America's Consumer Debt Culture

America's Consumer Debt Culture

                You have $10, you can use this money to buy various things like: apples for $2, video games for $5, candy bars for $1, or books for $3.  You can spend your money in any combination to get the items you would like.  This could be a word problem a typical 3rd grader might see in his/her basic math class, and they would most likely come up with answers like; buy 5 apples, buy a video game and 5 candy bars, or maybe 3 books and a candy bar.  All of these would be acceptable answers, and it is seemingly a very easy problem, and yet when American consumers are faced with scenarios like these in their day-to-day lives they end up buying 4 apples, 2 candy bars, and then putting a video game and a book on their MasterCard with a 12% interest rate.  America has created a culture where its people feel they must live outside their means, buying bigger and better things regardless of whether it is fiscally responsible or not.  Last year 43% of American households spent more money than they earned (Debt Slavery: 30 Facts About Debt in America That Will Blow Your Mind).  Consumer debt is a big problem in the United States emerging from a culture that teaches excessiveness and glamour over responsibility, and leads to numerous problems including specific common mental disorders, suicide ideation and other health concerns (European Journal of Public Health; Psychological Medicine; Debt Stress Causing Health Problems, Poll Finds).

                American households currently owe $22,720 on average, for a total of $2.795 billion (Debt Slavery: 30 Facts About Debt in America That Will Blow Your Mind).  This is an alarming figure considering the fact that the median income is approximately $45,000 (I used median rather than mean, because the extremely rich skew the data).  This means that an average family in America would have to spend about half of their income just to pay off their debt, and that is before any expenses are incurred, so it is easy to see how much debt people really have.  The reason people have accumulated so much debt is that American’s have become extremely dependent on credit cards, and buying items on credit.  A credit card can be an effective tool if used correctly, and is helpful when looking into buying a home or car.  The problem is that people are not using credit cards effectively.  46% of Americans carry a credit card balance month to month, and households average an outstanding credit card debt of over $6000 (Debt Slavery: 30 Facts About Debt In America That Will Blow Your Mind).  $6000 may not sound like too daunting of a total, but most people who carry balances month to month end up paying the minimum payment, because they simply can’t afford any more than that.  The problem with this is that, let say you have a $10,000 balance, and are paying 13% APR, and only pay the minimum payment each month.  It would take you 27 years to pay off this debt and you will end up paying over $21,000.  Paying an extra $11,000 is just plain irresponsible.  These kinds of decisions are a result of a need for instant gratification, or “wanting it now” (Debt Slavery: 30 Facts About Debt in America That Will Blow Your Mind).  This way of thinking, of only worrying about feeling happy right this minute oftentimes leads to problems down the road, as decisions made to satisfy instant gratification are done without taking into account the consequences down the road.  Americans need to change this way of thinking and begin to adapt more cautious, fiscally responsible purchasing habits.

                The reliance on debt culture isn’t a global phenomenon either.  According to Natalia V. Osispova, “In my experience, immigrants and first-generation children tend to accumulate wealth much more quickly than those of us with families who have been in the U.S. longer.”  Many immigrants or first generation Americans are actually baffled by the “debt culture” in America.  This is why immigrants actually have a lower poverty rate than US-born citizens (Osipova).  Because of immigrants distrust in credit they rarely accumulate debt, but they also aren’t able to establish a good credit history, which makes getting home and auto loans more difficult.  There needs to be a happy medium here, a situation in which consumers have the self-control to not treat credit cards like “free money”, but also not be afraid of credit.

