Remember those days when you were young and your mother
or father would take you to the store and give you five bucks? “Choose wisely,”
they may have admonished and left you to stare at the shelves in wonder,
holding that crisp five dollar bill and feeling the weight of the world on your
shoulders. Five dollars is not a lot of money and even a small purchase would
wipe out most of it. Should you save it? The latest Transformer was right in
front of you and it was calling your name. But not only would that use all of
your money, you would need a small loan from the parental unit that dragged you
into the situation in the first place. Out of the corner of your eye, you spot
to aforementioned parent lumbering toward you. Time for decision is running
out. With a sigh, you recall the last time you asked for a loan. Not only did
you get shut down, you received a lecture on fiscal responsibility – well, the
seven-year-old appropriate version of a fiscal responsibility lecture.
Unwilling to walk out of the store empty-handed, you reach for the 98 cent
yoyo. It doesn’t matter that you already own five of them; it is the only item
on the shelf that will allow you the satisfaction of a purchase and leave you
with enough left over so that you can purchase the Transformer the next time
you are given money to go shopping.
This decision process is something that the average adult
no longer has to go through. The concept of walking out of a store without the
item that you really and truly wanted – or at least thought you wanted – is
nearly obsolete. The creation of the credit card has allowed members of society
to throw caution to the wind. Not having cash on hand is no longer a problem; credit
cards let you make purchases without having to worry about the paycheck that
you’ve already spent.
Every
year, the average American household has a credit card debt of between 5% and
12% of their income.[1]
Only 16% of this debt is paid each month on average.[2] So while Americans are filling their homes
with knick-knacks and products that have the potential to increase the ease of
their lives, they are increasing the risk of losing their homes due to bankruptcy. A majority of Americans are spending so much
of their future earnings that they are beginning to spend their retirement
funds.[3] Credit
was not always used so recklessly. In colonial America, credit was used to aid
in the purchases of everyday items. In those times, towns were smaller and the owners
of produce stands and general stores knew their customers’ names and addresses.
Credit was a way for busy mothers to send their children to the market without
having to worry about doling out correct change. The bill was paid off weekly
and it socially unacceptable to carry large amounts of debt.
Credit
since then has ballooned into a large crisis. We’ve gotten so used to having
what we want when we want it how we want it that denying ourselves to preserve
our future is a difficult concept. Instantaneous gratification dulls the true
sense of joy of obtaining something that you had to work hard and save for.
Credit card companies have induced this false sense of kingliness in which we
feel that there is no reason to stop us from having what we want. This sense of
entitlement is perpetrating a debt crisis. Instead of our purchases enhancing
our lives, they are adding to our stress levels and contributing to America’s financial
situation.
