To Some, Money Now Counts for Less
Now here’s a news flash from America: Last week, 42-year-old Kate Rhoad of Conroe, Texas--momentarily strapped for gift ideas--asked her 9-year-old son Travis whether there was anything he wanted or needed for Christmas.
First, the kid went off and thought about it. When Travis came back a few hours later, Rhoad heard something that perhaps no other parent in the nation has heard--could even conceive of hearing--at this time of year.
No, said Travis. He couldn’t think of anything he needed.
So this year, Travis will be getting home-made coupons, each one redeemable for one of the things he prizes most--a round with Mom on the board game of his choice. In other words, gift certificates for his mother’s time.
Another flash: On the drizzly day after Thanksgiving, as crowds thronged West Lake Mall in Seattle, 25-year-old Alan Seid and a group of friends set up the most improbable of solicitations. They urged mall-goers to join them in observing “Buy Nothing Day.” They invited them to come to their booth and cut up their credit cards.
And six people did it! With gusto, according to Seid. Countless others made thumbs-up gestures at the group manning the scissors.
Gerald Celente, author of “Trends 2000,” calls simplicity--a rejection of mindless consumerism and a return to quieter, simpler lives--one of the really big trends for the new millennium. “Never before have I seen a social trend gain such momentum as this one,” Celente gushes. “Something new is being born. This is not a flash in the pan.”
And yet:
This year, Americans are expected to spend $500 billion--an amount equal to roughly three-quarters of the gross domestic product of Canada--on Christmas presents, driving retail sales into the record books.
Americans are in debt up to their eyeballs: The Federal Reserve reports consumer debt has reached $1.178 trillion. The average U.S. household has run up a credit-card bill of $3,400, compared to $1,600 a decade ago, according to Standard & Poors.
By the end of the year, a record 1.1 million Americans--roughly 1 in every 100 U.S. households--will have declared personal bankruptcy, according to government statisticians. Once a mark of shame and failure, declaring bankruptcy this year became almost as common as purchasing a new foreign car.
In the national debate over values, money appears to represent the final frontier. The bridge too far. The one that is getting away.
To talk to Americans, it would seem both the source and the destroyer of many of our shared values. At its best, money can serve as a faithful handmaiden to many of our most cherished institutions: family, community, responsibility. At its worst, it is the dark force that separates many of us from the values we hold dear.
At Work On Simplifying Life
“Money is a great servant, but it’s a terrible master,” says Rick Peterson, a 42-year-old financial planner in Alameda, Calif., who has embarked on a conscious effort to wean himself from overspending and to simplify his life. “I’m trying to make it a better servant, but I’m not there yet.”
Today, Celente said, roughly 1 in 20 baby boomers--about 4 million people--have acted on that conviction, embracing a life that stresses frugality and rejects consumption for its own sake. Those numbers include Rhoad and Seid, both of whom followed a nine-step program laid out in the movement’s bible “Your Money or Your Life.” The 4-year-old guide to “transforming your relationship with money” has been on the Business Week best-seller list all year.
Many believe a growing number of Americans, whether by conscious decision or financial necessity, will follow Rhoad and Seid in reordering the role of money and the things it buys in their lives.
Until then, the vast preponderance of Americans will continue to bemoan the nation’s materialism. All the way to the mall.
“We haven’t changed. We’re more consumer-oriented than before,” says Vicki Restivo, a stay-at-home mother of three who last week was gazing at jewels at the the Bal Harbour Shops, an upscale mall in south Florida. “We talk a blue streak about what we should be and what we should do about it, but we don’t change anything.”
Restivo, who long worked in marketing and retail sales, is more honest than most about her own role in helping to sustain a national addiction to consumption. “I am in the same boat. I know what I should do and the way I ought to be, but nothing happens really,” she says.
For all the talk about a renewal of the nation’s spiritual and community values, the American dream remains firmly rooted in money, and increasingly rooted in debt. First and foremost, it is linked to homeownership, along with a mortgage that for many Americans compels a whole stream of value-laden decisions, including whether and how much both parents will work for pay.
Need for Steady Rate of Growth
Since the end of World War II, the American dream has been interpreted to mean that each generation should do better--and have more--than its parents. That has dictated an economy that must remain in a steady state of growth--much of it fueled by domestic consumer spending. It is an economy, observes professor Paul Wachtel, author of “The Poverty of Affluence,” for which the absence of growth is termed “stagnation,” not stability.
In William J. Bennett’s best-selling “Book of Virtues,” frugality does even not make it into the Top 10 (although, to be fair, self-discipline does appear as one of 10 common virtues). While politicians and Federal Reserve Board Chairman Alan Greenspan have been imploring Americans to live within their means and save more, their message largely has fallen on deaf ears.
Only 38% of Americans save any money at all, said A. Gary Shilling, a financial consultant based in Springfield, N.J. Even among those 38%, their accumulated savings averages only $1,000. Among Americans in their late 50s, who are nearing retirement, the median savings is less than $10,000. The figure does not include home equity, much of which already has been tapped for loans.
