Thursday, August 21, 2008

Gross consumerism and the credit 'crunch' and the dreaded covet!

I was reading an article on CNN yesterday titled "The next credit crunch". I got to thinking about the situation our society finds itself in currently and how we got here. Property values are falling, people are losing their homes. Everywhere pundits and analysts are looking to assign blame. Looking at my own financial history and my own trials therein, I come to a conclusion that seems some what self evident to me. We are ALL to blame for this mess.

First a little back ground. I got my car when I was in the Air Force, I think it was some time in 1987. It was a brandy-new 1987 Mercury Lynx (a Ford Escort with better trim!). My parents co-signed the loan for me as I was only 18 with no credit history. I remember the payment was $228.01 a month for 60 months. It worked out to a 10% interest rate which isn't that bad for a car loan. I remember my parents cautioning me that I needed to be careful and to be sure I made the payments on-time and monthly as they could not afford to make them if I didn't. The veiled threat was that their credit would take a big hit if I didn't live up to my responsibilities. As I was an enlisted man in the Air Force my paycheck was pretty much guaranteed for another three years. As I lived on-base in the enlisted dorms and filled my belly at the base chow hall, my only real financial responsibility was the car, the requisite insurance and gas! So it wasn't much of a strain at all.

No sooner had I made a few payments then the credit card offers started rolling in. VISA Mastercard. I thought it would be a good idea to have one in case of unforeseen emergencies. So I applied and for whatever reason I was declined, it may have been insufficient credit history. My parents again stepped in and co-signed. Within a month I had a VISA card with a $1500 limit and an 18% interest rate.

At first I was very judicious with its use. Only using it once to repair a broken driver's side window on my new car. Over time I started to notice that many of my fellow airman had really cool stereos in their rooms including those new fangled CD players. I was still playing my cassette tapes that I made from LP's in high school. I coveted a new stereo system! One day i went to the Cherry Hill Mall in New Jersy close to where i had been stationed. On a lark I wandered into a store known as 'Silo' similar to what a 'Circuit city' or 'Bestbuy' is today. in retrospect, it is all too clear to me that the salesman saw me coming! He showed me the latest stereo receivers, CD players and dual cassette decks. I was probably salivating! I selected a modest receiver, a CD player, a dual-cassette desk and Bose 301 speakers. The total price was in the neighborhood of $1000. i was about to lay down my new plastic, when the salesman said, and I think to this day there was an echo with it: "Hey! why don't you apply for our own charge card! You wont need to put the balance on your VISA." I agreed instantly and my application was approved almost as quickly. Less than a half hour later I was on my way back to the dorm with a car full of state of the art audio gear.

Thus began a long almost 15 year saga of the abuse and misuse of credit.

I have never declared bankruptcy, but I have come close.

Now whose fault is it that this happened to me?

I fully accept that my own nature, my coveting of toys and things that I wanted more than contributed to my abuse of credit. But, why in the modern age is a concept of 'time value you of money' not a required bit of education? Consider that most Americans have no concept of how long it will take to payoff $1000 dollars at a 21% APR while making minimum payments of say $35. The answer is 40+ months! You end up paying more than $400 dollars on top of that original $1000.

These things were NEVER made clear to me at anytime in my youth nor early adulthood. Why is that?

Clearly, I am guilty of coveting that which I didn't have. I wanted many things! Most kids and young adults do.

But what cost is too much and how many things are enough?

Why is it we live in a society that doesn't require that its children LEARN basic finance along side the math to do calculations and the ability to read fine print?

My own little admittedly cynical view is that the powers that be in this society aren't interested in a population of educated people who can see that if they laden themselves with high-interest debt they'll be working to pay that debt for a very long time further enriching the already wealthy!

I see advertisements in print and in various other media showing off the latest Iphone, the latest Ipod, the newest car...all squarely aimed at those who can least afford them. In the western world we have created this stew, this unholy realm of gross consumerism fueled by people who are conditioned to covet that which they don't have and are convinced that they must need. I see my own children falling prey to this virus. I have an 11 year old telling me that his friends all have cellphones. Why does an average 'tween' need a cellphone? I did just fine without one! What does he possibly have to say to anyone that can't wait till he gets home to the essentially free 'land line'....other than"Mom or Dad can you come and get me?"

