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Bill Collectors: How to Keep Them Away from Your Children

Debt problems are often rooted in bad habits developed during high school and college. The average college grad has $21,000 in student loan debt and a few thousand dollars on his plastic, and such poor job prospects that getting out of hoc soon is nearly impossible. One of the kindest things parents can do is teach their kids how to manage money and credit now so that the bill collectors stay away from them later.

You know that, of course. But what you may not understand is just how emotionally draining life will be for your kids if they enter adulthood with excessive debt. People who fall behind in their bills are filled with regrets. (Why did I buy those Jimmy Choos? Did we really need the expensive wine?) They fight about money with their spouse. (I won't cancel my golf trip!) They have more stress and less sex, and they spend untold hours dealing with unscrupulous debt collectors.

Much has been written about the crippling nature of debt from a budget point of view. Yet I'm not sure the psychological side has been well explored. I get the occasional collector calling me about a missed payment -- the result of an honest (but stupid) mistake on my part, and thankfully one that I can quickly correct. I'm always astounded and sometimes shocked by their scolding voice and crass ultimatums. Those calls leave me irritated, and I spend way too much unproductive time stewing.

But it's multiple times worse if you cannot make the payment and debt collectors harass you with frequent threats that range from the legal (lawsuit to garnish your wages) to the nefarious (go public with your delinquency, or maybe break your knee caps). The most chilling business confession I ever read comes from former debt collector Alexis Moore, who recounts how her colleagues had contests to see who could make the most people cry in one day and occasionally threatened debtors with a tire iron.

Do you want these people in your kids' life? I don't even want them in my kids' zip code. Better they deal with Vinnie down at the docks. Not all debt collectors break the law. But complaints of shady debt collection practices rose 6 percent last year and there is enough money in it for bullies to justify their hardball tactics.

In this blog my goal is to examine a wide range of issues having to do with kids and money from the viewpoint of a concerned father whose own children are nearly adults. I offer thoughts on the consequences of teen financial illiteracy and advice on how to raise responsible children. The subject blossomed into a passion for me two years ago, when my oldest went to college and I realized I hadn't done all I could to prepare her for financial independence. In the column I write for Money, I penned an open letter to my college-bound daughter with money tips for students. I later appeared on the Oprah Show to talk about it.

I'm all about responsibility and self-sufficiency. I believe people should be reasonably compelled to pay what they owe. Without debt collectors, many interest rates would be higher for people who do pay on time. So this industry has its place. My point is that bad money habits learned early will expose your kids to a nasty, seedy side of life that could and should be avoided. The right credit practices now will keep the thugs away later. And they just might lead to more sex in adulthood -- and no regrets over that bottle of Château Lafite Rothschild, which, arguably, is what got them in the bedroom in the first place.

photo by Jenny Downing from flickr