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In today’s New York Times, columnist David Brooks writes about seduction by debt. The United States was founded on a moral structure that emphasized hard work and thrift, he says, and this helped the country grow affluent. But somehow we’ve lost our way. He writes:
The social norms and institutions that encouraged frugality and spending what you earn have been undermined. The institutions that encourage debt and living for the moment have been strengthened. The country’s moral guardians are forever looking for decadence out of Hollywood and reality TV. But the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money.
Our entire way of life is now based on easy money. State governments push lottery games. The Federal government deficit spends. Credit card companies and payday lenders prey on the poor and uneducated. And, of course, the average person doesn’t even understand how to steward her finances. She lacks the financial education to make the right decisions.
Brooks highlights a new report from the Institute for American Values called “For a New Thrift: Confronting the Debt Culture”. According to the report’s web site:
Jointly authored by a number of distinguished scholars and leaders from across the political spectrum, “For A New Thrift” powerfully addresses the linked problems of overindebtedness, lack of savings, and growing inequality in the United States…When a society creates democratic institutions to encourage thrift, more people are likely to engage in the positive activities of saving, conservation, and asset building.
I like that this report doesn’t just focus on the financial problems, but also apparently suggests possible solutions. I’d love to see a national campaign encouraging thrift and frugality. I’ve actually signed up at the web site, volunteering to get involved in my community. I’ve never done any sort of volunteer work in my life, but if there was ever anything I felt a passion to assist with, this is it.
The following articles offer supplementary reading on this project:
- The American Interest: A nation in debt: How we killed thrift, enthroned loan sharks, and undermined American prosperity
- The Washington Post: Let’s make it cool to save (Michelle Singletary)
- Houston Chronicle: Time to make outsaving the Joneses a reality
The article from The American Interest is an attempt to summarize the full report. I haven’t had time to read it yet, but I will tonight. And I’m going to order a pile of those Thrift Captain buttons. I love ‘em. If we ever meet, don’t be surprised if I try to foist one of them upon you…
This article is about Basics, Debt, Frugality, News Tuesday, 10th June 2008 (by J.D. Roth)
June 10th, 2008 at 2:18 pm
This sounds great! Exactly what we need in this country, an honest, grass-roots attempt at getting us back to our sense, when it comes to money. Doesn’t matter what side of the ailse you sit on, Debt is Debt, and those jerks telling us grasshopper our time away now, & not ant-up for the future are the ones who are just anting-up over us.
http://en.wikipedia.org/wiki/The_Ant_and_the_Grasshopper
June 10th, 2008 at 2:25 pm
Ironically, I will not buy the report because I want to save $7 .
June 10th, 2008 at 2:27 pm
I agree. I think that money finance needs to be taught to the young kids in school. Get them to understand savings and assets at an early age. Its just as important as any of the core studies (math, english, history, etc.).
My parents were never a good example of money management. I wish someone had taught me at an early age what to do with my paper route money, but sadly no one did and it wasn’t until I had bills of my own that I had to learn on my own.
June 10th, 2008 at 2:31 pm
I am jumping head first into the thrift lifestyle and trying my hardest to make spending habits that will last me the rest of my life.
I’ve already cut up my credit cards (all two of them) and will hopefully have them paid down by the end of the year. I am so tired of paying for them.
Every now and then my parents will lecture me about how/why I have the credit card balances I do and how I should have been smarter when I used them. I can’t help but look and them and wish that they had told me what would happen when I went out and used the cards and didn’t make sure the bill was paid in full each month. They only told me not to use them and that was about it.
June 10th, 2008 at 2:53 pm
Don’t even get me started on how much I despise David Brooks. However, even a broken clock is right twice a day.
June 10th, 2008 at 2:56 pm
Today was a piece in the paper about scientists finding a link between debt and heart disease caused by stress.
It is an AP story, so it should be in the news all over the country. Slowly but surely it seems this society is waking up.
June 10th, 2008 at 3:10 pm
From the Houston Chronicle article -
• If you’ve resolved to pay all your bills on time, are you also prepared to open and read your mail every day?
• If you are resolved to eliminate your debts, are you also prepared to stop using your credit cards?
• If you are resolved to live within your means, are you also prepared to tell your friends you can’t afford some of your usual activities?
#1 We didn’t have any problems with this one when we first resolved to get debt free.
#2 We don’t use our credit cards for day to day spending (we do use them once in a while for travel expenses or business expenses) and its sometimes difficult to live off present money.