The article I referenced speaks of a people using credit to 'pretend' to a standard of living that they are ill equipped to sustain. Now, even that ocean of free and easy credit is drying up. What will be the consequence of all that principle coming due, with no other resources to pay it off?

I am at the point in my life where I am now looking for a house for my young family. My past credit woes while not a extreme detriment have made it more difficult. I often wonder: If the society I live in had chosen to educate its children about 'time value of money' and basic economics how different would our current circumstance be?

The flip side is how many things are enough? How much of these material possessions do you get to take with you after you draw your terminal breath? The answer is ZERO, bupkus, zilch, nadda! You will leave with that which you came in with.

So what's really important?



karen said...

Wow, what an honest and good post.
We've let our kids know all of our stupid mistakes. If ya can't be a good example, serve as a horrible warning and all.
You're right. We have nothing but ourselves to blame.

SirRobert said...

Welcome Karen!

I always love to see new visitors to my little blog! :)

While I don't see myself as a HORRIBLE example, I do plan to tell my kids the troubles I had and to demonstrate it as an example of what can go wrong.

Thanks for stopping by!


karen said...

Thanks, R--we're not really a horrible example..just aged!
:-D...I'm actually a return visitor...but it's been a while. I added you to my blog listing because I appreciate your fair dialogue here on matters of spirituality! :-)

SirRobert said...


I wasn't always so fair...

But a number of well meaning and truly good-hearted Christ-followers have showed me that the caricatures of Christians we see on TV are not truly representative of what it means to be Christian...

...any more so than the baby-killing Satan-worshiping 'straw-men' that some Christians would like to make of myself and my atheistic/agnostic/humanist/naturalist brethren. ;-)


Christian Beyer said...

Great post! I have experienced similar woes.

My parents did warn me about falling into debt. They were quite proud of the fact that they never had any debt other than a mortgage, they even paid for cars with their cash savings. But then, my dad was a doctor, he had plenty of it. He was raised poor when there was no such thing as credit cards but then again everyone he knew was 'poor ' and it wasn't a big deal for him.

Later, the successful people of his generation set the template for what was to come - the status conscious consumer juggernaut that we have all so willingly jumped aboard. Some of us can not afford it, but is this consumerism somehow 'ok' if you can afford it? We love a bargain, don't we? If it's on sale, buy it, even if you don't need it. Some economists think that to change our mindset here would be disastrous for the nation's economy.

But even though we are ultimately responsible there is something wrong with our culture condoning the predatory practices of many if not most financial institutions. Even the Christian Church seems to think this is OK, though 'usury' is considered just as much of a sin in the Bible as sexual immorality. In fact, in ancient Israel, it was written into their law that all debts be forgiven on a regular basis. Wow - how communist! :)

Christian Beyer said...

I will stoop to a little trolling here but at least it's not "woot". I wrote about how I see the inadequate Christian response to this crisis:

(I hope the link works)

SirRobert said...

I think you and i are on the same page Christian.

There is something missing, a hole of some kind in our society and I think people look to fill that hole with material goods and toys and they go into hock to get these 'things'. I myself STILL feel the pull of retail therapy at times. Sometimes I can give myself the necessary 'shaka buko'.

There is such a thing as too much capitalism...

and coveting can be a good thing at times...

coveting a better life for your family compels us to try and excel at what we do to make such a life possible.

But, the question becomes when does it become avarice and greed?

Deep stuff!


karen said...

This is good stuff. You have truly "made my day" with your thought-provoking blogs...both of you. I was getting into a rut.
Christian, your link to your good post worked.

My family has lived in the same house for 23 kids grew up here and the pull of a "bigger, better" house has certainly been there--ours is small and we are tall, big, people, all four of us and the occasional extra person we've taken in. The kids have told me they are grateful for not moving around like some of their friends and they love our home. That is worth millions to me.

Christian Beyer said...

Pascal once said that “There is a God-shaped vacuum in the heart of every person, and it can never be filled by any created thing. It can only be filled by God, made known through Jesus Christ.”

Sartre paraphrased Pascal and talked of the God shaped hole in the human consciousness but believed that we should ultimately reject God because the idea destroys our freedom.

Is this conversation deep enough to suggest that it is this unbridled human freedom which is at the root of the problem?

Christian Beyer said...

