Is Being In Debt an Integrity Problem?

August 2, 2007 at 3:08 AM 13 comments

Tonight I finally got a chance to watch an episode of The Millionaire Inside: Debt Free that had been sitting on my TIVO for weeks. For the most part the show was a total waste of time and thankfully I was able to fast forward through most of it. In my opinion, the producers wasted a great opportunity to provide helpful debt elimination tips to the viewers. Instead of hearing quality advice, the subject matter experts, (David Bach, Robert Kiyosaki and Jennifer Openshaw), babbled on providing bland and often conflicting financial advice. Personally, I think the show was really more about helping the experts sell books then helping the end consumer get out of debt.

Despite three unmemorable panelists, I did appreciate the frank discussions of the fourth panelist: Larry Winget. Winget was by far the most sincere in his comments. He seemed like the one honest salesman in a see of shady car dealers.

At one point in the show, in response to an audience member’s question, Robert Kiyosaki mentioned the need for financial education in our school systems. Larry Winget retorted with a very interesting statement. He said, “It’s more than just being taught about money. When you teach people how to take responsibility for their lives you ground them in integrity. People that don’t pay their bills, don’t have money because it’s an integrity problem, not a money problem . If you’re responsible to the people you signed that contract with then you will pay them because you are a person who honors your contracts. So what you’re talking about teaching kids is not just reading and writing, you’re teaching people to be responsible human beings, and responsible human beings always do the right thing, whether it’s money or not money.”

I know so many people with high incomes who are always behind on their bills. Now I’m not talking about all people that are in debt. Obviously there are exceptions to every rule, like a medical injury or illness that unexpectedly causes financial debts, or being in debt due to student loans. But for the few that are in debt due to these circumstances there seem to be quite a few people in debt for fruitless reasons. How many people do you know that have reneged on personal loans from friends or family? How many people do you know that allow their clothes, cars, and homes define them? How many people do you know that present a ‘false’ image of themselves to friends and family? How many people do you know that are currently in debt and continue to use credit credits to accumulate more? How many people do you know that live way beyond their means?

The more I think about it the more I find myself agreeing with Larry. Do you agree? Do you think debt is a problem with money or integrity?

Addendum: After reading the comments on this post I wanted to clarify my own thoughts on this subject. Clearly this post is discussing extraneous debt. For example, credit card debt accumulated for clothes, jewelry, gadgets, etc. It could also include debt for an expensive car. Essentially any debt that is accumulated for items that one could not afford and therefore should not have purchased. In my opinion, purchasing items you want, but cannot afford, is an indication of irresponsibility. And the lack of responsibility for one’s behavior can be an indication of poor integrity. Although Larry discusses integrity in context to those who do not pay their bills I believe the stroke is much broader. It should begin at the point of consumption. The responsibility comes not just in paying the bill on time, but in not purchasing the item in the first place.

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13 Comments Add your own

  • 1. Fianna  |  August 2, 2007 at 3:49 AM

    I agree, but also find it necessary to say that it is the type of debt and the reasoning behind the debt. I know a lot of people, including myself that were young when their debt was acquired, or was a result of bad circumstances.

    Those people I know that I relate to Larry’s comments have payday loans, are months behind in their payments, don’t repay loans from friends and family.

    There is a huge difference between these types of people. I believe that integrity comes into play when the person has a choice to repay the debts. Do they cut their lifestyle in order to make the payments or do they ignore them? Continue to incur more debt?

    As to your final question, debt is rarely a money problem. It may begin as a problem due to lack of knowledge, but the choices made – do they work to get out of debt or stay in it, this shows their character and self-discipline.

    Reply
  • 2. M  |  August 2, 2007 at 7:20 AM

    I don’t think being in debt is in any way equivalent to having reneged on loans or broken contracts. Honestly, I’m not sure where that association came from in this post, or why being in debt is associated with not being a moral citizen! Even if one makes poor spending choices, that does not make him/her dishonest!

    Having debt simply means that you’ve borrowed money. Just because you have debt does not mean you are not keeping your word and adhering to your contracts. Just because you have debt doesn’t mean you are not paying it off in accordance to your contract.

    I think judging someone’s character based on their debt or spending is not productive or accurate. People are complex and are shaped by many factors, forces, and history. You cannot simply look at someone’s debt and expenditures and know what kind of person they are, or why.

    I think there are a lot of assumptions and unnecessary judgments in this post. I think there’s a real danger of falling into a very judgmental stance when focusing on finances, or often discipline of any kind, and it can be, in my opinion, a negative side effect of any self improvement effort. Equating good financial choices with good character is, in my opinion, a large mistake.

    Reply
  • 3. Amelia  |  August 2, 2007 at 3:57 PM

    Wow. I somehow completely agree with the original post and m. I DO think that learning about how to manage money does go hand in hand with lessons about integrity and character. But just because I believe that does not equate to me thinking that all people with debt are reneging on contracts, etc. It’s just a piece of the story.

    I was/am one of those people who wracked up thousands of dollars in debt in my early twenties. I had a head-in-the-sand attitude about finances and dealing with all the stuff surrounding them. However, I paid my minimum payments on time and fulfilled my end of the contract. I was no deadbeat. But was I living with integrity? Not in my own estimation. I was only hurting myself – paying tons of needless interest on purchases I probably could have lived without. All that debt was/is standing my way of achieving goals.

