needed time, he will, of course, meet the terms and award his future custom to a more considerate firm.

The novice debtor should not berate himself too severely for having become liable to the attentions of a collector or two, but he will do well to review his whole experience in the credit adventure so as to avoid such contacts in the future. Was he, perhaps, neglectful in the matter of properly spreading and spacing his charges? Was his correspondence with creditors belated or lacking in conviction? Was he remiss in applying a partial payment to a plainly critical account? Was his error the natural human one of placing more confidence in a creditor than the creditor was prepared to place in him? Such mistakes are all readily corrected. There is one other possibility to be considered: did the debtor, from a sense of duty toward credit men in the later stages of their work, voluntarily fall far enough in arrears to throw a share of the take their way? If so, he has let his enthusiasm for the credit system carry him into thankless martyrdom; for collectors never give a crumb of gratitude to those who keep them in business. He must alter his approach to bring the responsibilities of indebtedness into a more realistic balance with the fun of it.