Debt

Fifty years ago, things were different. The middle class was made up of one parent - usually Dad - working outside the home. He supported the household, which included his homemaker wife, three or four kids, and the car they owned and the house they were paying off. And maybe a collie or German Shepherd running around in the back yard.

Now, both parents work and only have one or two kids to support. So, you'd think that modern families would be practically rolling in disposable income. Twice the income, half the dependents - seems obvious. And our consumables are being made overseas, and sold in discount big-box stores at a fraction of the relative prices of yesteryear. This makes goods seem cheaper than they ever were, which should, obviously, mean more money in our pockets.

Well, funny how what seems obvious can be so very wrong. Based on all of that information, we should all be living lives of debt-free luxury and early retirement. Should be. But, obviously", we're not. Blame some of it on the economics of a two-job family. Two working people might mean TWO cars and their insurance and upkeep, two computers, two sets of business clothing. It might mean adding daycare expenses and more pre-made or order-in dinners. But that doesn't explain why families now are more heavily in debt than ever. But I can explain it, and it's both simple... and sad.

We have become a consumer society. We want the newest gadgets, the fanciest cars, and the biggest houses. We want a better version of whatever our neighbors have, and bragging rights. How many times have you upgraded your cellphone? How many DVDs have you bought and then only watched once or twice? How many new gaming systems have you bought your kids? How many new GAMES have you bought for those systems?

Fifty years ago, the "toy store" was one aisle in a department store, and it was mainly board games and Roy Rogers six-shooters. Today, it's a twenty-thousand square foot Toys R Us in every town. And then there's WalMart and Costco and eBay and Craigslist and Etsy and Dollarama and just about the entire internet. There are opportunities to buy-buy-buy at our fingertips 24-7. And thanks to credit cards, lines of credit, home equity loans, and MORE credit cards, we can buy now and pay later. Much, much later, as we mentioned in another Commentary a few months ago.

We often complain that our national debt is out of control. Well, so is our personal debt. I guess that means it's true that our governments are "of the people, by the people". Same mistakes, bigger scale. And both households and governments are going to have to make big changes if things are going to improve.