As the credit crunch continues to cripple the stock market and American economy, UA students can learn ways to avoid falling for the same tricks that duped their parents.
The Social Justice Film Series is presenting a film titled “”The Overspent American: Why We Want What We Don’t Need.””
The film aims to provide students with a greater understanding of how to manage their finances, said Jill Burchell, manager of the Gallagher Theater, which will host the film at 1 p.m. and 5 p.m. today.
“”It’s basically about why so many middle class Americans are materially dissatisfied,”” Burchell said.
This year’s film series has an economic slant due to current world events, with the hope of educating students about the financial dangers that they can encounter in the real world, she said.
“”The whole series is just to get people thinking,”” Burchell said. “”Think about the cycle that you’re in. Do you really need this kind of hyper-consumerism, or are you doing yourself a disservice by feeling like you have to buy and buy and buy so that you match everyone else?””
It is necessary for students to keep track of their finances, because buying on credit is no longer their best option, said Gerald Swanson, economics professor and Thomas R. Brown chair in economic education.
“”The current average credit card debt is $10,000, so we have been living beyond our means in search of instant gratification, and at some point, the bill comes due, and I think it is coming due now,”” Swanson said.
Currently people feel the need to buy certain things that they cannot afford, simply because they feel they can pay for it later, he explained.
“”We borrow to buy,”” Swanson said. “”I was raised in a time when you saved and then bought. We even saved to buy Christmas presents. We did not put them on credit cards. Life has really changed to where everything goes on a credit card and then you worry about paying for it later.””
The problem of high credit card debt is closely related to America’s inability to save, especially in relation to other countries, Swanson said.
“”We save less than any other country in the world,”” Swanson said. “”People can have a six-figure income and it still feels like they don’t have enough money. Why is that and what’s behind that?””
The current credit crunch will have a trickle-down effect that will eventually force people to pay with cash, rather than credit, Swanson said.
“”This credit crisis … is going to have a very sobering effect on everybody,”” Swanson said. “”It’s going to last … at least a couple years and people will have to adjust their standard of living to live within their means instead of living on credit.””
Diminishing credit, however, is not solely on the shoulders of consumer irresponsibility, he said.
“”One thing that is so difficult about this downturn is that (the credit card companies) encouraged households to put their electric bill on their credit card, to put their water bill on their credit card, to put their Internet bill on their credit card, so they are running their whole life through a credit card of borrowed money,”” Swanson said.
The credit elimination movement is already underway, and Swanson said that consumers would get the hint sooner or later.
“”We do see that consumers are retrenching, and the amount that they are putting on their credit cards has gone down since this financial crisis has started,”” Swanson said. “”Credit card balances are already being restricted, and the interest on the balance going forward has risen. In some cases it is in the 20 percent range.””