Karen, we have lived in our relatively small town house for about 16 years (and still have a 30 year mortgage - how in the hell did that happen?) My wife also has suffered (still does a bit, actually) with 'house envy'. We were both raised in big houses (but not as big as these monstrous McMansions that have sprung up all over Maryland like toxic mushrooms) and she felt that we were not 'providing' our two children with what once enjoyed (although I NEVER played in my own yard as a kid). Of course my grown children's take on things is surprisingly different than hers,

Now, with McMortgages tanking all around, energy and water bills doubled and property taxes on the rise (along with my daughter's tuition bill) we realize that we are blessed. As the Japanese understand so well, smaller is better (no offense - not talking about people here although we are 'little people')

SirRobert said...

Christian said:

Is this conversation deep enough to suggest that it is this unbridled human freedom which is at the root of the problem?

There may very well be something to that!

I come to question from a more naturalistic standpoint. I see and feel that human freedom does need to have some constraints due to the necessities and requirements of living in a society.

I forget who said it but the phrase "Your freedoms end, where my nose begins." There has to be some sort on restraint on human greed and ambition such that it puts down one for the advance of another. There is no such thing as total freedom.

I equate total freedom with anarchy which not conducive to a civilized society.


SirRobert said...

As the Japanese understand so well, smaller is better (no offense - not talking about people here although we are 'little people')

In our current house search we are hoping to find a 5 bedroom house. It's important to my wife and I that each child have his or her own space. This is somewhat due to necessity as can be seen when you consider the ages of our children:

Libby = 14
Ethan = 11
Vincenzo = 5
Sofia = 3

Ethan and Vinny share a large room currently and it is beginning to strain my older son's patience.

Poor Sofia still shares a room with My wife and I. Libby is the only one with her own room and to my mind she doesn't nearly appreciate it as much as she should.

I think back to tales of my fathers childhood when 4 girls and 4 boys shared 2 rooms in his family house!

The range in age was far more disaprate than my kids and the family made do with 3 rooms.

Today we wouldn't think of such a thing unless we were impoverished!

Am i asking too much?

I don't know....but it seems like I might be.


karen said...

Christian, McMansions...LOL...I live in the DFW area...a mecca of materialism. Smaller is better...just when I think we don't have enough space, I realize it's that we have too much stuff. We feel blessed, as well.

“There is a God-shaped vacuum in the heart of every person, and it can never be filled by any created thing. It can only be filled by God, made known through Jesus Christ.”
You know, that is really good...I lost my consumerism and that "empty place" when I found God. My biggest desire right now is to finish out my back yard after dead tree removal so that I have a sweet place to gather with friends.

Robert...your kid situation--yikes. I have 2 young men children, sometimes 3 or 4. They make do--they have their own rooms, but if we'd had a third.... 4 little ones...different story.

Christian Beyer said...

Hey, there are only 4 of us in our house so each person has their own rooms (well, not exactly - I still have to bunk with my wife)

We occasionally look at houses in closer to the city where prices are about half the price, with the idea of getting a smaller mortgage. Goody for us that this usually means a bigger yet older house with lots of character and charm as well as a larger yard (sigh). But....all these older houses seem to have only ONE freakin' bathroom? Four or five bedrooms and only one bathroom?!

Impossible! And I only have two women in my house.

Indian Lake Papa said...

i am remined of the wealthy old man who on his death bed told his wife he wanted all of his wealthy cash assets to go with him - she promised she would make that happen! when he died, just before they closed the lid on his coffin she wrote him a check and placed it in his hand!

We have used credit cards for over 40 years. Use then extensively - we have never paid interest.

Anonymous said...

This is and excellent post Sir Robert..fortunately I had parents who taught me that credit is just spending money you don't have and will bite you. To me material possessions are "fun" but not by any means necessary...I do not have to have the latest greatest to find contentment. Actually, just being out by a lake with stars does quite nicely for me. Hearing my kids laugh, watching my Dad bbq...those are the things that last. I agree there needs to be some training in children..but like us I think a few hard lessons along the way really drives the point home sometimes, and are inevitable.

"If the society I live in had chosen to educate its children about 'time value of money' and basic economics how different would our current circumstance be?"

Perfect! We would be living in an entirely different society. :)


Kumar said...

nice post. Would like to show it to my son