SpinOff: Does others overspending affect you?

[Free Thinker]

I noticed a few posts talking about the rise in consumer debt and overall debt and how it is going to affect our future. Some posters thought what others did was none of their business and others thought it would have a very negative affect on our whole economy. I'd like to hear what you think about it! Is it any of our business if our neighbors owe on a boat, SUV, ATV, house, education, and CC debt?


I will start and say that YES I definately think that the over-spending of the average American will have a drastic affect on our economy in the very near future. IMO, it will be more of a slow, trickle-down effect that puts our country into a recession. I think that there will be lots of forclosures, but I think more often there will be a reposessing of vehicles, ect. and as Americans are more strapped by an increase in things like gas and food (and property tax and insurance) they will in turn tighten their belt on other spending like eating out, clothing, electronics, ect. I think this tightening is what will cause the most damage in loss of jobs as we pick and choose where our money will be spent. The housing market is just one example. In the past it has been booming, contractors were always way behind, brick manufacturers were 6-9 months behind the demand, ect. Just in the last year I have noticed a remarkable slow down, now the local contractors aren't near as busy and don't have as many jobs lined up (we have been looking around about building for about 2 years and plan to start our house this spring, everyone now has sudden availability where as those who built just a year ago were waiting for everything from flooring, cabinets, to even the contractors to do the jobs!). This is just one industry where I can clearly see a slow-down. Also, we have been looking at lots of open houses to get ideas for our new house and there are suddenly TONS of expen$ive houses that are just sitting there, with no lookers and no one to buy. Banks and builders who speculated are having to pay interest on those houses, but not much to show for it right now. There are literally entire neighborhoods like this when we were looking just a few months ago in a larger town. DH's aunt in real estate in the area and she said no one can really afford those houses anymore. I think the automobile industry has slowed too, and will slow even more (read that as layoffs in man. plants), as well as retail industries that sell clothes, ect.

[avendesora]

Do you really know that your neighbors owe on these items? That's quite a judgement to assume that if you don't actually know it.

I'm sensitive to people judging my purchases. I believe that a healthy economy involves some comfortable spending - keeping money flowing is what's keeping other people employed. We have a few luxuries, but we've always paid for them in cash. And before buying those luxuries, we made sure that we had an emergency fund established, were able to make our 401k contributions, our 529 contributions, and a contribution to our church. Any money beyond our basic mortgage, bills, other necessities, standard savings, charitable contributions, etc., can be spent however we want.

No, I don't buy cheap plastic crap from Walmart. And when I upgrade something that isn't broken, I feel good about donating the used item to someone who I know can use it.

We work hard, we love our jobs, and we earn some good money. We're frugal in areas we aren't passionate about (example: my children only wear second-hand clothes), but we DO spend where our passions are (organics for me, electronics for DH).

Someone mentioned in that other thread hiding cash under the mattress (they were partly joking, I think). I think that beyond emergency funds, retirement, etc., 'hoarding' cash will actually contribute to our country's economic demise.

Aven

[Knittin' in the Shade]

[qupte]Do you really know that your neighbors owe on these items? That's quite a judgement to assume that if you don't actually know it.[/quote]

I took what she said as not neccessarily means her actual, physical on-her-street neighbors, but more as in neighbors in society in general. I don't think it is as all an assumption that there are many, many people in every town who owe on debts like this. It's a fact.

[2Sweeties1Angel]

Did you seriously throw education into that list, like it's just something to waste money on? :

[Free Thinker]

As for education that IS money OWED, I didn't say it wasn't a wise investment, but it is money borrowed that will have to be paid back.

ANd no, I wasn't talking about anyone in particular, but I know what we make and I have a general idea how much my friends make. I also know that they don't care to owe money on several different items at one time. I don't think it is at all an assumption that too many Americans owe too much money, I think it's a fact. That doesnt mean that I"m judging anyone or their particular purchases, I'm just saying as a whole, we owe too much money, period. Doesn't matter what we borrowed money on, it's the actual $$ taken in vs. $$ owed and how much of that we pay in interest.

[mommyddeville]

I don't know if it's just me and my acquaintances, but there's a certain amount of chatter about what people spend and if they owe money on something. I know that certain neighbors or friends owe on their cars, RVs, houses, or have student debt. I guess I'm just weird that we discuss it.

[mightymoo]

Honestly, its very hard for me to save and not to spend, and to want to have things others have, but I don't. While yes, I realized any one particular person may or may not owe any money on their toys, I do know that stastically many people do owe. And honestly, It makes saving much easier if I think to myself that they are probably up to their eyeballs in debt to own those things. Because then I can feel that I'm making a better choice for myself in what I'm doing, not just doing without.

I have to feel good about my choice to be able to keep making it day in and day out - that's the nature of frugality, its not a choice made once and then you are locked in, you have to make it over and over again.

I am affected by it most when I see my family members making these choices. Most specifically, when my parents, who haven't saved adequately for retirement, becuase my mother is definitely a consumer, get a call from my brother, who just immersed himself again into debt to buy an egagement ring he couldn't afford on credit, which he had to have my mother cosign. Why is he calling? Cause he needs money. Why does it affect me? Because I just know that when the time comes for that call to come to me from my parents, my brother still won't have any money, so I'll be supporting them, partially because of my brother's continued draining of them.