#3 I don’t really care to talk about money with friends (except very close friends/family or on blogs like this one) but I have been upfront with friends. I had lunch with a good friend a couple of weekends ago and she asked “Sam, WHEN are you going to get a new car, I can’t believe you are still driving around that old car.” I didn’t take any offense but told her “when I can pay cash for it.” There is another way to live life and each month that I don’t have to pay a credit card bill or a car loan or a student loan bill brings a little extra joy and a bit more freedom.
June 10th, 2008 at 3:36 pm
“And, of course, the average person doesn’t even understand how to steward her finances. She lacks the financial education to make the right decisions.”
Not nitpicking, but why use the pronoun her? Why not “their”?
Huge fan of the site btw, I check it at least once a day.
June 10th, 2008 at 3:43 pm
Moi, I’ve always alternated pronouns between entries. There’s no logic to it. Whatever I’m in the mood for. If the article is long enough, I’ll switch back and forth.
June 10th, 2008 at 3:56 pm
Today I deposited our “stimulus” check in the house account — the one from which I pay the regular bills. So, we won’t be participating in “stimulating” the economy with those funds.
Those checks from the government were meant to increase spending, not saving, and they are typical of what specific governmental philosophies have done.
Consider the ways in which governmental non-regulation has helped credit card companies. Consider how governmental non-involvement in most health care has meant that millions of Americans may be one disasterous diagnosis away from debt.
As individuals we can try to make good decisions and to be thrifty etc. But we can’t individually control the macroeconomy, that requires group actions, political ones, mostly…
June 10th, 2008 at 4:01 pm
@Moi:
The author didn’t use “their” in that sentence because it doesn’t match with “person.” Pronouns must agree with the nouns they refer to in number and gender. “person” =”his” or “her” and “people”=”their”
If you want to nitpick, then say the sentence should be revised to “average people” which is a little awkward to my mind.
I like the fact that “her” was used because it is nice and grammatically correct usage. Just so you know, in English at least, “his” is not gender neutral. I like to see “her” used sometimes so that women are included as examples too.
Article was interesting. Thank you for the info.
/can you tell I’ve had to teach grammar for 14 years and can’t stop it now?
June 10th, 2008 at 4:02 pm
Cool thanks for the response J.D.
June 10th, 2008 at 4:18 pm
I read this NYT article this morning too and I immediately thought, “JD will eat this up.”
He doesn’t need the buttons, the blog is way better than any button.
You’ve never done much volunteer work? This statement surprised me. Volunteering is one of my core tenets for keeping frugal living fun and fresh and a great way to meet people.
Instead of, or in addition to giving cash, I give time to organizations I want to support: public radio, the local film festival, public schools, arts organizations, library, church, etc. I get to meet like minded folks who support the same causes. In some cases there are some terrific side benefits: free food, t- shirts, memberships, movie tickets, meeting minor celebrities, deals on items, etc. Plus I feel like I am giving them something they really need when they need it.
Helping few hours at a key fundraiser, offering to do some errands, or manning a phone aren’t big time commitments. Plus I feel like I am giving them something they need, when they need it.
College students and seniors, in particular, have so many cool, free things to gain by volunteering in addition to, of course, doing good.
June 10th, 2008 at 4:27 pm
Elena, if you think I’ll eat up an article, you should send it to me! I won’t reply (usually), and I may not use it, but I’ll certainly look at it. And I’d rather have eight people send me something than nobody…
About volunteer work: No, it’s not something I’ve ever done. But now that I feel like I have a purpose in life, I know exactly how I’d like to give back…
June 10th, 2008 at 4:46 pm
Thrift is great.
What do we know about the Institute for American Values?
June 10th, 2008 at 5:03 pm
Well, for some part of the nation’s history, the people doing the hard work weren’t the ones getting money for it.
I’m just sayin’.
I’m not sure about the “hard work led to american affluence” argument. OK, so the early settlers and later pioneers worked hard, but did that lead to affluence or sustenance?
I think a better argument could be made that America’s affluence, which came later, was built on exploitation.
In that sense, some would argue, little has changed. Employees are underpaid, jobs are shuttled off to countries with low standards of living while executives collect million dollar compensation packages.
Affluence comes from exploitation. Sustenance comes from self-reliance.
June 10th, 2008 at 5:05 pm
This is exciting! Being thrifty might become popular again in this country!
(Hate to generalize here but there is a lot of truth to the following stereotypes. Of course, I realize there are many exceptions to these generalizations, too.) Koreans are notorious for our conspicuous consumption. I’m not exactly sure why it’s so ingrained in us. On the other hand, my Chinese friends have always been much more thrifty. Generally, Koreans compete to try to buy the most expensive things, while the Chinese try to outdo one another in getting the lowest prices on everything. Sometimes my answer to the question “How much was this?” results in vastly different reactions from my friends, depending on their nationalities.
