Inside the Mind Of a Debtor Nation

By Michelle Singletary
Sunday, March 2, 2008

As the director of a financial ministry at my church, I get an up-close and personal look at the spending habits of a lot of people.

And year after year, I am stunned by the decisions people make that get them into financial trouble. I've seen monthly car notes the size of mortgage payments. People take vacations or buy big-screen televisions and expensive jewelry while ignoring huge federal tax obligations.

While it would be easy to judge these people for the messes they've gotten themselves into, I wonder -- even worry -- why they spend so much. Why do they continue to use credit even though they are already weighed down by so much debt?

The problem is just as acute with many who use cash. They may not have credit card debt, but they struggle, too.

I keep coming back to one question: What has made us into a nation of people who spend more than we earn?

It's a question that led Stuart Vyse to write "Going Broke: Why Americans Can't Hold On to Their Money" (Oxford University Press).

Because so many people need to know the answer before they can dig out of their own financial messes, I'm recommending "Going Broke" for the Color of Money Book Club for March.

In this compelling and wide-ranging work, Vyse explores the history of lending in America, the invention of the shopping cart, the evolution of self-service discount shopping, and the explosion of branding and advertising.

It's not a book I would recommend for people in financial trouble who need a quick fix. Vyse doesn't promise to help you go from broke to an automatic millionaire in 10 easy steps.

Relying on psychology and behavioral economics, he analyzes the many influences that rob consumers of their self-control. He doesn't, however, absolve people of their wasteful spending habits.

There really are two sides to why so many Americans overspend.

"Part of the problem is simply a matter of how we think about money," Vyse writes.

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