Review: The Overspent American

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OverspentThe vast majority of Americans are trapped in a cycle of “work and spend” and simply don’t know how to escape. We’re surrounded by an enormous abundance of incredible material goods, but these goods don’t really mean anything – they leave us with a hole that’s only partially filled by this stuff and we have to work at an incredible pace in order to pay for it. The Overspent American argues that the real root of this is a desire for things we don’t actually need.

The author of the book, Juliet Schor, has written other books on similar topics, including Born to Buy, a deep look at the effect that consumer culture has on young children that I read shortly after having my own child and found quite interesting and insightful. So far, the only television that my child has watched was a few Baby Einstein videos – we basically don’t turn on the television when he’s around.

I’ll admit to being a little afraid to read this book for several reasons, the biggest of which is that the last time I looked at a more socially-oriented book dealing with personal finance issues, it turned into a complete debacle of preconceived notions and liberal guilt without true understanding. I was concerned that this book would be much the same, turning quickly into a lengthy anti-consumerist rant without looking at the real causes and how to fix them.

Was this concern founded? Let’s dig in and find out.

Examining The Overspent American

This book, interestingly enough, is directly targeted towards middle class and upper middle class Americans, people most susceptible to spending more money than they can afford and thus the people most susceptible to debt in today’s society. I find myself in that group, and I’m also currently in a significant amount of debt, having just purchased a home.

1 – Introduction
The Overspent American starts off with a litany of explanations for why Americans, particularly those in the middle and upper middle class, tend to spend far more than they earn. Some of them are obvious (the competitive desire to keep up with others and not let ourselves or our family “fall behind”) while others are much more interesting (the growing disparity between the income of the top 20% and the bottom 20%). Just combining those two factors alone (not wanting to fall behind when the income gap is widening) paints a pretty clear picture of how the middle class can often run up incredible debts.

2 – Communicating With Commodities: How What We Buy Speaks Volumes
Here, Schor establishes the idea that particular items indicate that you’re a member of a particular group. People at certain income levels, for example, are often expected to dress a certain way and own certain things – an upper middle class family kitchen may be expected to have granite countertops, for example, or that middle class teenagers should have an iPod. These statements seem ridiculous when I type them out, but when I pause and think about the experience of people in these groups, they suddenly don’t seem ridiculous at all. Granite countertops are a way for a middle class family to state that they meet a certain income threshold and thus are of a certain “class.” iPods tell other teenagers that this person is not one of the “poor kids.”

3 – The Visible Lifestyle: American Symbols of Status
When you carry forth that symbolic nature of consumer goods to the next logical step, it makes sense that people would covet the items that represent a group that they wish to be a part of. Let’s say you live on a block where many of the people drive Lexuses and your Ford pickup sticks out like a sore thumb (not that I’m in that situation or anything…). There’s a subtle social pressure to purchase a Lexus or an automobile of similar quality so that you fit in with the group on your block. Thus, advertisers often look for people who are trendsetters and get the ball rolling by focusing in on them – if two or three of the most social people in a group suddenly have a particular item, it begins to spread throughout people in that group.

4 – When Spending Becomes You
While that step is still not too bad, it becomes dangerous for all involved when the spending becomes competitive. I live next door to a family that owns a Lexus LS 300. Even though I rationally know that I really have no interest in owning such a car, part of me wants to purchase something better to “one up” them. Why? Although we are in the same social grouping, I would have prestige within that grouping for owning a higher quality item. Rather than merely seeking acceptance, I’m looking for prestige – a sense that I’m somehow slightly ahead of the other person simply because of this purchase. All of these ideas are constantly encouraged by marketers, who rightly see such societal pressure as an enormous assistance to their effort.

5 – The Downshifter Next Door
This chapter (with the title parodying The Millionaire Next Door) focuses on telling the stories of various individuals who have moved away from this incessant societal pressure to spend – the variety of the stories is compelling, from people who have bought heavily into voluntary simplicity to people who have simply made commitments to stop buying. I actually find myself in this group – although I still do occasionally buy consumer goods (like my recently-purchased Wii), it was a carefully calculated buy based entirely on what I wanted to do, not based on anyone else’s influence. I’m also very big into frugality and I’ve been thinking about making a few very large lifestyle changes (such as a complete career shift and also going back to school, funded in part by the income from The Simple Dollar).