June 10th, 2008 at 5:46 pm
My point in my comment above (which I forgot to include) is that I’m sure it’s nothing different in our genes that makes us thrifty or spendthrifts, but culture. But, that culture is very difficult to change.
All important goals are worth the effort, so we should still try to change it. J.D.’s pledge to his new volunteer work is very inspiring. I’m embarking on my own way of helping by striving to teach inner city kids about these issues. As I said, these are exciting times! I’m so glad to have found this blog and this community of readers!
June 10th, 2008 at 5:57 pm
ooops! Just posted a squib on this very subject, without realizing you’d beat me to the punch! Trying to make up for it with a link to yours.
Which, BTW, is better than mine.
June 10th, 2008 at 6:06 pm
Brooks is right. The country has been seduced by consumerism and easy money.
Hard work and patience pays off in the long run and we know it…That is why we blog about it.
June 10th, 2008 at 6:22 pm
While I generally agree with you JD, I have a huge problem with the source of this report, the Institute for American Values. It appears to have an extremely right-wing, conservative bent. While I have no problem with their views on money management, I think that you should be aware of their values. Any thrifty feminists out there should take note.
Again, I am not taking issue necessarily with the message about consumerim and debt. Just wanted to make a point about the source. I think I’ll pass on the buttons.
June 10th, 2008 at 7:25 pm
Hey -
Where can a person get one (or a ton ;)) of those thrift captain buttons?
I love them!#*
June 10th, 2008 at 7:53 pm
Woo hoo! I’m cool. i don’t get that a lot!
June 10th, 2008 at 8:55 pm
K @
You are exactly right…
And yet exploitation to one degree or another has been a part of human history for a very long time…it’s just gotten a lot more obvious and a lot more disgusting over the past two centuries…and though everyone in the world is guilty, the US seems to be carrying the flag.
June 11th, 2008 at 3:55 am
I’m with Atticus on this one..why $7? This is the type of message that should be released for free from organizations like “think-tanks”.
It seems as though the sole purpose of charging for this would be to gain money to spread the word…it would spread much quicker if there were no barriers in the way. Given the quantity and qualifications of the authors, I doubt that they’re interested in making $0.10 on this book.
Very odd and ironic.
June 11th, 2008 at 4:19 am
Being British, I’m not really in the greatest position to comment on American way of life, but it does seem to me that to a certain extent we are looking at the past with rose tinted glasses. Just because credit cards are a recent invention doesn’t mean credit is.
I suspect that America is not unlike the UK, where in the 19th century it was common for grocers to offer credit for basic supplies. I’m sure I’ve read that one of the contributing factors to the American Civil War was the precarious financial position of plantation owners usually built on credit from the northern industrialists.
It wasn’t necessarily better in the past, but it could be better in the future.
June 11th, 2008 at 6:20 am
I would be careful linking debt to morality.
For one thing, if you go back to 1950 or so and before, there was generally one breadwinner in the family. Today I would dare say that 2 income families are the ‘norm’.
What this means is that in the 50’s, it was possible for a family to thrive on one income and still meet its savings goals. Another way of stating this is that it’s alot more expensive to meet the basic necessities today than it was in the past. A person may not necessarily be tapping their home equity and credit cards because they are immoral, but rather out of necessity. It doesn’t help that wages have for the most part not kept up with inflation. Certainly there is a moral *component* to debt, but to say that we are immoral because we are not thrifty is not looking at the whole picture.
I believe, by the way, that this is a weakness of the free market that the credit market sprung up to address. A Libertarian’s answer would be that the person should simply work harder or smarter and be more frugal so that the person can meet both basic necessities and savings goals. Everyone else knows however, that although this is part of the answer, it isn’t very practical. A person can reach peak efficiency and still be outpaced by inflation, healthcare, and other expenses. This is what credit addresses in the market.
My solution would be acknowledging that debt should be *de-coupled* from morality, and address the weakness in the free market system with better, more realistic financial edumacation. Preach thriftiness, but without the implied judgment that comes with it.
Just my opinion.
June 11th, 2008 at 6:31 am
@plonkee
At the turn of the (last) century, in the area I grew up in, we had a huge coal mining industry. Most of the coal mining towns had a concept called ‘company stores’. Basically, the mining company owned everything in the town, and the general store. A person would work in the mine and get an advance on their pay for things like rent, food for their family, etc. Naturally, this credit would be extended to the employee and only good in the company store/town.
Oh, and coincidentally, it just so happened that the price of everything almost exactly matched the wage paid to the person, more or less.
