"Fine, continue paying your debts!"

I got a robo-call this morning from someone telemarketing their debt consolidation and reduction services. These places usually provide some combination of loan aggregation and paid negotiation with your current creditors to reduce your balance owed, at the cost of trashing your credit rating for a while.  When I have time I will sometimes play games with telemarketers, because I abhor their business model.  Sometimes I'll even try to convince the person with whom I'm speaking that they should quit and follow their higher aspirations in life, which I'm sure never included sitting in a boiler room call center selling random people things that they don't need.  Today, however, I was in a hurry, so I skipped straight to, "Do you check your calling list against the federal Do Not Call list, of which you are now in violation?"  The woman paused for a moment and said, in a snotty tone, "Fine, continue paying your debts!" And then hung up.

I was amused and somewhat disgusted that of all the things she could have said, she chose to insult me for being someone who continues to pay his debts.  I wonder if she's ever considered that the logical extension of her work and apparent world view is the fundamental breakdown of credit systems everywhere.  After all, there is an enormous amount of unsecured credit extended every day, to individuals and business, in order to keep the economy buzzing along.  Could we live without it?  Sure, but everyone would have to maintain a larger cash reserve, and all large purchases would have to wait until after the funds for the purchase were acquired. You'd also have to send payment for all purchases in advance, or at least through some sort of escrow transaction. Imagine if every time you ordered something online, you had to send payment before the seller shipped.  And it would have to be a check, or money order, or bank transfer, because in a world with no unsecured debt, there can be no credit cards or even charge cards.  But these excellent tools do exist to allow us to smooth money over time, because people, for the most part, continue paying their debts.

I understand that there are times when circumstances make paying debts impossible.  Risky investments, such as venture capital poured into start-ups, are made with the full understanding that the money very likely will never be paid back.  In that case, the investor is taking on substantial risk in exchange for substantial potential upside.  Sure, you're 90% likely to lose your investment, but it only takes one early investment in Google to pay for all your investments in pets.com.  But here I'm talking primarily about unsecured personal debt, such as credit cards.  And yes, if you owe more in interest each month than you're able to pay, the financial hole will just get deeper without bound. In that case, a negotiated reduction in interest rate is preferable to a settlement, which is preferable to bankruptcy.  And bankruptcy is far preferable to protracted destitution.  But writing down debts should be a last resort.  When possible, we should aspire to avoid unnecessary debt, and when it is a necessary and useful evil, we should then continue paying our debts.