6 – Learning Diderot‘s Lesson: Stopping The Upward Creep of Desire
The final chapter includes nine wonderful points of advice for anyone wishing to escape from this consumerist mentality (without withdrawing from society and becoming a hermit, of course). These principles really cut to the chase of escaping consumerism, so I thought I’d spell them all out here. This chapter is excellent reading for anyone whose stomach was turned by some of the material described above.

Principle 1: Controlling Desire Stay away from malls and other places where you may be tempted to spend. When you go to buy a product, think about the durability of it as well as how much “more” you’ll need to fulfill that purchase (more games for that game console, more decorations for the redone kitchen, etc.).

Principle 2: Creating a New Consumer Symbolism: Making Exclusivity Uncool Whenever you see a symbol of excessive spending (like, for instance, my neighbor’s Lexus), look at it for what it is: successful marketing. If you lust for an item, ask yourself if you actually need it.

Principle 3: Controlling Ourselves: Voluntary Restraints on Competitive Consumption Not only encourage yourself, but encourage your friends and social groups to put caps on spending. Get involved in group decisions and suggest spending caps – you’ll quite often find that others are relieved, too.

Principle 4: Learning to Share: Both a Borrower and a Lender Be Consider sharing expensive purchases (like a lawnmower) with your neighbors. Look at rentals or secondhand shops for sporting equipment and other narrow-use items. Use your local library, not only for books, but for DVDs and CDs.

Principle 5: Deconstruct the Commercial System: Becoming an Educated Consumer Deconstruct every ad you see. When you see a product you superficially want, research it and understand it before making the purchase (and that means more than visiting the product’s website).

Principle 6: Avoid “Retail Therapy”: Spending is Addictive If a particular mood or event triggers a desire to shop, do something (anything) else instead.

Principle 7: Decommercialize the Rituals Don’t view Halloween, Christmas, or other social occasions translate into a reason to shop. Look for non-commercial alternatives to celebrating these societal rituals.

Principle 8: Making Time: Is Work and Spend Working? Look for ways to reduce the time you spend working so you can increase the time doing things more valuable to you. If you choose activities with that extra time that don’t involve spending and consumerism, you’ll still be financially fine.

Principle 9: The Need for a Coordinated Intervention Look for larger societal solutions to this issue. Get involved in organizations that focus on consumer issues and reducing spending.

Buy or Don’t Buy?

The Overspent American is a fantastic book that should be read by every middle class American. It addresses rampant consumerism, takes it apart effectively, and provides a bevy of solutions that are applicable to almost anyone in the middle class. It’s a tremendous book, well worth reading for anyone, and is among the best books related to personal finance I’ve ever read.

Having said that, I have a few minor nits, the biggest being that compared to many personal finance books, the writing is simply at a higher level. It’s intended for an educated audience and while that doesn’t mean that it’s not readable by everyone, the writing here is going to be a bit slower to digest than, say, Dave Ramsey. The advice really applies to people with at least some significant earnings potential, though, so many of the people who might have a hard time with the tone and language of the book would be self-excluded from the topic (i.e., children and people with no interest in self-education). If you’re reading this review, though, this book won’t be a problem at all.

If any of the material in this review really spoke to you, or you find yourself in a situation where buying stuff isn’t really filling up a hole you feel inside, this book is an absolute must-read.

The Overspent American is the thirty-eighth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

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20 thoughts on “Review: The Overspent American

  1. I started reading this book and after a few chapters totally lost interest in it. For some reason it just could not hold my interest like “The Millionaire Next Door” or “Your Money or Your Life”. I don’t think I had any problem trying to understand it (I am college educated, work for a university, and read research documents on a regular basis). It just did not hold my interest.

    My copy of this book is now in the pile of stuff ready to go to Goodwill.

    If you want to read this book try to get it from the library or buy it used.