[tinybutterfly]

Originally Posted by mightymoo

I am affected by it most when I see my family members making these choices. Most specifically, when my parents, who haven't saved adequately for retirement, becuase my mother is definitely a consumer, get a call from my brother, who just immersed himself again into debt to buy an egagement ring he couldn't afford on credit, which he had to have my mother cosign. Why is he calling? Cause he needs money. Why does it affect me? Because I just know that when the time comes for that call to come to me from my parents, my brother still won't have any money, so I'll be supporting them, partially because of my brother's continued draining of them.

This does get tricky when it is personal.

We have a family member who has spent and spent over the years, and my brother and I have bailed this person out periodically, as have some of her friends.

In the end, it doesn't help. Nothing has helped. The pattern is still the same all these years later.

Right now we have both backed away a bit. She has enough to live on.

I send money for birthday or Christmas with the full knowledge that it will probably be spent on stuff she doesn't really need...but have decided that is her choice.

I don't feel responsible anymore to take care of this person financially. She has made her decisions and her spending patterns are deeply ingrained.

I can't fix it and giving her money is like throwing it down a hole.

It's a very complicated, personal issue.

As far as other people I don't know and how they spend their money...I figure we all get to choose.

Otherwise, who will choose for us?

Who would tell us what is okay to spend our money on and what is not okay?

Who would make up the list of approved items and activities, and banned items and activities?

And if people want to judge me or my family by what they see in our yard, or drive-way, or what we wear, etc. they are free to do that. But their assumptions might often be wrong.

[velochic]

It affects me personally as well as everyone else because there comes a day to pay the piper. By overspending, a consumer will eventually ruin their credit and then they are not able to spend even within their means. This affects the economy, and that affects me.

I think if there is a sudden decline it will be if the war debts come due suddenly for some reason. I think Mr. Bush's spending will negatively affect our economy more.

But, yes, I concur with you, OP.

[Purple Sage]

Originally Posted by Free Thinker

I will start and say that YES I definately think that the over-spending of the average American will have a drastic affect on our economy in the very near future. IMO, it will be more of a slow, trickle-down effect that puts our country into a recession. I think that there will be lots of forclosures, but I think more often there will be a reposessing of vehicles, ect. and as Americans are more strapped by an increase in things like gas and food (and property tax and insurance) they will in turn tighten their belt on other spending like eating out, clothing, electronics, ect. I think this tightening is what will cause the most damage in loss of jobs as we pick and choose where our money will be spent.

This reminds me of what happened after 9/11. We were told to spend money to help the economy. People were encouraged to go to New York and spend money there to support that economy in particular. In so many words, we were told that to be good Americans we needed to be good consumers. Personally, I think it's time for change from that whole paradigm. I don't know the answers, but it saddens me that our economy is primarily based on us consuming so many things that we don't really need, and it's the impact that this has on the environment and our values that I'm more worried about.

On another note, it's because of the housing market's decline that I am able to live where I do now. The house we're renting was intended to be a flip, but the owner couldn't sell. We're renting it for less than what he's paying for the mortgage, insurance and taxes, and I'm very grateful to be living here so cheap (if you consider $1400/mo for a 2 bedroom house "cheap").

[nylecoj]

Having debt is not necessarily a bad thing in and of itself, and I definitely believe that it matters what kind of debt you have - i.e. a home versus a Nordstrom's card. Having so much debt that you are unable to pay it back will definitely negatively impact the economy, but if you can afford your debt, there's no reason not to invest in something large.

Personally, I think the trend to buy only the cheapest goods possible is far more detrimental to our economy (and GDP) than my neighbors owning a new house, SUV, and boat.

That said, spending more, like on American goods is definitely GOOD for our economy provided it can be paid for.

OP, I think it's far more alarming that people seem to just shuck off the responsibility and seriousness of going into debt - for any reason. It seems there is a very cavalier attitude in this country to "put it on credit".

Buying a new home - $230,000
new SUV - $30,000
Furniture and decor for home - $15,000

Monthly payments on $275,000 - PRICELESS

[AngelBee]

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[mightymoo]

Originally Posted by tinybutterfly

As far as other people I don't know and how they spend their money...I figure we all get to choose.

Otherwise, who will choose for us?

Who would tell us what is okay to spend our money on and what is not okay?

Who would make up the list of approved items and activities, and banned items and activities?

ITA - I learned long ago I can't control what my brother does, and attempting to lecture him only drives a wedge between us. I find by sitting back, not lecturing or criticizing and being extra supportive of him when he is being more responsible, I have more influence, he is more open to hearing my opinion and even seeks it out and can help more.

My personal motto lately seems to be "It is what it is" - I just take them for who they are and don't stress over whether they are making bad choices for themselves. But when I see them hurting others with their choices its very hard. But then again my parents are making the choice to give him the money, and that isn't my choice either.

Originally Posted by tinybutterfly

And if people want to judge me or my family by what they see in our yard, or drive-way, or what we wear, etc. they are free to do that. But their assumptions might often be wrong.

I actually want it this way - we live in a smaller home and I'm happy that as a result people might think we have less money, because then they will expect us to spend less! It's amazing how people's perceptions of how much money you make clouds their judgement one whether you should spend money on a specific thing (like eating out or clothes or whatever). If you can't afford it, its okay not to have, buy or do it, but if you can afford it and don't, you must be cheap or mean or something. That's why I like living in a small house, I'd rather people assume we have less money than we do.