    In essence, I am self-educating myself about personal finance and how to feel good about myself in relation to it. Toward that end, I consolidated those debts and got started on repaying them. The single payment a month and lower interest rates were a relief and I always managed to have that lump sum in my account each month. I got rid of the cards and forced myself to live within my means. I managed that for a couple of years before I realized that I still had more work to do. So I got down to it and made a budget and worked out a plan to start saving to create an emergency fund. My next step down this road is to start paying extra on those cards to get the debt paid off faster. Hopefully, I will be able to start that by the end of the year, once my emergency fund is firmly in place.

    So this IS about integrity for me and I do believe that good information and mentoring about this in school would be very helpful. At least these kids would have a clue and it would give them at least something to look to apart from the habits of their parents, which may or may not be worth emulating. It may have helped me! Even just practical skills and tools for money management would be a huge improvement, if the integrity piece seems to “out there” for some.

    Reply
  • 4. One Frugal Girl  |  August 3, 2007 at 2:43 AM

    I agree with all of these comments to a certain degree. I wonder if Larry Winget had used the word responsibility instead of integrity would you feel differently about his statement?

    Reply
  • 5. emma  |  August 4, 2007 at 7:31 AM

    I think in most cases, breaking contracts or taking risks with other people’s money is indicative of an integrity problem. I also agree with M, though. I have / have had credit card and personal loan debt. I stuck to the contract, made the payments. I don’t think my debt was wise though. I think it was indicative of an awareness and personal responsibility problem so in that I agree with the last comment that had the word been responsibility rather than integrity my perception would be different. However, I think debt in and of itself is no more definitely indicative of a person’s moral character than having flash assets on display.

    Reply
  • 6. Ammar  |  August 4, 2007 at 2:10 PM

    Depends on your definition of integrity. Being in debt, in my mind, definitely has to do with character. I can’t stand being in debt. I’m working three part-time jobs right now to pay it off even as I’m racking it up (student loans). Warren Buffett, 2nd richest man in the world (3rd now, maybe) hates debt. It doesn’t sit right with him to use debt, and I’d say he has an especially strong character.

    Re m’s post: It’s hard for me to enjoy something on someone else’s dime, whether i have to pay it back later or not. I’d argue that integrity in this case means being able to deny getting something unless YOU can get it by working hard. And it takes character to deny yourself something and discipline yourself. Thus being in consumer debt, in my mind, does have to do with discipline and character.

    Reply
  • 7. M  |  August 6, 2007 at 4:39 PM

    Dear Aamar,

    How would you suggest paying for sugeries and other medical bills that are a necessity (and this is just one example) by “working hard”? Shall one wait till one has saved enough for a $10,000 surgery and possibly die in the meantime?

    There are as many reasons for debt as there are people who have it, and many of those reasons have nothing to do with not working hard or not being able to delay gratification. Judging others without knowing their situations is always dangerous.

    I stand by my comment: Equating “good” financial choices with good character is, in my opinion, a large mistake.

    Reply
  • 8. Vicki  |  August 7, 2007 at 1:37 AM

    Larry’s show, Big Spender, on basic cable is one of my favorites. He has an intervention of sorts with people with mind-boggling amounts of consumer debt. They usually have a car and a bunch of junk they can’t afford.

    Larry’s philosophy is better explained when he makes a woman with 1,000 pairs of shoes apologize to her landlord/cousin/mother for being late paying back the money. That act to me shows what he means, that it is an integrity problem when you spend on things you can’t afford. It usually involves crying, and the shopaholic usually wants to just put the check in the mail. And that is the difference between taking responsiblity for your debt and paying it off.

    Reply
  • 9. The Happy Rock  |  August 7, 2007 at 5:59 PM

    It seems like not paying back debt would be definitely be an integrity problem, but I am undecided if just having debt is.

    I do like Aamar’s comment “And it takes character to deny yourself something and discipline yourself. Thus being in consumer debt, in my mind, does have to do with discipline and character.”

    He does make a distinction and say that consumer debt has to do with one’s character.

    I am not sure that we can use any blanket statement though to say all debt is an integrity issue. I do think that taking responsibility for your actions means you will pay the debt back though.

    Reply
  • 10. The Happy Rock  |  August 7, 2007 at 6:00 PM

    I meant to say that I am a big fan of starting the discussion though! Great job.

    Reply
  • 11. SAHMmy Says  |  August 8, 2007 at 3:01 PM

    I don’t think you need to excuse your opinion with the addendum–of course there are circumstances beyond one’s control that cause debt and reasonable people should understand that the exception proves the rule. I agree that not making good on debts in a timely manner is an integrity issue. For instance, my brother owes upward of $80,000 in student loans which are in forbearance. He complains to me on his cell phone while going through the drivethru at Starbucks in his new car to buy a $4 latte.

    Reply
  • 12. CC  |  August 11, 2007 at 10:12 PM

    Great blog. Very thought-provoking.

    I’m gearing up to go back to school after a long absence, and really excited. I’m not excited about the necessary student loans, but I consider them “good debt” (as opposed to credit cards being “bad debt).

    Reply
  • 13. plonkee  |  August 17, 2007 at 9:05 AM

    I agree that misuse of debt and credit is not really a money problem. I disagree that it is an integrity problem.

    I honestly think that people who overspend have issues that they need to overcome. These might just be entitlement issues, but until the underlying cause is addressed they won’t really stop spending.

    Reply

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