Owe Really: Financial Advice Ignores the Shared Reality of Debt

Illustration by Drawkit.io, Multiple characters interacting with finance chart

Illustration by Drawkit.io

This article was published in Plastic Issue #91 | Summer 2021

AFTER CONGRESS passed the first COVID-19 relief bill, which included issuing $1,200 stimulus checks to eligible Americans, a question began circulating online: Should people ignore the bills piling up during the pandemic and invest the $1,200 in the stock market or a new business instead? Assuming a stimulus check doubles as disposable income for those receiving it also assumes we all have discretionary money to spend. That’s a false assumption: As well-known financial adviser Dave Ramsey told the Hill in February 2020, “If a check for “$600 or $1,400 changes your life, you were pretty much screwed already.” Ramsey’s right: NBC News reported in October 2020 that 55 million people in the United States were living in poverty, including 8 million who had become impoverished since May that same year. Although the stimulus checks did relieve some financial stress, NBC also reported that “poverty rates, especially those among minorities and children, rebounded” after the money dried up. If a stimulus check won’t really change your financial reality, why not take the “extra” money and have a little fun with it? Because most of us simply don’t have that privilege, even under normal circumstances.

When the COVID-19 pandemic hit, the Trump administration temporarily suspended payments on federal student loans, stopped collections on defaulted loans, and instituted a 0 percent interest rate, but most Americans still weren’t kept afloat. According to MarketWatch, 22 million jobs were lost in March and April 2020, and thanks to unexpected hiccups, many people waited for weeks—or even months—for their unemployment claims to be approved. In Oregon alone, it took until August 2020 to clear a backlog of 70,000 Pandemic Unemployment Assistance claims. And as Portland resident Alexis Brooks tells Bitch, job searching during a pandemic isn’t easy. “There’s not only the stress of finding a fulfilling career but [also] of finding something that will pay enough to cover loan payments and basic living expenses,” Brooks says. “A lot of companies aren’t looking to hire new employees anytime soon.” Though some states have instituted eviction moratoriums, millions of renters are still in danger. A February 2021 article in USA Today noted that one-third of all Americans—approximately 107 million people—rent their homes, and only 40 million had been protected by an eviction moratorium since the pandemic began. Suffice to say, most people are worried about keeping a roof over their heads and food in their bellies—but what does that mean for the millions of Americans who were already swimming in debt before the pandemic hit?

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In the United States, being in debt is as commonplace as having some kind of milk in your fridge. In fact, not having debt—or managing to pay it off—is considered unusual, one of the tangible benefits of class privilege. According to The Federal Reserve Bank of New York’s Center for Microeconomic Data’s Quarterly Report on Household Debt and Credit, total household debt increased by $206 billion in the fourth quarter of 2020. Per Experian, average credit card debt in 2020 was approximately $5,300, a 14 percent increase from 2019

As some progressive congressional leaders attempt to alleviate student loan debt, a frustrating but comforting thought comes to mind: We’re seemingly all in this together. The debt has welcomed us. The debt is our toxic friend. The 2020 American Psychological Association Stress in America survey found that 64 percent of adults said money is a significant source of stress in their life. That stress is now compounded by our current conditions: “I’m constantly stressed about money choices because I obviously made some bad choices to be in this position,” one Twitter user (who wishes to remain anonymous) tells Bitch. “I thought that I was doing right by beginning to pay it off, but now I feel like I lost all of that money.”

There’s not only the stress of finding a fulfilling career but of finding something that will pay enough to cover loan payments and basic living expenses.

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I currently have a little less than $26,000 in debt, most of which can be attributed to student loans at a university I don’t have a degree from yet. The rest? Credit cards. I wasn’t raised in a home where we discussed credit cards, investing, or money beyond paying bills—and, sometimes, not having enough money to cover those bills. But when I got approved for my first credit card at age 19, I became an adult with financial responsibilities I didn’t fully grasp. I could charge up to $1,200 without a care in the world, or so I thought. My debt grew through a little spending here, a few “I deserve it” treats there. This is what being an adult is all about, I thought, watching the money in my checking account dwindle as I spent more and more to cover my ever-growing credit card payment. This, my friends, was financial freedom. Suddenly, I was receiving daily emails about being this close to getting my card declined. I’d panic, then immediately begin the shame spiral. It’s easy to slide into debt, and while the financial aspect of it can drown you, so too can the shame of talking about it. In The Debt Project: 99 Portraits Across America (2020), photographer Brittany M. Powell interviewed strangers around the country about debt. For some, student loans and putting necessities on their cards led to debt. For others, it was medical bills or unemployment. “I was surprised that once I filed for bankruptcy, I no longer felt ashamed about my experience, and I wanted to talk to others about theirs,” Powell writes. It can be so easy to feel alone in debt, even though dollar signs weigh heavily on many of our minds.

Despite the threat of debt, people are being told to use their stimulus checks to either invest or to start a business. In a country without universal healthcare or a livable minimum wage, the idea of telling people who live paycheck to paycheck that the best way to take control of their finances is to “work even harder and take risks” is ignorant at best. In 2020, billionaires added approximately $1 trillion to their total net worth as millions of Americans worried about where their next meal would come from. That’s not the result of poor investing; it’s the result of massive class disparities and the structures and powers that be. When financial advice doesn’t openly acknowledge that people live with debt, it only reinforces shame and guilt. Some of us, myself included, haven’t always made the best financial choices, while others simply didn’t have a choice. But until this country is equal in every sense of the word, there will always be citizens in debt. No matter how long it takes for us to go back to some version of what we used to consider normal, our normal is imbued with inescapable debt. Those debts will continue to increase. Bills will continue to be delayed. Credit cards will continue to be swiped for both necessary purchases and the occasional pick-me-up because we could all use one after the hand that 2020 dealt us. That’s a problem for future us—and it’s one we will all have to face.

 

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by Katherine Morgan
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