WAPO: Inside the Mind Of a Debtor Nation

[El Pinko]

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/01/AR2008030100924.html


Inside the Mind Of a Debtor Nation

By Michelle Singletary
Sunday, March 2, 2008; Page F01

As the director of a financial ministry at my church, I get an up-close and personal look at the spending habits of a lot of people.

And year after year, I am stunned by the decisions people make that get them into financial trouble. I've seen monthly car notes the size of mortgage payments. People take vacations or buy big-screen televisions and expensive jewelry while ignoring huge federal tax obligations.

While it would be easy to judge these people for the messes they've gotten themselves into, I wonder -- even worry -- why they spend so much. Why do they continue to use credit even though they are already weighed down by so much debt?

The problem is just as acute with many who use cash. They may not have credit card debt, but they struggle, too. I keep coming back to one question: What has made us into a nation of people who spend more than we earn?




In my case, it was too little income to even keep a roof over my head and feed my family with rents as high as they were...

[AP]

1. I can answer that: economic/social inequality and advertising.

In the US there is incredible income inequality and people are more sensitive to being perceived poor than I think many realize. Consumption is sold as something that confers status. So, for example, when cell phones first came out, they were pretty expensive. A lot of people really didn't need them, but they became a sign that you were in a certain class. Therefore, a lot of people made the decision to buy them because they didn't want to appear poor, rather than because they were worth the cost.

I think our society is surprisingly easily to dupe into consuming things we don't need and can't really afford largely because of the combination of being a society with a huge gap between the richest and the poorest and being a society in which consumption is really promoted as a way for people on the bottom to appear or feel like they're in the top.