“As a culture, we’ve made it easier for ourselves to buy things,” says James Lupori, a Seattle-based counselor who has worked in the consumer credit industry for years. “This fuels our economy. The implied message is that you’re being somewhat unpatriotic if you don’t spend.”
And yet:
Even as Americans indulge in an orgy of buying, there is growing evidence they are feeling guilty and unfulfilled about their spending. According to a 1995 poll conducted by the Merck Family Fund, 91% of Americans agreed with the statement that “the buy-now, pay-later attitude causes many of us to consume more than we need.” And while 89% agreed that “buying and consuming is the American way,” 82% acknowledged that “most of us buy and consume far more than we need. It’s wasteful.”
Believing is one thing. Taking personal responsibility for broad social problems--and changing one’s own behavior accordingly--is quite another.
The Merck poll asked respondents if, in the past five years, they had voluntarily taken steps to make less money. To their astonishment, 28% said yes--a figure that prompts many pollsters to caution that respondents sometimes lie, and many economists to laugh out loud.
“I guarantee you, they don’t just go in to their bosses and say: ‘I’ll take a pay cut,’ ” says Susan Sterne, president of Economic Analysis Associates in Greenwich, Conn. “It never is voluntary. You just don’t get that. If people were more values-oriented or virtuous, why would they be bankrupt or up to their ears in debt?”
Celente predicts that the number of Americans embracing what some have called the “voluntary simplicity movement” will quadruple, reaching 12 million, by the year 2000. But along with most social scientists who have tracked consumer behavior, he has no romantic illusions about what is causing this sudden surge of personal fiscal virtue. It is the cold, hard financial reality of lower wages, greater job insecurity, imminent retirement, or a growing recognition on the part of many Americans of the chest-tightening, mouth-drying extent of their personal debt.
He calls it “involuntary voluntary simplicity.”
Others see the same forces at work, and insist that it is sanctimonious pap to think that fiscal virtue is set to sweep the nation.
“While it’s romantic to say that Americans are gaining a new spirituality and a new frugality, it’s due more to changing economic realities,” says Marc L. Miringoff, director of Fordham University’s Institute for Social Policy. “But we don’t like to look at ourselves as the bloated Americans. We like that something like this comes from our Puritan New England background, like to think we can strip down and not have many things. There’s something deep in our psyches that likes that. But consumerism is safe in America.”
A Shift in Both Values, Behavior
Yet for many Americans like Rhoad, a sudden financial jolt is bringing a stark moment of clarity, and an enduring shift in their personal values and behavior.
Her epiphany came at 2 a.m. on Sept. 15, 1993, as she was poring over her credit card bills and discovered she and her husband, Rusty, a chemical engineer, could no longer cover the required payments.
“A lot of my perceived happiness was tied up in spending money: It made me feel good,” she says. “It made me feel successful. It made me feel powerful to be able to spend money. And that night, sitting there at 2 a.m., I didn’t feel any of that. I felt defeated. I felt terrible. My integrity was on the line when I couldn’t pay off our credit cards. I was mortified.”
Rhoad, who works part time as a professional organizer, decided to organize her own family’s life around a different ethic than spend-all-you-make. They sold off a second car. They stopped recreational shopping, stopped buying premade foods, stopped eating out at restaurants, stopped replacing all the gadgets with which they had “simplified” their lives (although they still have plenty, she says). Finally, they started saving.
Since they had never been television watchers, the withdrawal was perhaps less painful. Their home has no tube, and as a consequence, no constant stream of messages telling the Rhoads what they need or should want.
Most important, Rhoads says, she and her husband got serious about teaching their three children what is important--family, friends, compassion toward others--and what is not. They give their 5-year-old and 9-year-old sons small allowances, and make them responsible for any purchases beyond their basic food and clothes and entertainment. Any money that comes into the kids’ lives is counted, and divided three ways: 25% goes directly to savings, 10% goes to a charity they choose, and the rest is theirs to spend.
No More Yuletide Shopping Frenzy
At Christmas five years ago, says Rhoads, she would have been blown out by a monthlong frenzy of shopping, with the credit card bills to show for it. Instead, her family has spent the past month indulging in homey little rituals she and her husband wanted their kids to associate with the holidays.
They spent one evening reading stories in front of the fire with hot cocoa, another baking cookies and making gifts for teachers, another going out as a family to look at Christmas lights. They cut their own tree, took a hayride and had a winter solstice party with another family.
They did go shopping once, to buy presents for the needy family whose name they picked in a local “Secret Santa” drive.
Rhoad says that her children see “that other children they come into contact with aren’t any happier than they are. Our kids don’t have a lot of stuff, and yet they have our time and our energy and they have all their needs met.”
“We have so many options that all people around us don’t have, it’s fun and exciting,” Rhoad says. “I do feel different. I know our thinking and way of life are different than people that we meet. But people we meet want to be like us. They want to have what we have. It’s not the other way around.”
Times researchers Anna M. Virtue in Miami, Lianne Hart in Houston and Edith Stanley in Atlanta contributed to this story.
