It’s no secret that American consumer debt levels keep rising year after year after year. According to creditcards.com , the total amount of revolving debt outstanding is at $870.4 billion in April, up from $861.6 in March and the average credit card debt held per US adult, excluding zero-balance and store cards, stands at $4,878. What is it about us that makes us want to keep spending and spending and spending until we are drowning in debt? Below is an exert from an excellent article that gives us a few reasons for our spending habits:
We’re economy-driven. “We are a consumerist society. In fact, it is a known fact that 70% of the US economy is driven by consumer spending. Our economy is built in such a way that it thrives in how much we spend – not how much we produce. Even if we have a high production rate, if no one buys them, that will not mean anything in our economy. Overall, the businesses thrive if we spend our money on them. So we work for these companies so we can buy the products that businesses produce. What we spend is what the business owners use to pay us our wages so we can buy some more. It is a cycle that moves because of consumer spending.
Debt as a measurement of an improving economy. In connection with the first reason, our consumer debt problem is made worse because we use our spending as a measurement of our economic success. According to the New York Times link that we mentioned at the beginning of this article, the willingness to borrow money to spend is an indication that households are confident about their personal economic conditions. The NYTimes.com article quoted an expert that said “In a steady state you would expect, in nominal terms, household debt to grow.” That simply means if we want our economy to be steady, we need to expect that our debt will really grow.
It’s a cultural thing. As sad as it may sound, Americans are culturally inclined to spend. If they want something, they spend on it instead of finding ways to work on it themselves. Some of us blame credit card debt on the purchasing tool itself. But if you think about it, the problem is not the card, but how we use it. An article published on CNBC.com revealed that other countries does not react to credit cards in the same way as we do. France, Germany and other countries in Europe do not have as much credit card debt as we have – and they have more savings than we do too. We all have access to the same purchasing tools but Americans are culturally inclined to be in debt just to get the things that we want. We do not prioritize savings as much as we should and the lack of emergency fund actually leaves us in a more vulnerable position in the future. One emergency that is beyond our budget can put us in debt.”
For the complete article, visit nationaldebtrelief.com
The last point is what troubles me the most….it’s a cultural thing. And where does this culture come from? Who is responsible for it? I don’t believe in conspiracy theories when it comes to this topic, I only feel as if this is the natural flow of our economic system and our psyche. For us to curb the rise of consumer debt and prevent the eventual destruction of our society, we have to change both the system and our psyche. Does anyone have any suggestions? I’m all eyes…