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Involuntary Thrift on the Rise
By Anita |
Well, well, well.
It appears that being weird is becoming more normal.
This recent New York Times article says:
But now the freewheeling days of credit and risk may have run their course — at least for a while and perhaps much longer — as a period of involuntary thrift unfolds in many households. With the number of jobs shrinking, housing prices falling and debt levels swelling, the same nation that pioneered the no-money-down mortgage suddenly confronts an unfamiliar imperative: more Americans must live within their means.
Perhaps, at long last, creditors will begin to lose their hold:
“We don’t use our credit cards anymore,” said Lisa Merhaut, a professional at a telecommunications company who lives in Leesburg, Va., and whose family last year ran up credit card debt it could not handle.
Today, Ms. Merhaut, 44, manages her money the way her father did. Despite a household income reaching six figures, she uses cash for every purchase. “What we have is what we have,” Ms. Merhaut said. “We have to rely on the money that we’re bringing in.”
A revolutionary concept, is it not?
It’s no surprise to me that many people with large incomes have also become enslaved to creditors:
Credit counselors are now swamped by calls not just from people of modest means, but from professionals earning six-figure incomes, their access to finance warping their distinction between necessity and desire.
“The longer someone has lived on a high income, the harder it is for someone to cut back,” said Manuel Navarro of Money Management International in San Diego. “I ask them, ‘Do you really need to have a 60-inch flat-screen TV hanging on your wall?’ ”
The article tells a story of an affluent woman who says, “The money was always there.” But, oops, now it isn’t. Her take-home pay is $5200 a month and her debt payments are $4400.
I want to be optimistic and think that being weird (i.e. not borrowing money and living within your means) will become more common but others aren’t so sure:
“Partly because of desire, partly because of optimism, partly because lenders have been free to invent useful borrowing tools that minimized shame and bother,” he added, “I think it will take a great catastrophe, greater than the Great Depression, to wean Americans from their reliance on consumer credit.”
Topics: Debt |
February 9th, 2008 at 4:05 am
Interesting post…
I have never understood the whole, “bigger, better, more,” attitude of people. They seem to not even allow themselves time to be grateful for what they already possess, before they are on another consumption of goods quest. Then the combination of that attitude with the formerly easy to get credit… it was definitely a disaster waiting to happen. Maybe the “live within our means” crowd will soon become the “cool kids!”