Perhaps this is an appropriate post given we’re all heading into the post-Christmas hangover. Like the poor young slob who awakens to wonder if any amount of fun the night before could be worth how he’s feeling right now, many people will be staring at their new credit card balances and wondering if the satisfaction of seeing everybody open that “perfect gift” you found for them (in a last minute shopping frenzy) is really worth the several months of interest charges that could likely end up costing more than what was originally spent on the loved ones.
Debt to the Max
I just finished watching Maxed Out on Debt, a documentary about consumer debt in America. While some situations don’t apply to us Canadians (our federal government has had a balanced budget for a few years now, our provincial government debates how to spend the growing budgetary surplus, and we don’t allow sub-prime mortgages and some of the other “interesting” schemes they have going in the US), most of it is applicable to the average Canadian family. In short, the movie shows how the majority of consumers do not use credit wisely, are allowed to get into far more debt than they can ever hope to pay off, and the laws governing consumer credit are actually written by the credit card companies. When you see story after story of people being allowed and encouraged to spend far more than they have, at the end of it all you are left thinking that the best thing we could do would be to just ban credit altogether. But you can’t do that, and the reason why is a tad shocking: because the economy depends on people spending more than they have. We’ve become so dependent on the current level of spending (most of which is using borrowed money) that our economies couldn’t survive if, suddenly, nobody had access to credit.
This ties in with another movie I watched recently, a 20 minute short story called The Story of Stuff (it’s free and easily downloadable and I encourage you to watch it). This easy-to-follow tale describes the life cycle of consumer goods from manufacture to disposal. The narrator points out that consumerism is the fuel that drives this cycle – without convincing people that they always need new things, demand would slow and economies would suffer (because they have become depending on rampant consumerism). The production, manufacture, and disposal of most consumer goods wrecks the planet’s health and dooms large groups of people (usually in other countries) to a lifetime of poverty and deprivation.
Debt is freakin’ scary. No matter how intelligent you are, and how many times you are told of the perils of credit card interest and the folly of minimum monthly payments, it is the rare individual who can deal with credit in a responsible and, importantly, financially prudent manner. A preliminary search did not reveal an answer to the question “What percentage of credit card customers pay off their balances every month?” but I’m willing to bet they constitute far less than 50%. Why is that? Are most of us just stupid and greedy?
The answer is a bit simpler, and a bit scarier – our culture raises consumers. From the time we are old enough to watch TV we are bombarded with messages that shopping and things and acquiring and renovating are all Good Things. Add to that the availability of credit and you have a disaster waiting to happen. I’ve heard about this sort of mass manipulation for over 20 years, but never believed it was really true. I don’t think I appreciated the amount of effort, research, data, and understanding of human psychology was directed toward this goal. And, like most people, I didn’t want to believe that my own Free Will was in fact an illusion. Most of us do not want to believe that human nature directs our actions via subconscious processes, nor that these processes are easily manipulated once you understand them.
It’s hard to watch a film like Maxed Out on Debt and not feel that the American economy is headed towards collapse. In our own family we have been fortunate enough to have the means to pull ourselves out of the crushing slavery of debt enough times that the lesson has finally sunk in. Even so, I’m finding that sticking to a budget and saving money is a constant battle that is, in many ways, analogous to the battle people wage to maintain a healthy body weight. My New Years resolution, which I may expand on in a later post, is to work better at being frugal and saving money. The film was definitely an inspirational boost in that regard.