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Personalizing the Debt Limit

by WALTER BRASCH

You have a credit card with a $25,000 limit.

Because you have a good job, you only have $6,000 on the card, and routinely pay the monthly statement and a little extra on the principal.

But then you decide you need a 52-inch high-def LCD TV screen to go into your “man cave,” and your family rightfully decides they need a vacation. So, you add a few thousand to the credit card. But, it’s all OK since you just got a promotion at work.

A couple of months later, your 2008 Honda begins puffing smoke. By the time repairs are done, it’s another thousand on the card.

And then your boss calls you into her office. Your work has been excellent, she tells you. You have made numerous contributions to the company, she says. But her boss has figured out he can make even more money for himself and the nebulous apparitions known as stockholders, so he is sending much of the company’s manufacturing needs overseas, where labor (and often workmanship) is much less of a financial burden. Besides, he won’t have to deal with unions overseas. Oh, yeah, says your boss, you’ve been replaced by some guy in Pakistan who’ll work for a tenth of your salary.

But there’s good news, says your boss. Because of your long and dedicated service, you’ll get four whole weeks salary—and health care benefits for two full months. You’ll surely find work in that time, you believe.

Three months later, you’re still unemployed. The mortgage is due. Bills pile up. But, you’re optimistic. You have a good work record. You’ll find another job. Besides, your wife (who had quit her job to spend full-time taking care of the home and raising the three children) just got a job at $7.80 an hour as a clerk at a big-box department store to help out. It’s only temporary, the two of you believe. You’ll get a job soon; she’ll be able to quit her job. A few more months go by, and both of you are now working—she as a near-minimum-wage clerk; you as a part-time customer service representative for a hardware store at two bucks over minimum wage. That’s all you could find. You don’t have health benefits; hers, which cover the family, are significantly less than what you once had.

You’re depressed, but there’s no money for social workers or psychologists. You and your family are a bit testy, snapping out for no apparent reason; there’s no money for marital counseling.

The bills pile up. There’s unreimbursed medical costs, a couple of unexpected veterinary bills for your two dogs, clothes for the kids, gas for the cars so you can get to your jobs. And then that variable interest mortgage hits a new high. You put a few more necessities onto the credit card and are now are at $24,950 of your $25,000 debt limit.

So, you go to the bank—the one that sold you the house, and which gladly gave you a mortgage when times were good and it could make a lot of money—and ask for a raise in the credit limit.

But times aren’t that good right now, and the bank refuses to raise your credit limit. After all, says the banker, there’s no way you could make monthly payments.

You plead that if the bank doesn’t raise the credit card limit, you won’t be able to survive, that you’ll have to default. That means you’ll lose your house and, probably, your cars. Your credit rating, once among the best, will plummet even further. Too bad, says the banker. Get another job, he says. One that pays better. Or, maybe work two jobs. Of course, there’s no jobs at the bank, or anywhere else. But that’s not his problem.

You again plead for help, but the banker isn’t interested. It’s your fault you’re in this mess, he tells you. You spent too much, he coldly explains. Cut spending, and you’ll be able to meet your minimum monthly payment—you know, the one with the 13.5 percent interest that goes to the bank—and, well, figure out something. He has no compassion and won’t help.

But there may be hope. Another banker comes into the office, hears your story, and wants to raise your debt limit, but the other banker has taken a stand. With you in the office, the two of them talk, argue, and shout loud enough so the other bankers and customers can hear them. It’s now 3:55 p.m., and the bank closes in five minutes, at which time the credit card, because of steadily rising interest, will be maxed out.

Finally, the two bankers agree to provide a miniscule amount of help. They will temporarily raise your credit limit, but will now dictate exactly what you can spend, and how you’ll spend it.

Since you like hunting, and they like hunting, they’ll let you buy all the guns and ammunition you want. But, they can’t help you on your health bills, or even lower the insurance premiums and co-pays. And, they can’t do much for that inflated mortgage payment. Or to help you find another job.

You will have to wear old clothes, used clothes, or lower your clothing expenses, they say, but there’s a solution. They give you a catalogue of very nice clothes—men’s, women’s, children’s. The pictures of the clothes, in full color on glossy paper, is just what you need to reduce your costs so you look presentable at the next job interview. And no one notices that the clothes the banker wants you to buy are all made in Pakistan.

Walter Brasch is an award-winning syndicated social issues journalist. His current book, Before the First Snow, looks at an energy company that lures citizen consent because of jobs in a depressed economy, but which may threaten health, safety, and environment.