It seems that every time you turn on your flat-screen television (the one that’s still burning a hole in your credit card account at 30% interest) some wretched garage band is trying to get you to sign up for a free credit report. Or some sleazy lawyer is promising to do battle for you against the IRS if you just call his 800 number. Or some Dark Age barbarian is making credit card debt look like the postmodern route to happiness.
Jerrold Mundis has made a career (one of several) of throwing life preservers to all who are drowning in debt. Primarily a novelist during the ‘60s and ‘70s, Mundis nearly drowned in bills himself during the ‘80s, but struggled to the surface and decided to tell others how to do it in a book with the unwieldy title, “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously* (*Based on the Proven Principles and Techniques of Debtors Anonymous).” T: The Together Interview: Lance Dodes
Called “the most helpful self-help book” by grateful reviewers, “How to Get Out of Debt” offers an effective, no-nonsense plan to do just that. Given that much of the recent financial crisis was fueled by Americans’ blind love affair with living beyond their means (abetted, to be sure, by unscrupulous lenders), the book has never been more timely. Mundis’ other two financial books, “Earn What You Deserve: How to Stop Underearning & Start Thriving” and “Making Peace with Money,” complete a trilogy that is long on practical advice and short on ideology. In a world drunk on debt, it is both sobering and refreshing.
Mundis lives in an apartment in Manhattan’s West Village stuffed with books (including17 novels and 13 non-fiction works of his own) and the unintentional detritus from a couple of recent computer disasters. There are also stacks of research for the second update of “How to Get Out of Debt,” which was first published in 1988. Besides writing, he works with individual clients on breaking writer’s block, does literary coaching, financial coaching, and holds seminars where he evangelizes for personal solvency.
Charles Young: How is it that going into debt can be an addiction?
Jerrold Mundis: Obviously, there’s no substance to ingest that causes a metabolic change. But compulsive debting, like any other compulsion, creates neural networks that reinforce themselves over time and become stronger. Addicts in general experience emotions more acutely than the average person, or are maybe less able to integrate intense emotional states into daily life. So when emotions like fear and anxiety occur, the addict looks for ways to mitigate them. Debtors experience these states the same way an alcoholic or substance abuser does. When they perform the act of spending, shopping, borrowing, they get the relief that they crave.
CY: What’s wrong with being in debt? Isn’t the whole system to a degree based on credit?
JM: If you go back five, ten years, maybe your whole adult life, and you say, “I have never been free of unsecured debt. Every month I’m late on some bill, I owe money to a friend, a relative, I owe money on a credit card, I owe money to a department store,” always at least some amount of money each month, and it grows every month until it becomes a very large amount of money – well, that’s income you’re taking out of your future. If you can’t pay for your needs now, why do you think you’ll be able to pay for your needs in the future, plus pay off all the debts you ran up today? Whether you want to call that an addiction or a habit or an inclination, I don’t care. I do care that you recognize the source of your unhappiness, that debt is wrecking your life and interfering with your relationships.
CY: What role does the creditor play in this dynamic?
JM: If a creditor is calling and you don’t have the money, you’re going to be upset and ashamed. You want to escape, so you go borrow more money and pay what you are asked to pay. And there’s relief. Extraordinary relief. It’s like an alcoholic taking the first drink of the afternoon. You get an immediate sense of well being. That is self-reinforcing. The more you do it, the more relief you get, the more you want to do it the next time.
CY: Why do you use “debt” as a verb?
JM: Some people find it an unlovely word, and maybe it is. I like it because it makes the distinction between that kind of spending and normal spending. If I eat dinner in a restaurant and pay cash for it, my cash supply is diminished, but I don’t owe any money. If I put it on a credit card, I do owe money. I just debted. So I want to distinguish between normal spending and unsecured debt.
CY: And “debt” as a noun? How do you define “debt”?
JM: In my books I define debt as taking any goods or services that you don’t pay for in full with cash or check when you receive them. Debt is not paying any bill by the due date. Debt is taking any other form of credit or loan from anyone, from a friend or a bank that you don’t offer security for.
CY: What about secured debt?
JM: If I go to the pawn broker and give him my digital camera that I bought for $600 two months ago and he’s willing to loan me $100 for it, then he’s got security and I’ve got $100. If I don’t pay him back, he gets to keep the camera. That may be painful, because I’ve lost the camera, but I don’t owe anyone any money. You can’t sue me, you can’t harass me, you can’t take me to court. I suffer no negative consequences beyond the loss of my property. That is secured debt.
CY: What do I do after I’ve admitted to myself that I have a problem with debting?
