Furthermore: Where the Headlines Take You

The American Way of Debt

In some ways, I am an atypical American when it comes to money: I didn't have a credit card until I was 30, I started saving for retirement in my mid-twenties, and I have never taken out a consumer loan to pay for a car or appliance. In one way, I am completely typical: my balance sheet is in the red. I owe more in student loans than I have in all of my cash and retirement accounts combined. Over the last decade, the average American household debt has ballooned to over $100,000 and annual household savings has declined to under $400 in 2008. This and other scary facts are made startlingly clear in a recent New York Times series called The Debt Trap.

If there were an award-granting institution that gave an award for spot-on predictions, 2006's In Debt We Trust: America Before the Bubble Bursts would take the top prize. Filmmaker and author Danny Schechter starts the film by talking about his own debts and then trains his investigative eye on the credit card industry, the major financial institutions, and mortgage lenders. No predatory lending practice is free from his scorn. He talks to bankruptcy lawyers, think tank experts and economists to back up his claim that The United States is heading for a major financial collapse due to the over-extension of the credit and mortgage markets. A feeling of deja vu crept over me as I watched. What was true for a small number of Americans back in 2005 has become a grim reality for millions in 2009.

When I think about my grandparents, I marvel at how young they were when they started their families and built or bought houses. Very few of my friends started breeding before the age of 25 and most of the people I know don't own houses, and we're generally in our thirties. I've often wondered why. Personal choice? Not wanting to be tied down? Selfish career-obsessed behavior? Maybe not. It turns out that today's young and early-middle aged adults have less money than their counterparts of generations past. We earn less and our dollar has to stretch further. Tamara Draut is an expert on this squeeze and was interviewed for the film In Debt We Trust. Her book Strapped: Why America's 20 and 30 Somethings Can't Get Ahead details this problem and lays the blame partially on rising college tuition costs and the outsize student loans people have taken out to pay them.

One complaint about today's 20 and 30-somethings is that their expectations of what an adult, middle class lifestyle should look like are too high. People of my generation just don't know how to make the tough choices and sacrifice (though I would argue on my own behalf that not owning a car is a major sacrifice). The Economides family knows a thing or two about tough choices. Steve and Annette Economides and their seven kids, aka America's Cheapest Family, live on about $44,000 per year. The family scouts bargains wherever they go and they have tips to share on a range of topics, including budgeting, grocery shopping, planning budget vacations, and teaching kids about money. Though I'm sure they're pleased with the proceeds from this book, they would probably recommend that you check your books out from the library rather than buy them.

A recent Writers Talking event featured local blogger J.D. Roth, who's made a name for himself with the blog Get Rich Slowly, a blog about personal finance. He's got a low-key attitude and doesn't specifically endorse one system of managing your personal finances over any other. No hard and fast rules, just a general philosophy. For the full range of materials the Library has on offer, try searching the catalog for books about personal finance, budgeting, or consumer education.