Monday, July 14, 2014

We Are All Slaves, Pt. II

Addicted to Stuff and Debt

Do a quick Google search (“average American debt”) and you will see that 160 million Americans have credit cards, the average credit card holder has three, and the average household credit card debt amounts to $15k. What happens when you total this number? The total U.S. consumer debt is around $11.4 trillion. 

As a nation, we are addicted to debt. There are countless stories of Americans committing suicide because they neither understand how they got into such dire straits, nor do they know how to escape. 

Turn on your television and you will see ad-after-ad seducing viewers to purchase more stuff. Annually, new lawsuits surface where consumers have purchased products claiming to do “x” and the products fail to follow through. Marketers suggest if we purchase their products we will look better, feel better, live better, and be successful. 
This problem is uniquely Western and particularly exaggerated in the U.S. We have become a society of idolatry, hedonism, consumption, wastefulness, and in a very real sense, legal slavery.

Add to this the national debt—currently a whopping $17 trillion—the message to Americans has been “spend, spend, spend.”

We are a wasteful people. Though only 5% of the world’s population, the U.S. generates 30% of the worlds garbage each year for a total of 250 trillion pounds. The numbers are exorbitant and for most, incomprehensible.

The products we purchase—appliances, furniture, clothing, etc.—aren’t even intended to last. Think of stores such as Wal-Mart, Target, Meijer, IKEA, and H&M to name a few. Their product lines consist of poorly constructed and quickly deteriorating materials. Clothes are purchased for a season and thrown out soon after because they do not hold up. Furniture made of cardboard and compressed wood break easily and they too are discarded. 

We spend a lot on cheap commodities. We discard trash our junk as quick as it was purchased. And we are stuck with credit card debt because we keep it longer than we keep our stuff. Debt is the only thing we are not shedding.

The current average for credit card interest rates is around 13% for fixed rates and 15.6% for variable rates. Credit card interest rates are three to six times as high as interest rates for home loans.

My wife and I recently filled out paperwork to process a home loan. When one does so, the lender will provide you with the amount paid for the home over the life of the loan. In the past, when interest rates were higher, homeowners could expect to pay three times as much as the home’s value. Our interest rate is much lower due to the housing market crash, but we will still pay double the home’s value over a 30 year span with a 5% interest rate.

So if you are working with higher interest rates for credit cards, what you pay for cheaply constructed junk is insane. If your interest rate is around 15% for your credit card, you are probably going to pay at least 4 times as much as a product is worth if you pay for the item over time. Why would you do such a thing?

We have been duped into believing if we purchase a lot of stuff and have the appearance of being wealthy, we will become wealthy. This is a delusional fantasy. If you purchase a lot of stuff you cannot afford, you are not wealthy, you are enslaved to your lender(s). You will be forced to work longer just to pay off junk you have likely tossed out. 

I do not claim to have all the answers, but I do know the problem. We are a society addicted to debt and enslaved to crooked lenders. I have three abstract solutions you can enact now without the aid of others: (1) spend less; (2) quit swiping your plastic; and (3) do all you can to find alternatives to purchasing wasteful products.

Spend Less. I am no less prone to these problems as anyone else. However, I have come up with a mantra to help resist the urge to spend: “If I didn’t need it before I saw the advertisement, or before it went on sale, I don’t need it now.” So often we convince ourselves to make purchases we do not need simply because of a sale price. If you need the item and stumble upon a sale price, that’s great, but don’t go shopping for cheap stuff because it’s cheap.

Quit Swiping Your Plastic. This one is more difficult. Not only are we addicted to stuff and spending, we are addicted to comfort. If it is quicker to swipe a card than to count cash, we will swipe the card. With cash you see what is going into your wallet and are able to determine how much is leaving. Moving to a cash only plan will allow you to set a limit on spending for each pay period. On the other hand, using a card removes the entire spending concept. It’s easy and convenient, but you lose track of how much has been spent. Before you know it, your family has accumulated $15k in credit card debt. 

Find Alternatives. Over the past few years I have been building my tool chest. Most of the furniture my wife and I own is either hand-me-downs or self built. With hand-me-downs, you typically end up with sturdy wooden furniture. What’s great about furniture made of solid wood is that you can update or refinish the wood and have a like-new piece for a fraction of the cost. Much of our furniture had its heyday in the 60s and 70s, but don’t tell us that. It now appears to be new because I took time to care for the pieces and refinished several items to fit our taste. And if you don’t like the look after a while, you don’t have to throw things away, just refinish again to fit your taste. 

I’ve also built furniture from repurposed materials. Whether it be discounted junk from a surplus building store, old furniture, or just old wood that had set around for too long, I’ve repurposed items into pieces of furniture that appear to have been store-bought for a much higher price. It will take time to develop the kind of skills necessary to do this, and by no means have I mastered woodworking, but it will pay off. Tapping into your creativity gives the added value of feeling good about what you’ve done as well. When friends and family visit and compliment our furniture, I am able to take credit for what I consider a piece of art. A piece of art I did not go into debt to have in my home.

I hope this has been helpful. Look out for more to come on my We Are All Slaves series. 

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