Breaking the chains of debt

download

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:

  • Education
  • Homes
  • Cars
  • 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:

fredgraph

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!

bankruptcy

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.

Advertisements

3 thoughts on “Breaking the chains of debt

  1. The only response I really need for this entire post is this;
    I’m glad I don’t give a fuck.
    Now for the elaboration. I’m glad I don’t give a good god damn how other people perceive me. I’m on my way to finishing up a cloak, which will get me some odd stares, but at least it’s warm and dry in there.
    Granted, I don’t have much of an issue with capitalism, but it can be taken a wee bit too far.
    I’ve got a sinking feeling that the reason we’re in so much debt at this is because things are becoming way more expensive. I saw a video not long ago where a guy mentioned that the most debt he’d ever heard of a college kid getting into back in his day was 500 pounds. Now it’s almost mandatory to be in debt. Your parents either can’t afford to pay for you or just flat out don’t want to. Why should they, when you can leverage that money against a future income you may or may not get?
    It’s also not too unrealistic nowadays to become a comedian or a musician. It’s becoming ever easier to make a recording studio in your garage which sounds decent, and you’re already on your way. Comedians can make a youtube channel or a blog. And, if you give enough of a damn, you can be decently successful with it. I have somewhere around 30 followers, and you’ve around 300 something if memory serves. Granted, neither of us are filling a stadium, but it’s still an audience.
    I dunno. I just kind of sit back and watch the world get crazier. Then again, I’m probably the crazy one.

    1. George Carlin used to have a similar attitude when it came to watching to world burn itself to the ground. He thought the human race was the greatest circus on earth, and just being born on this planet gave you a front row seat.

      There certainly is something to be said about inflation. Of course, when it comes to things like tuition, the rise in cost has far outpaced the average pace of inflation elsewhere. I understand why the price of goods rise, especially when scarcity of capital increases.

      But I don’t really understand why the price of tuition has increased the way it has. It’s not like universities are manufacturing a product and need raw capital, which can fluctuate in cost. They already have the infrastructure, so why the hell is the cost increasing?

      1. I believe the same thing about the species (probably because of him; he’s my favorite comedian).
        The cost has increased faster than everywhere else, but there is a supply/demand thing going on with college, as well as college becoming more and more useful (in a sense). Without a college degree, at this point in time, it’s way more difficult to get a decent life. Granted, it doesn’t absolutely 100% guarantee a decent life, but it helps.
        The supply/demand thing comes in with the classroom sizes being finite. I’m fairly certain there are more people who want to go to college, and have the means to, than there are seats in college classrooms.
        They are producing a service which does require raw capital, though. Bills need to be paid for these stupidly huge universities, which do focus more on things besides education than education most of the time, as well as teachers needing to be paid.
        That and, at this point, we’re not paying for the service anymore. I think i’ve talked about this with you before, but we’re paying for the brand. Harvard isn’t stupidly expensive just because the education is far better there than it is anywhere else, but because it’s Harvard University. You get to put that on your resumes, both social and professional. Community Colleges are still dirt cheap (the one I’m going to only costs about $8,000 for an associate’s degree), but the fancy ones that have an actual name are in the tens of thousands of dollars.
        A good example of the brand thing actually comes with my school. The students at the local university often come to my college for their general education courses because they’re cheaper. They use the same books, they quite often get the same work, but it’s about 1/5 the cost. Then they just transfer the credits over to the university and, bam, they’ve saved around $9,000 on their bachelor’s degree.
        That’s just my guess, though. I might be completely wrong.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s