American Middle Class and Debt

The deception of debt...

When I was growing up and lived in a British society, the middle class abhorred debt, it was to be avoided at all costs. Indebtedness was considered the weakness and downfall of the upper classes, the aristocracy and the rich. In that era (I'm referring to the fifties and sixties) the wealthy were notorious for carrying way too much debt to keep up the appearance of a lifestyle that did not match their incomes. The middle class were too sensible for that and intolerant of the wealthy for their foolishness with money. Americans in general prior to post-WWII felt pretty much the same way, primarily because they did not have access to credit. Many of the Founding Fathers were debt-ridden because they considered themselves to be "gentlemen" and were competing with the Lords of England and more than a few fell into a trap and hard times due to it.

The availability of "buying on time" after the second World War was purposefully intended to get Americans to end their conserving, thrifty, saving habits to stimulate the economy by turning them into consumers. Since many of the newly manufactured goods, cars, washing machines and the like, as well as cookie-cutter houses, were priced at high markup to boost businesses bottom line, most Americans couldn't afford to pay cash for these items. Business and government was not prepared to wait for people to save and thus the era of "buy now, pay later" was born. The cycle of stimulating business profits by pricing planned obsolescence products highly, lending consumers money at interest and trading in those products when they wore out for more credit, was born.

There is nothing wrong with wanting a more comfortable life, with possessions that make daily living easier or aspiring to a higher standard of living. The problem seems to have become matching what one would like and the ability to earn the money to pay for it, as well as the unbecoming trait of placing undue importance on the appearance of being wealthier than you are. It is also an ethical problem if you assume more debt that you can reasonably be assured of your ability to repay. There is also the character issue with the expectation that material goods will fulfill human needs and desires that in reality, only non-tangible things can fill. A society becomes void of character when people seek happiness primarily in consumer goods and diminishes the value of good character, education, virtue, ethics, knowledge, interesting conversation as things that also can be enjoyed to enrich itself.

Debt appears to be an American institution from the beginning and everyone has to make their own decision about their use of it. Debt has now become a way of life that has led to a gigantic economic crisis, requiring a long period of deleveraging, that is affecting society as a whole. From this point forward credit and indebtedness should be taken more seriously before it is undertaken. Those that take on too much debt and especially those that have repudiated it, regardless of circumstances, should be disdained. Whether a large segment of the American population has the character or will to do that remains to be seen.

A significant portion of the American people need to take a long, hard look at themselves and adjust to a way of life that is not filled with all the articles that are "buy now, pay later," because the cost later is far more than just owing money. It is at a cost to the heart and soul of what America is really about and risks what this country is supposed to be and for what it stands for.


  1. Amen.

    I agree with everything you say here, and I come at it as someone who has been on both sides of the fence to varying degrees in my lifetime; happily I can say that mostly I have fallen on the side of "save and buy"-I'm sure not trying to acquire any NEW credit, have no credit cards (LOTS of offers), and don't foresee a time when I'll ever borrow money to pay for anything again.

    I DO have a car loan (1 year left on it) and though I wouldn't do it again, I can't say I'm unhappy that I did it. I used to be a big one for driving run-down vehicles; buying something decent was not an ego boost but simply a desire to have something I could count on to get me somewhere. It was freedom, pure and simple, and though the math and all the experts probably say I made a mistake, I feel like I didn't. I plan on driving the car for a long time; it's a great car, gets great mileage, and I love it. And in a year it will be paid off and I will have no long-term debts of any kind.

    The main thing I wanted to say was I find your take on consumer goods interesting, because a)I think you're right on the mark, and b)I own a few things that really bring me pleasure. I would put my camp, my guitar, and my car on that list. The first two are paid for (paid cash for the guitar almost 20 years ago) and I guess I consider them to be...I don't know. They ARE objects that people could conceivably buy without gaining any joy or spirituality or energy or fun or anything else from. Camp is camp; I can't explain what that entails, but I can tell you that if someone walked up to me with a million bucks in cash, I'd turn it down without batting an eye. The guitar and the car, I'd let go of, but I'd replace them quickly. They have spiritual value. Maybe only to me, but it's there.

    I guess my point is that consumer goods aren't always just consumer goods. I'm not trying to justify "buying on time" and I don't ever plan on doing it again; just saying that I consider myself a pretty frugal guy at this point and I still can't beat myself up over having borrowed for a couple things in the past.

    One last thing: I didn't mention it in my comment on your Obama town hall video, but I LAUGHED OUT LOUD when BO assumed the woman had a credit card and she stated, NO. He was absolutely perplexed. Either that or the teleprompter stroked out. Either way, it was perfect.

    Thank you again for putting these up, JR. I'm sure my comments are "out there" sometimes, but no one's ever considered me a particularly logical thinker anyway. I do what I can. Again, thank you!

  2. Realistically I think a house and a car are two things most people have to buy on credit but somehow I think that's different. I do think that how far you over-extend yourself on those things is important. I tend to buy new vehicles, put as much as I can done but always end up having to finance some, often because it makes more sense to save the money. I also drive them as long as 12-15 years and this Jeep is a replacement one and I still owe some on it. I'm not totally against credit on items that have some lasting value and serve a good purpose. If I couldn't afford to pay cash for one, I'd consider a reasonable computer as something to buy on credit in this day and age.

    What amazes me is the number of giant U-haul storage facilities we have here and in California. I used to think "how many people move here that have to store stuff that long to require that much storage space in these cities?" Stupid me...it was explained to me it's for peoples overflow of "their stuff" that they buy that can't fit into their house. Like the living room furniture they bought last year but just replaced. I feel like an anachronism...I bought a good solid couch 25 years ago and still have it and the big stuffed chair that went with it. I don't get why people need all this "stuff" and have to replace things every year but I don't suppose I ever will.

    I bought a small 1000 sq ft house in the 70s for what I thought was an enormous amount of money. It was a modest payment though that I could afford and I figured it gave me a stable place to live. I sold it in the late 90s because I had to move to Tucson for my job and that was just as the housing boom was beginning and I made a modest amount on it I used to move with. It sold again in 2003 for $300,00 and I was shocked...way more than the low 5 digits I bought and sold it for. Craziness.

    I'm not buying anything in the city, neighborhoods change, come and go, become bad and I'm not really a city person. My nephew and I live here because we have to for employment. The next place is going to be an Arizona version of your "camp" near my real hometown in the northwestern part of the state.

    You comments are never "out there." Either that or I am also because I totally get them.