JM: Surrender. Don’t blame your parents. Don’t blame your employer. Don’t blame high rent in Manhattan. Most Americans have a problem with the word “surrender.” They’d rather be battered but unvanquished. But surrendering here means simply that you’re going to give up your old way of doing things with money, so you can bring in a new way.
CY: And what’s that “new way”?
JM: Learn a lesson from Alcoholics Anonymous, which Debtors Anonymous did, and, one day at a time, don’t incur any new unsecured debt, the same way a sober alcoholic doesn’t drink one day at a time. You cannot get out of debt by borrowing more money, any more than an alcoholic can get sober with another drink. As they say about holes, when you’re in one, stop digging.
It’s different with a house or car. When you take out a mortgage or a car loan, the bank owns the house or car until you pay it off. If I miss payments, the bank can take the house or car, or I can sell them, and I walk away clean. I may be unhappy about my losses, but I don’t owe any more money.
CY: The easiest thing in the world to do is spend money you don’t have. How do you become more conscious about it?
JM: Keep a record of your spending. It only takes three to five minutes a day, maybe 20 minutes at the end of the month. Break your spending down into 20 or 25 categories – fewer you’re probably too vague, more you’re probably too complicated. If you buy a lot of books, that might be a separate category. If you don’t buy a lot of books, you might include them in “entertainment.” Generally, it would be rent, dry cleaning, laundry, electricity, telephone, cable, groceries, eating out in restaurants, and the like.
If you keep a spending record for 60 days, it can tell you more about your life and values than two years of therapy. Then create a spending plan. Figure out what you have to spend every month, cut it to the bone, and cut into the bone if you have to. Maybe you need to eat out less. Maybe take fewer taxis. Go to the movies less often. Whatever it takes. Ideally, of course, you will bring in more income, too. But in the beginning, it nearly always involves some surgery.
CY: Sounds like you’re speaking from experience.
JM: I’m not speaking abstractly here. I learned to do this in the trenches myself. When I first recognized I had a serious problem with debt, I thought it was because I was a freelance writer. My income was erratic. I had an unhappy divorce. I fell into some behaviors with substances that were not beneficial.
I would take a book advance, spend it, and then start borrowing money while I finished the book, then pay it back when I got the rest of the advance. Over a period of years, I was borrowing more and more until I couldn’t pay back the debts when I got the final advance. In 1983, I quit the substance abuse. In 1984, with my brain cleared up, I saw inescapably the financial hell I had fallen into. When I woke up in the morning, it felt like I had ground glass in my stomach. How am I ever going to pay these bills? How do I get out of this? It was overwhelming.
CY: Was there any help available in those days?
JM: Very little. Financial writers weren’t interested in this sort of problem back then. But I’d always been a researcher, doing historical fiction as well as other books, and I found a few things: home-ec textbooks from high school, agricultural extension courses, prosperity consciousness groups. Debtors Anonymous was quite small in those days, but it had this idea of not incurring new debt a day at a time. That was a stroke of genius. I also looked into Buddhism, cognitive psychology, Sufi philosophy.
CY: Is recovering from debting similar to recovering from alcoholism?
JM: Staying out of debt and staying away from a drink are two different things. You can’t get drunk by standing still. But you can go into debt by standing still. Bills keep coming in, and they have to be paid. If you’re not generating income, you will eventually fall into debt again. When you see that, you’re forced to consider other possibilities for making money.
In my case, I’d always been good at helping other writers break writers block. I could pretty much talk anyone out of avoiding their writing. So I made a system out of it, started advertising and charging money, wrote a book about it, and I still sell a four-hour audio seminar on breaking block. I never would have thought of doing that if I hadn’t had this commitment not to incur any new unsecured debt. And I wrote my book “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously” in 1988.
CY: Has your view changed since then?
JM: The concepts remain the same. So do the techniques. Society has changed, of course. The macro economy waxes and wanes. But even in the fat years of the ‘90s, personal bankruptcies went up from an average of 600,000 a year to 1,250,000 a year. When there was more money around than ever before, people were still going deeper and deeper into debt. Personal debt has been epidemic in the United States for nearly four decades.
This pisses people off sometimes, but I still say it: All economies are personal. How I bring money into my life, how it flows out, how I manage it – it’s influenced by the larger economy. But my personal economy is not dictated by that larger economy. Yeah, there’s a maelstrom swirling about in the macro economy, but barring total societal collapse, I can find income streams, and this is doable by nearly anyone. As I’ve often said, the day it’s safe for me to pick up a scotch again is the day it’s safe for me to incur unsecured debt again.
Charles M. Young is a journalist who has written for Rolling Stone, Men’s Journal, and Musician magazine.
