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IF I’M HONEST WITH myself, I’ve been financially comfortable for so long that I’ve lost the ability to truly relate to those living paycheck to paycheck. But over a lifetime of working with people and their money, I’ve learned to be aware of signs that someone may be on the brink of breakdown—and could use some help.
I was only 22 years old when I had my first shocking experience with the power of money to cause a life to self-destruct. I was working as one of the federal government’s national bank examiners. A teller’s cash drawer was missing money and she was sent home.
Around lunchtime, the bank president realized his truck was also missing. The teller had stolen his truck, and then driven for several hours before stopping and attempting to end her life. Fortunately, she wasn’t successful.
But the experience made a big impression on me. Money is a double-edged sword with the power both to help fulfill our aspirations and to destroy. How can we help those who are struggling? Try these three steps.
1. Strive to be a “financial first responder.” That’s the label I give to those willing to help others in financial difficulty. We know that depression can occur in those suffering from too much consumer debt. If not addressed, serious consequences often result.
In such situations, there are time-tested methods to give people hope. It doesn’t take an MBA to help those who have too much credit card debt. Just like we learn first aid to assist with a medical need when a doctor isn’t around, anyone can learn some basics to help financially stressed people who can’t afford professional help.
I’ve trained others with materials from organizations like Crown Financial Ministries. The goal is to lay out a series of small, manageable steps that can be used to gain financial peace of mind. The first step might be to find a way to save $500. It’s something almost everybody can accomplish, and it gives them the confidence to move on to the next step of reducing debt. Crown’s money map is a brilliant formulation of baby steps to give those in deep debt hope that there’s a way out.
2. Redefine failure as a virtue. One of the reasons our economy has been a success is our acceptance of failure. For much of human history, debtors who couldn’t pay their loans went to prison. But in America, we made bankruptcy relatively easy so folks could discharge their debts and start over.
You might think, as a banker, I’d prefer the harsh debtors’ prison method. But there’s real value to society, as well as to the individual, in making bankruptcy less severe.
If bankrupt entrepreneurs are excessively punished for failure, they may give up on high-risk but potentially high-return opportunities. Think Henry Ford, who had two companies go bankrupt before he succeeded. Or Walt Disney, who was fired by an editor because he had no imagination. Or Mark Cuban, who failed as a waiter, carpenter and cook before finding success.
High-tech firms like Amazon believe if they aren’t trying and failing with new ideas, they aren’t maximizing long-term value for shareholders. The list of failed Amazon ventures is remarkable. Amazon Fire smartphone lost $170 million before being shuttered. Kozmo.com was a $60 million dollar write-off. There are many more.
Amazon founder Jeff Bezos has a high view of failure’s value: “I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins.” We need to remind ourselves and others that there shouldn’t be shame in failure, but there might be regret in being too fearful to try new initiatives.
3. Remember the limits of money and the value of life. I became a bank chief executive in my mid-30s. I was driven to achieve great numbers. When something or someone got in the way of that objective, I could lose perspective.
Fortunately, I worked with a bank attorney named George who had flown multiple missions over Germany during the Second World War. He had the perspective to distinguish between what was really important and what was a temporary problem.
One day, my bank discovered a customer had sold “encumbered” assets without first paying off the bank loan that was secured by those assets. Even worse, he lied to the bank, saying he still had the collateral. George and I met with the customer and his lawyer.
As the start of the meeting, the customer began talking. He was completely broken. In tears, he shamefully admitted his deception. He was looking at financial ruin and possible criminal charges. But I was mad and less than sympathetic. Fortunately, George took over the meeting.
Rather than beat the guy up, George sensed the man was suicidal. George comforted him with assurances that he could get through this situation. I remember George telling him, “You know, in a few years, no one will even remember this happened. We have to get through this, but you will have a life once it’s over.”
I’ve heard a lot of sermons where a preacher taught the Christian virtue of loving those who have wronged us. But that day, George taught me that lesson more effectively than any preacher could. With George’s encouragement, the customer got through his problems and went on to lead a productive life.
In the years that followed, I had to deal with many problems created by bad money decisions by my employees and customers. But I never forgot that lesson I learned from George. Thanks to him, I found I was able to show a little more humanity in dealing with financial problems.
Joe Kesler is the author of Smart Money with Purpose and the founder of a website with the same name, which is where a version of this article first appeared. He spent 40 years in community banking, assisting small businesses and consumers. Joe served as chief executive of banks in Illinois and Montana. He currently lives with his wife in Missoula, Montana, spending his time writing on personal finance, serving on two bank boards and hiking in the Rocky Mountains. Check out Joe’s previous articles.
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Joe – thank you for putting a very human face on the financial missteps of others. This article helped me gain real perspective on these crisis moments as “life lessons”. Showing empathy (in contrast to sympathy) to those who take a hard fall off the financial wagon is critical, but it can be easily get lost in the heat of dealing with their financial crisis. Your article touched me greatly given my role in helping those I serve to plan prudently with their money. It’s easy to get locked into a “left brain” mindset on financial matters when building a financial plan..the linear mental activities (rate of return, debt to income ratio, asset allocation, future inflation impact, taxation, et al). Most positive (and negative) financial behaviors are right-brain driven (emotion) type activities. Behind every balance sheet is a real person with hopes, fears and personal challenges. We need more “George and Joe” conversations with those who struggle. Thanks for keeping it real, sir!
Good observations! Thanks for sharing your experience in this area of helping others.
Great contribution, Joe. Thanks.
Your story about George is a great illustration of how much more powerful it is to learn from examples rather than from people preaching to us and telling us what we “ought” to do.
Thanks Andrew. I find I learn the best lessons from the George’s that practice what I hear preached.
You sound like one of those friendly country bankers who has compassion for their customers. Would you support some federal legislated relief for students with very high student debt(about $1.5 trillion overall) who, except in situations of undue hardship, cannot discharge this type of debt in bankruptcy?
Good question Peter, but it’s a bit beyond my scope of expertise. The moral hazard of forgiving student debt, the obligation of universities to prevent students from racking up debt for degrees that don’t have the cash flow to pay them back, and the anger a mass forgiveness would create from those who sacrificed and paid their debt back are issues way beyond those I dealt with in community lending. I know many who labor under student loan debt, so I understand your interest in it. The pain is real. But I don’t have the answers to that realm of finance.
Like the moral hazard of bailing out the big banks. I guess that was a mistake too.
Ha, touché Peter! That’s a good point. I didn’t like that bailout either when it happened. However, as you probably know, the government ended up making over $15 billion for taxpayers from the Tarp bailout. And they extracted a pound of flesh with Dodd Frank to help battle the moral hazard ethical issue. I think they did a good job eliminating any thought of any banker that they should go out and take ridiculous risks because the government will bail them out.
I haven’t studied the student loan issue a lot, but I don’t think there is any consideration to punish student loan borrowers like congress did with the banks to address moral hazard. Or any thought that a discharge of student loan debt would help all taxpayers the way TARP did. In any event, I understand your point that student loans are a problem for many. One thing I love about community lending is that you can address every loan situation uniquely. Public policy is not so flexible. Good luck as you pursue a solution.
Appreciate the article, Ive found things don’t go just as I planned – but as the song goes – “You can’t always get what you want but if you try sometimes, you get what you need”.
Thanks Bob. I used to sing that line to my kids when they would whine about something.
Joe. Great article and great message. Rhanks
Excellent…we all need a second and maybe a third chance in life.