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.
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