So, yes, I agree that the author is looking at the past through rose tinted lenses.
I would go so far as to say that the concept of thrift and frugality evolved as a coping mechanism against this sort of exploitation that was extremely common in ‘the good old days’.
June 11th, 2008 at 6:51 am
Ah, ok, I discovered Brooksie’s agenda:
“The tax code should tax consumption, not income”
Translation: Tax the hell out of the poor, who coincidentally spend a greater percentage of their income on consumption. Or, “Let’s go back to the good old days, when uppity poor folks couldn’t have ipods, hdtvs, etc (or whatever the early 20th century equivalent of these things were). They didn’t need them anyway. They were too busy working to pay for rent, food, and clothes!”
Company stores all over again.
June 11th, 2008 at 7:56 am
Kris tells me I need to vet my stories more closely. Both this and “The Story of Stuff” seemed neat to me. It’s not that I didn’t see possible political agendas behind the stories — I just thought the stories themselves merited attention. I’ll try to do a better job of noting possible motives in the future…
June 11th, 2008 at 9:49 am
JD: If you would have nothing left to learn, then you’d get bored at this job.
Possible motives or NOT, this and a fight against stuff, are still topics of intrest for a site like this, I’d argue. Although, i’m always for more talkin’ on an issue.
June 11th, 2008 at 11:04 am
I take issue with this statement made by icup:
————-
What this means is that in the 50’s, it was possible for a family to thrive on one income and still meet its savings goals. Another way of stating this is that it’s alot more expensive to meet the basic necessities today than it was in the past.
——–
Let’s not forget that in the 1950’s everyone didn’t have two cars in their driveway, TVs, cable bills, washing machines, and huge houses.
It’s not more expensive to live now than it was then, we just define the “basics” differently now. I have friends who actually believe that cable TV is a “basic necessity”. I’m not joking.
My family thrives on one income, but we have a 1200 sq ft house, older cars, no cable, no plasma TV, etc.
We also have no mortgage.
June 11th, 2008 at 12:14 pm
J.D. — Regarding vetting: I actually enjoy reading through the article (or whatever) at issue, your discussion, and then reading through all the commentary — and articles that end up being badly motivated or misinformed often become the best discussion materials. Everyone has different opinions or is educated more in one area than another, and the evolving discussion ends up being an entire learning experience that, in this case, those people who just read Brooks’ article on the NYT web site didn’t get at all. Your job (and one you’re great at) is simply kicking off the discussion!
June 11th, 2008 at 12:49 pm
@ Moi, Ritter, JD,
I see what Moi is saying. That whole paragraph is inadvertently identifying women as being ‘financially uneducated.’ The paragraph is talking about the average person, which obviously could be a him or a her. I think we all know that men and women are equally financially ignorant. I also agree that writing that paragraph any different would have sounded pretty awkward (I am not a big fan of using ‘his/her’ in an article).
Thanks for the great posts JD!
June 11th, 2008 at 1:32 pm
Do you think that with everything getting more expensive, plus people being unable to pay their mortgage bills…
A new era of thriftyness might be on its way for Americans? I think we need it.
June 11th, 2008 at 1:55 pm
JD, don’t forget that all the people who just agree mildly aren’t going to bother to comment. Anything interesting could provoke disagreement.
June 11th, 2008 at 8:51 pm
Hi JD,
There is a lot I could comment on here, but I will keep it to this: Please don’t avoid controversy. That keeps your blog interesting.
June 11th, 2008 at 11:02 pm
Moving up daylight savings time to the middle of March is a symptom. That wasn’t done to converse energy, but to get people to spend money.
Being up at 2am has me thinking about the sun which is going to come much too early even with daylight savings.
June 12th, 2008 at 12:39 am
I thought you’d like to know that on the series finale of “Men in Trees,” a character demonstrated “not being cheap” by throwing money out the window. “See? It’s not a big deal,” Jane says. Her husband Sam promptly stops the RV and goes after it. Later, when they’re revealing how much the other makes, Jane is shocked to see Sam has saved a small fortune and much more than her. (He works sanitation.) He says (roughly), “I don’t need to be thrifty; I want to be thrifty.”
A lesson for us all.
(I highly recommend this episode; it’s all about relationships and money.)
June 12th, 2008 at 3:44 pm
You would notice that more people were frugal with their money. I think this is because most people would pay in cash earlier. Now that everything is done over the computer no one really knows who has how much money and when we go to purchase stuff we think we can take out more than we really can. Unfortunately credit is a necessary issue that has been plaguing our way of life. We should be smart about what we do with our money. Saving and only spending what we have is what needs to be learned.