red. They are actually less happy than they were before-because they have bitten off
too much with their increase in income."
That is only natural. We all want to get more out of life. But in the long run, which is
going to bring us more happiness-forcing ourselves to live within a tight budget, or
having dunning letters in the mail and creditors pounding on the front door?
Rule No. 5: Try to build credit, in the event you must borrow.
If you are faced with an emergency and find you must borrow, life-insurance policies,
Defence Bonds and Savings Certificates are literally money in your pocket. However, be
sure your insurance policies have a savings aspect, if you want to borrow on them, for
this means a cash value. Certain types of insurance, called "term insurance", are merely
for your protection over a given period of time and do not build up reserves. These
policies are obviously of no use to you for borrowing purposes. Therefore, the rule is:
Ask questions! Before you sign for a policy, find out if it has a cash value in case you
have to raise money.
Now, suppose you haven't insurance you can borrow on, and you haven't any bonds,
but you do own a house, or a car, or some other kind of collateral. Where do you go to
borrow? By all means, to a bank! Banks all over this land are subject to strict regulation;
they have a reputation to maintain in the community; the rate of interest they can charge
is fixed firmly by law; and they will deal with you fairly. Frequently, if you are in a
financial jam, the bank will go so far as to discuss your problems with you, make a plan,
and help you work your way out of your worry and indebtedness. I repeat, I repeat, if
you have collateral, go to a bank!
However, suppose you are one of the thousands who don't have collateral, don't own
any property, and have nothing to offer as guarantee except your wages or salary?
Then, as you value your life, heed this word of warning! Do not-do not-apply to the first
"loan company" whose alluring advertisements you see in the paper. These people, to
read some of their ads, are as generous as Santa Claus. Don't you believe it! However,
there are some companies that are ethical, honest, and strictly on the level. They are
doing a service to those people who are faced with illness or emergency and have to
raise money. They charge a higher rate of interest than the banks, but they have to do
this, for they take greater risks and have greater expenses in collecting. But, before
doing business with any loan company, go to your bank, talk to one of its officers, and
ask him to recommend a loan company that he knows to be fair. Otherwise-otherwise-
well, I don't want to give you nightmares, but here is what can happen:
At one time a newspaper in Minneapolis conducted an investigation into loan companies
that were supposedly operating within the regulations laid down by the Russell Sage
Foundation. I know a man who worked on that investigation-his name is Douglas Lurton,
and he is now editor of Your Life magazine. Doug Lurton tells me that the abuses he
saw among the poorer class of debtors would make your hair stand on end. Loans that
had begun as a mere fifty dollars had soared and multiplied to three and four hundred
dollars before they were paid. Wages were garnished; and, frequently, the man whose
wages were attached was fired by his company. In numerous instances, when the man
was unable to pay, the loan sharks simply sent an appraiser into his home to "evaluate"
his furniture-and cleaned out the home! People were found who had been paying on
small loans for four and five years and still owed money! Unusual cases? To quote
Doug Lurton: "In our campaign, we so flooded the court with cases of this sort that the
judges cried uncle, and the newspaper itself had to set up an arbitration bureau to take
care of the hundreds of cases."