Saturday, January 26, 2008

Addicted to Spending

Addicted to Spending

They tried to make me go to rehab
I said no, no, no

-Amy Winehouse

I don’t know if they have rehab for spending addicts. If not, someone ought to start one.

I was flipping though the news channels when I heard a guest demand that we give tax rebates to poor people.

“Rich people accumulate wealth. Poor people accumulate things,” he said.

He had a trickle up theory of economics. His believed that poor people will go a wild spending spree. The money will burn a hole in a poor person’s pocket while wealthy people would sock it away.

Most poor people need their income just to survive but there are many who are broke because they don’t handle money well.

There is a financial dividing line that separates savers and spenders.

The savers wind up with wealth and the spenders wind up with debt.

The line between affluence and broke is getting bigger. If a poor people want to go a go on a spending spree, there are plenty of credit card companies, payday lenders, “buy here, pay here” car lots and subprime lenders to help them along.

The economy is in recession because some avenues of credit are drying up. Too many people got in over their heads and can’t make payments. Companies like Citigroup bet that the fun would never stop. The bet cost their shareholders billions.

Giving rebate checks to the poor won’t bail Citigroup out.

If I get a rebate check, I’ll send it back to the government. They will eventually want it back to someday pay for the giveaway.

People on their way to wealth have good savings habits. People living beyond their means blow money on stuff they don’t need.

Spending is instant gratification, like snorting cocaine. One shopper told me that she got a high from shopping like a high from drugs.

Shopping doesn’t work for me. When I walk into a store, the hatred of shopping contorts my face to resemble a mass murderer or a professional wrestler. People run out of the aisles when they see me. I buy what I came to find and get out as quick as possible.

My goal is to accumulate wealth, not things.

When I was growing up, I used to think some people didn’t have good jobs. They lived in run down houses and often had their cars repossessed I found out that they made as much money as my parents. The people who lived in run down houses spent money on gadgets they didn’t use and motorboats that never made it in the water.

They lent money to “family and friends” even though they should have paying their own bills first. They had no sense of long term planning and ultimately had no money.

Spending beyond your means is an addiction. A spending addiction is probably as hard to cure as a drug addiction. It requires changing your lifestyle.

Money is a leading cause of divorce. The stress of debt pushes people to escape reality with booze or drugs.

When the economy slows downs, the addiction become a crisis. People who were keeping the balls in the air suddenly can’t. They have no back up systems.

I’ve frequently hired a casual laborer. He is good at his craft and for 20 years, made really good money. None of which he saved. Whenever I saw him, he talked about skiing trips, his bass boat or his brand new trucks.

Now the economy has turned. His house is being foreclosed on and they repossessed his trucks. He has no savings or credit.

His focus was on accumulating possessions. Now he doesn’t have those possessions. Or any money either.

The nation’s economic system has also gotten addicted to shopping.

America’s ebb and flow depends on citizens who accumulate things. If those people stopped buying and running up their credit card at the same time, the banks and stock markets would collapse.

That won’t happen soon. Shopping addiction is not going away.

There is going to be a day when it all hits the fan. Americans are competing against workers in countries like China who have great savings habits.

To turn the economy around, Americans need to find a spender’s version of rehab.

Don McNay is the Chairman of McNay Settlement Group. He is the author of Winners, Losers, and What to Do When You Win the Lottery. You can write to him at or read what he has written at