Your Debt, But Not All Your Fault

By Michelle Singletary
Sunday, May 4, 2008

She hooked me with the word "debt."

"The word alone causes people's blood pressure to rise. It's a hard-sounding word, phonetically in sync with its impact on people's lives," writes Tamara Draut in the foreword to the compelling "Up to Our Eyeballs: How Shady Lenders and Failed Economic Policies Are Drowning Americans in Debt."

Draut is director of the Economic Opportunity Program at the research and advocacy organization Demos, which co-published the book with the New Press. The book has a mission: to slam the folks who have pushed credit on American households for decades with little accountability for what it could do to borrowers or our nation.

Given current economic conditions, "Up to Our Eyeballs" is a timely choice as the May selection for the Color of Money Book Club. The title alone will start a debate that could go on for hours.

This well-researched book provides a historical perspective on how we got into our current financial jam. And I say "we" because all of us are feeling the ramifications of a heavily leveraged population.

For example, you may be able to handle your monthly mortgage payment but if your neighbors can't, their eventual foreclosure may affect your property values and ultimately your ability to sell or refinance your home.

"Up to Our Eyeballs" was written by José García, James Lardner and Cindy Zeldin, all researchers who work on issues of economic opportunity and security.

Lardner is a senior fellow at Demos and editor of Garcia is a senior research and policy associate at Demos. Zeldin formerly worked in federal affairs for Demos and is pursuing a doctorate in health policy at Emory University.

Rather than launch an attack on consumers, who admittedly signed up for their debt burden, the book looks at the government policies and business practices that have allowed many financial institutions to help people dig their own debt grave.

Garcia, Lardner and Zeldin don't just point a finger at lenders, they poke them in the eye.

"Set free by two decades of deregulation, today's creditors have cooked up products that are so complicated, deceptive, and trap-laden that even the most sophisticated borrowers can't tell a good loan from a bad one," the authors write.

Some of the stories in the book are heart-wrenching and all too familiar, such as the 70-year-old retiree who was persuaded to refinance her home into an adjustable-rate mortgage that started at $832 a month and eventually jumped to more than $1,400. The mortgage was more than the woman's monthly income.

Seriously, I want to throw the person who made that loan in jail. It's an inhumane way to do business.

Relaxed lending standards have helped more families become homeowners and more people to attend college. But financial institutions and regulators have failed to keep the debt spiral from getting out of control.

Too often, too much blame falls on consumers, who are depicted largely as materialistic spendthrifts.

That's only part of the problem, the authors say.

"Are some of us spending money we don't have on things we don't need? Absolutely," they concede. "Does that fact explain the more than $2 trillion of household debt that American families are carrying? Not even remotely."

Consumers aren't just buying big-screen televisions with all that debt. They are using it to get a college education, pay for medical services or buy groceries.

For instance, a typical two-earner family today spends about 80 percent more on housing, 74 percent more on health insurance and 42 percent more on transportation than a typical family in the early 1970s, according to the book.

"Americans are borrowing more because incomes have failed to keep up with the cost of health care, housing and other basic needs," the authors write.

The book is not just a rant. It also contains practical solutions. But what makes it worth the read is how angry it should make you. And ticked-off people tend to help promote change.

To become a member of the Color of Money Book Club, all you have to do is read the recommended book. Join me online to chat about this month's selection, especially if you're up to your eyeballs in debt. I'll have a live discussion May 22 at noon Eastern time at Joining me will be the authors of "Up to Our Eyeballs," who will be available to answer your questions.

In addition, as part of the book club, every month I randomly select readers to receive a copy of the book, donated by the publisher. For a chance to win a copy of this month's selection, send an e-mail to Please include your name and an address so we can send you a book if you win.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

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