My neighbour, Lawrie, whom I’ve mentioned before – young, idealistic, budding political activist – has an older sister. Kristen is 24 and still lives at home, which is probably a good thing considering her spending history. On the weekend she came clean with her parents, it was an intervention of sorts. She has a $32,000 credit card debt spread over three different cards. She can’t pay it back on her salary as a marketing assistant. Six thousand dollars of that debt is for mobile (cell) phone bills.
Kristen is stressed. The weight of regret shadows her eyes. She stays up all night, putting the kettle on over and over again, drinking herbal tea in the hope it will lull her to sleep; locking herself in the bathroom when the phone rings.
In the past I have used my credit card to pay bills if I have been in-between jobs or in a tight spot. But Kristen has been using her credit cards to do little else than indulge herself. Her wardrobe would make any red-blooded fashionista swoon, her make-up could transform the faces of an entire village, her digital cameras and other electronic accessories are top of the range. Her mother is furious. “All this stuff,” she says. “It’s meaningless in the end, even more so if she can’t afford it. How did she get to be so reckless? She was so sure-footed as a child. She moved through the day with such a delicate rhythm that not once did I fear for her future. How could I have been so wrong?”
Some blame consumerism gone mad and easy credit. Kristen’s parents blame themselves for not teaching her the value of money well enough. Yet they raised their son the same way and he manages to live debt free and frequently gives money to charity. They plan to pay off Kristen’s debt which she will have to pay back over time. They have drawn up an interest free contract. It will take Kristen three years to pay back the money. One of the conditions is that she cut up all her cards immediately. She says she feels sick to her stomach and can’t tell if it’s because her parents have found out about her debt or because she has to cut up her cards. “I don’t know how I’ll survive without buying things,” she says. “I’m embarrassed to admit it, it makes me sound like such a loser.”
Seems that a lot of people in Sydney can’t survive without buying things, but it’s not just plasma screen TVs and Playstation 3s that are contributing to household debt. Reports in the press on the weekend show that house prices have reached a zenith of unaffordability. Many people are now spending one million dollars on their first home. Maxed out is a phrase which describes the financial status of many Sydneysiders.
I am fearful of where it will all end. I worry that if interest rates continue to rise the economy may fall into recession, that people I know and love will lose their jobs and thousands of debt-servicing problems will be created. I am already seeing shades of the US sub-prime mortgage fiasco here, despite the assurances of economists and politicians that all is well. I worry about the dashing of hopes, homelessness, the loss of idealism, depression, suicide. I feel we may need a revolution of some kind to address these issues but see no heroes willing to storm the Bastille lurking in the shadows.
We all want different things but one of them is not disorder. We all try to plan our lives to avoid being driven by panic. But debt; crazy, over-inflated, monstrous debt is turning the tough into the vulnerable. And our policy-makers are letting us down by not addressing the issue head on.
For an insight into how household debt has affected many people in the US you must read Laurie Anne’s wonderful post over at All Over The Bored. I know she won’t mind me providing a link. You must read it. She is an extremely gifted writer. Cheers, Laurie!