                The self-control is the real issue in America, and it isn’t just limited to debt and misusing credit cards.  As J.R. Slosar says in his book, The Culture of Excess: How America Lost Self-Control and Why We Need to Redefine Success, the drive to succeed and the fear of missing out (which leads to need for instant gratification) generates not only debt, but also “in everything from sharp rises in obesity and cosmetic medical procedures to equally troubling increases in eating disorders, panic attacks, and outbreaks of

uncontrollable rage” (Slosar).  The issue of obesity is a front page issue these days, and in many ways the attitudes and behaviors that lead to obesity are similar to the ones that lead to indebtedness.  When we think of an obese person we think of a lazy person who is a regular at McDonalds or BK.  Think about it this way, though, a person who is lazy and maybe doesn’t think about the consequences of eating at a fast food burger joint, just because it’s on the way home, or it’s easier than cooking a meal.  These are the same kind of thoughts a person who impulse buys new jet skis on credit has, both are trying to fulfill a want and they are doing so in the easiest or quickest way.  Neither thinks about the fact that eating burgers will make them fat and unhealthy, or that money would be better served in a long term investment. 

             Another reason people make these decisions is that they believe that gaining these material possessions will result in more happiness.  This is the wrong way to acquire happiness, though, as Viktor Frankl said, “It is the very pursuit of happiness, that thwarts happiness” (Smith).  People are mistaken when they believe that buying new cars or jewelry will bring them great happiness.  In fact, happiness is more closely associated with “giving”, rather than “taking” (Smith).  This means that people who give to charity, help others out, and don’t worry about material things are much happier than people who spend their lives trying to acquire things.

  This leads us into the other reason that buying a bunch of stuff you can’t afford doesn’t lead to happiness, and that reason is that personal debt leads to an increased chance of suicidal ideation, puts a person at risk for developing several common mental disorders, or CMDs, and also can lead to other general health problems (European Journal of Public Health; Psychological Medicine; Debt Stress Causing Health Problems, Poll Finds).  According to a study, adults in debt are 3 times more likely to develop CMDs and those who had to resort to borrowing money from a pawnbroker or a moneylender had the highest rate of CMDs, approximately 50%.  These CMD’s include disorders such as: depression, phobia, generalized anxiety disorder, and OCD (European Journal of Public Health).  Also those who were in debt were twice as likely to think about committing suicide, as their debt free peers (Psychological Medicine).  There are few things scarier than somebody you know thinking about committing suicide, and if staying out of debt can help prevent those kinds of thoughts I think we should go to great lengths to avoid indebtedness.  Lastly, the poll done by NBCNews showed us that people who admitted to having to having high amounts of debt stress were more than 3 times as likely to suffer from an ulcer, almost 3 times as likely to suffer from migraines, and twice as likely to suffer a heart attack (Debt Stress Causing Health Problems). 

	Ulcers	Migraines	Severe Anxiety	Severe Depression	Heart Attack	Muscle Tension
People Suffering From Debt Stress	27%	44%	29%	23%	6%	51%
People With Low or No Debt Stress	8%	15%	4%	4%	3%	31%

  Being in debt is seemingly an American way of life nowadays, and this is the kind of way of life we should be ashamed of, and should try to eradicate, as quickly as possible.  Indebtedness leads to all kinds of problems in our lives: from simply going broke, to not having any money for retirement, to decreased overall happiness, an unhealthier life and lastly to suicidal ideation and the development of CMDs.  I believe that we need to practice better spending habits, and work on self-control as a country, not only because being in debt is irresponsible, but also to improve our quality of life.  We, at the GreenRoom, challenge you to exercise better self-control in all facets of life, and especially when making financial decisions.  

Works Cited

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Slosar, J. R. The Culture of Excess: How America Lost Self-control and Why We Need to Redefine Success. Santa Barbara, CA: Praeger, 2009. Print.

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Sufi, Amir. "Household Debt Is at Heart of Weak U.S. Economy: Business Class." Bloomberg.com. Bloomberg L.P,, 7 July 2011. Web. 29 Mar. 2013. <http://www.bloomberg.com/news/2011-07-08/household-debt-is-at-heart-of-weak-u-s-economy-business-class.html>.

"US Debt Collector's Cash In On $1 Trillion in Student Loans." Web log post. Talesfromthelou.wordpress.com. N.p., 9 Sept. 2012. Web. 8 Apr. 2013. <http://talesfromthelou.wordpress.com/2012/09/10/us-debt-collectors-cash-in-on-1-trillion-in-student-loans/>.

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