  2. Hi Trent,
    This book sounds great. Thanks for the meaty review. I have been thinking a lot about this. My husband and I live in an affluent part of Los Angeles. We drive completely beat up cars (my husband’s motto: “there’s nothing a little duct tape can’t fix”) It may be time for new cars because of their condition. That said, we live in an area where brand new priuses, volvos and hybrid suvs are de rigeur as are ipods and expensive strollers. I don’t want to one up anyone as I think this kind of spending is irresponsible. When people spend so much money on things that are such blatant status symbols it irks me. I’m wondering if others have similar feelings of being judgemental? I swear I’m not jealous…but I am resentful that people are spending without being mindful of what that spend means to our society. Any thoughts?

  3. Just a bobble-head comment here, 300 million or so of my closest friends could certainly benefit from reading and THINKING about this book. I picked it up at Half-Price books about 6 months ago and found in words concepts I was subconsciously living or disgusted by (depending on which side of the fence the concept fell). A few months later I picked up YMOYL, and even as a pre-existing frugal person, these books have made a difference in my perspective and every day lifestyle; reinforcing decisions I’ve made with a lot of regular old common sense and contemplation.

  4. Wow, great review and sounds like a great book. Just in your review, I very much recognized my mostly-former self. I had the attitude that “I’m making good money, thus I *should* have this-or-that or I *should* be able to shop a this store for clothes rather than Ross Dress for Less. It really kept me from doing any better than live from hand-to-mouth early in my career, despite a fairly good salary.

    I’d never looked at it that way! Interesting…

  5. I have Schor on my to-read list (Consumer Society Reader, or maybe Work: The Coming Revolution). She’s a sociologist who has worked in this area for a couple of decades.

    Because she’s an academic, your saying this book is at a higher level actually makes it more likely that I’d consider reading it. Sadly, a lot of people who can write beautifully when it comes to more academic work really fall down when it comes to popularization.

    (Example: Lakoff’s Moral Politics–provocative, persuasive–was turned into Don’t Think Of An Elephant–completely nasty f*@k-up, really ticked me off even though I have mostly-liberal politics in American terms. I haven’t read Nickel and Dimed, but Ehrenreich might be another example–for me, the book she wrote w/ Deirdre English really finally made sense of a lot of weirdness in our culture surrounding things like homeopathy and welfare.)

  6. The problem I see with this book is that I am not sure “keeping up others” is really all that important to me. Fulfilling my own desires is the more serious problem and I think I wrestle with that much more than the others, even though some of the symptoms can seem the same.

    Brad

  7. I purchased an iPod Nano about a year and a half ago, and have never paid for anything on iTunes. My husband and I regularly hit up the local library for cds to add to our computer collection (we don’t have a cd burner). We have a tremendous collection going!

    As far as the book goes, I’d like to check it out. We live a simple/frugal life, at this point borne out of necessity rather than choice. I feel strongly about the rampant consumerism that seems to motivate the purchases of most of the people I know. However, I have often wondered if my strong feeling is disgust or jealousy (or a little bit of both – along the lines of “I’d like to have the option of frugality, as opposed to necessary frugality”). I guess we’ll see when my husband is out of school :P

  8. Trent, good post. I think that your book reviews are among the strongest posts you have, as they step away from the daily life of the new house and your son, and speak to concepts that almost everyone can see at work in their daily lives. Based on your stong recommendation, I’ll find this at the bookstore or library soon.

    @kim – My wife and I are consciously striving for simplicity, but she sometimes has trouble with the “I’m making good money and should be able to splurge” mentality, too. I’ve tried several explanations, but the evidence of past credit card freedoms doesn’t seem to sink in. Any recommendations for making this point stick?

  9. Your review of the book really rang true for me. I can tell this will be a “must read” for me as I try to get my arms around exactly how I landed in so much debt and what the motivations truly were for my overspending and poor financial management.

    Another good book along the lines of this one is “Green With Envy”; that too was a real eye-opener for me personally.

