Getting Over Our Debt Addiction
June 10, 2008 – 6:36 pmOptionARMageddon is all about raising awareness of our debt-fueled lives and economy. Debt is a dangerous crutch to lean on. It’s a drug, really, offering users the temporary and totally artificial high of having more stuff: the bigger house, the faster car, the size D breasts.
In today’s NYT, David Brooks has a great Op-Ed on our troubling national debt habit:
The people who created this country built a moral structure around money. The Puritan legacy inhibited luxury and self-indulgence. Benjamin Franklin spread a practical gospel that emphasized hard work, temperance and frugality. Millions of parents, preachers, newspaper editors and teachers expounded the message. The result was quite remarkable.
The United States has been an affluent nation since its founding. But the country was, by and large, not corrupted by wealth. For centuries, it remained industrious, ambitious and frugal.
Over the past 30 years, much of that has been shredded. The social norms and institutions that encouraged frugality and spending what you earn have been undermined. The institutions that encourage debt and living for the moment have been strengthened. The country’s moral guardians are forever looking for decadence out of Hollywood and reality TV. But the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money…..
Deeper into his article, Brooks mentions a great piece with additional detail on the topic. You can find that article here.
Posted in Economy, credit crunch |
3 Responses to “Getting Over Our Debt Addiction”
Credit did the trick.
It used to be, as you mentioned, you couldn’t get easy credit, so you couldn’t appear to have wealth without actually having it. In addition, society had definite ideas of what it meant to be a “good person” and a “bad person” along with other ingrained opinions about how races ranked and how men and women ranked. Behind the strictures on spending lay the definition of bad times: the Great Depression.
Combine easy credit, a horror at presuming to evaluate the behavior of others and a memory free of economic hard times and you have modern times until just now. People could appear to be wealthy, charge their way out of any situation without fear of social sanction.
But things do go in cycles and it may well be that here we go again on our way to resetting economic norms.
By ClifBrown on Jun 10, 2008
My husband and I have long tried to live within our means. Because we could not afford a mortgage in the Phoenix area during the bubble, we gritted our teeth and rented. We had to hang on during all those years people said, “Prices are only going to go up! Better get in while you can!”
Now the market is on the way down and all we hear is, “It’s a great time to buy!” when I know very well that it still isn’t. The only good time to buy is when the price is such that you can afford it AND when you’ve got a good enough down payment.
We started using a budget for the first time a year ago and we discovered pretty quickly that we had to cut back our spending more. We can’t do a lot of things that a lot of other people do, but now we are saving money for the things that matter to us.
It seems plain to me that if a growing economy is built upon debt, then that growth will always be a bubble that will pop. An economy that is built upon saving will naturally look much much smaller than what we have seen in the last five years, but it will be much more healthy.
By Michaela S on Jun 20, 2008
This seems to be pretty much the same experience in the United Kingdom too. The prevalence of easy credit and 100% mortgages has meant that so many people are feeling the stranglehold of credit card and loan repayments whilst the offers of discounted re-mortgages to dig households out of increasing debt repayments at a lower cost have now dried up.
It has been all too easy for the last 15 years to have all the things that we “need” but, infact, want. Now the financial pinch is being felt hard here as it is in the States. I suspect that some of that sense of hardship at the moment here,though, stems from the sense of shock that credit can’t be obtained so easily and at last people are being forced to live within their means….
By Karis Dillon on Aug 14, 2008