Anyone who reads this blog regularly knows that I’m not a fan of consumerism and I view capitalism with a dubious eye. I’ve blogged quite a bit about the philosophical pitfalls of consumerism and capitalism and how distracting they can be. But now I’d like to talk a little bit about the practical ramifications of wanton consumerism and capitalism–you know, the kind that politicians and businesses and the media promote. Namely, I’m talking about debt.
Did you know that the average American is $225,238 in debt? That’s quite a shocking number. But it really isn’t surprising. Think of all of the things that people go into debt for:
- Medical bills
- Credit cards
It’s a wonder that the figure is “just” a quarter of a million dollars. To add something else to this conversation, consider the following information from the Federal Reserve Bank of St. Louis:
Look at that for a moment. The average household debt was extremely close to $0 just 60ish years ago. And it only started to really take off during the 80’s. You know, when Mr. “Deficits don’t matter” was commander-in-chief. But I digress; this isn’t a post about politics. This is about the consequences of debt.
So what are they? Well, let’s talk about retirement. That’s the goal, isn’t it? To sock away enough money to live out your twilight years in comfort? Well you can postpone that, maybe even indefinitely, if you’re up to you eyeballs in debt. You’ll be paying it off for the rest of your life, which means living on a fixed income isn’t even a possibility.
It also means, quite literally, that you don’t own anything–the bank technically owns it all. They can repossess your stuff if you fall behind in payments. And let’s face it, it’s quite possible to do so with that much debt. Haven’t we all seen those daytime TV commercials with guys in suits and cowboy hats talking about how they’ll fight to reduce your debt and consolidate all your monthly payments? Yeah, turns out that debt is a big business, probably because there’s so freaking much of it. That’s what lead to the 2008 financial crisis: Wall Street let Americans go elbows deep into debt buying houses they knew they couldn’t afford because they could bundle it all together and make money off the debt. Great for them, not so great for the rest of us.
Of course, there’s always bankruptcy. Seems simple, right? Just declare bankruptcy and it all goes away!
Well, unfortunately, there are consequences to declaring bankruptcy. Your credit score is totally ruined. Say goodbye to being a homeowner. Your assets can be seized. And to top it all off, you’re still obligated to pay certain debts (student loans never go away, for instance). So while it is an option, you still feel the sting of debt, so to speak.
But I understand why people go into so much debt. It’s the American way, isn’t it? A big house with two cars and 2.4 children. A college degree is the only way to get a good job, and state schools might as well be community colleges (and community college is for losers, duh). Everyone wants to own the latest, shiniest toy, and heaven help you if your neighbor gets a newer and shinier one.
Isn’t that what good ol’ W told us all after 9/11? That if we all wanted to be good Americans we’d go to the mall? Buy stuff or the terrorists win! Yeah, that whole rhetoric. That’s an extreme example of an underlying philosophy that’s been the basis for our society and culture for the past 30 years.
The truly tragic part is that it’s all made up. It’s wholly untrue. Owning a pickup truck doesn’t make you a good American. Buying the biggest house doesn’t make you an American. Your college degree doesn’t make you an American. The reality of the American dream for most people is a lifetime spent in servitude to banks to pay off stuff they didn’t even need in the first place.
That bears repeating: you do not need the crap they say you need to be happy or patriotic.
That college degree you paid $80,000 for? It doesn’t guarantee a good job, let alone any job. And you probably didn’t need to spend that much for it. You probably could have started at a community college and finished at a state school. Because guess what? The math they teach is the exact same math they teach at Dartmouth! The only difference is the price.
Or don’t even go to college at all. A four year degree isn’t he only path to financial success for people. Trade schools, apprenticeships, and vocational schools are all viable paths that lead to well-paying skilled trades that don’t come with the price tag of a four year university degree. And if you don’t believe me, think about this post the next time you write a check to your plumber.
Similarly, a family of four does not need to live in a 6 bedroom, 7 bathroom house. Why pay for more than you need? That seems like a no-brainer to me. Money not spent on your house is money that stays in your pocket is money for retirement or vacations or whatever. Plus, a house is not the same thing as a home. Think about that in relation to debt.
I guess what I’m getting at is that the average American is pretty bad at saving money. The majority of Americans have less than $500 in their savings account. And yes, there are a myriad of economic and social issues that relate to that figure, not just debt. But debt is a tempting way to be like everyone else, or to live the way you think you ought to (that is, the way other people tell you that you need to live).
Of course, they key to avoid or managing debt and living a life that isn’t owned by a soulless bank is to live below your means, not beyond them.
But that’s not very American.