  10. Trent,
    I must say that I find your site very interesting, and it has been a real inspiration for me. We have been struggling with a major financial crisis due to circumstances which are in large part not under our control (family deaths – with the legal ramifications they entail, daughter with cancer, unplanned additions to the family (3 grandchildren), job loss and change, health, etc.). We are not in a high income bracket, and already follow many of the frugal ideas you espouse. The thing that you have helped me see, is that we really need to plan for our future, now. We need to take steps, (like taking an adult child off our insurance,) so we can be more repsonsible for ourselves down the road. I am grateful for the constant focus I get from your site, and have found useful ideas, and reading suggestions. We never know what influence we may have in someones life, but I wanted you to know that we appreciate the extra motivation, and ability to see that it is possible to succeed. It is appreciated.
    Thanks again,
    Lois

  11. My personal “frugal epiphany” came in the form of these words: “you can’t get enough of what you don’t really need.” Meaning that buying and buying to fill an empty spot in you won’t work because stuff isn’t going to fill the empty spot.

  12. I am an immigrant and I have seen what being poor is first hand and I have seen how much you can make when you put your heart to anything. I have a lot principles which are intrinsic to me by my upbringing and responsibilites(as a son). I read your blog whenever I have time. “Control of Desire”–sounds more like Buddhist Philosophy, they call it “kama”, once your control it everything in life falls into its place.

  13. There’s a saying “He who dies with the most toy wins”. This is a popular saying/attitude with my family in NJ. It really doesn’t matter how much one has in the bank (or how much debt is incured). Looks are everything. It’s a miserable existance. There is a great amount of stress to keep up with neighbors, friends, co-workers, even strangers.

    These people often have a way of making those who don’t live their lifestyle feel uncomfortable. Mention WalMart to these people and observe the changes in facial expression/body language. These people are not happy or wealthy.

    There is a lot of pressure in general to buy. The media tries to make us believe that we need things we could live without. Parents start thinking they aren’t good parents if they don’t take their kids to Mc D’s or use tide, clorox, etc. We begin to lose our identities.

    There is also a lot of pressure to buy. I can’t call a single utility company without getting a sales pitch. The phone co. used to offer phone service. Now they offer internet, satelite tv, all kinds of add-ons. They don’t care if a consumer can’t afford something, they try to push them until they break down and spend more money. Then they wonder why people don’t pay their bills. A lot of it has to do with greed. All they care about is making their wallets fatter so they can fund their lavish lifestyles.

  14. I live in a newer home,built in 1999, it is very nice, no granite countertops though. My problem, it is small, as newer homes tend to be. I remember going to the home of one of our church members a few years ago. The house was obviously built in the 60′s or early 70′s and had not had any updates since then, although it was clean. I remember thinking “why don’t they upgrade”? NOw I would be more than happy to live in that very spacious home, upgrades or not! I’m also sure that their home is almost paid for. As our first home would be if we had left well enough alone. But I hated the yard, even after doing a complete remodel of the inside. I am really starting to think that the unhappiness is a problem that I have, not with any real problems of the homes I have lived in. As Americans we have more than most people on earth.

  15. trb- You know, I think that’s a value change that has to happen within one’s self. When I want to splurge, I use overtime pay or save up in very small increments over time. Honestly, though, I think it just takes time and constantly training oneself to think in that way. I’m not there, yet, but trying!

  16. Thanks for the great review. I will be getting this book from the library.

    I definitely find this a problem for me in my neighborhood. I drive a very old minivan while the neighbor’s have Lexuses, etc. My kids are already asking me why we are the only ones in our neighborhood that don’t have a beach house. They even asked “are we poor?” (They are 10, 8, and 4 years old.)

    I feel like I can deal with not keeping up with the Joneses, but I’m not sure about my kids. I guess mostly it’s that I feel guilty that my kid’s are suffering (okay, not suffering really) because of my decisions, and really because of my past financial mistakes. We are working feverishly to pay off a large debt, currently at $38,000. And I can’t help but think that my kid’s could have more if I hadn’t wasted my money on stupid purchases in the past!

  17. I couldn’t understand some parts of this article o.us poetry, but I guess I just need to check some more resources regarding this, because it sounds interesting.

  18. Thanks for directing me to a great little book. I just got my copy from the public library. I read a couple of chapters, every chance I have.

    I you don’t read the whole book, you have to read the Preface and the Introduction. (I usually skip over those in a book) The Intro really “hits the nail on the head” and gives a lot to think about and discuss.

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